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Normally the FAFSA drops in October, but this year the thrills and chills of the season had nothing to do with looming college expenses. Instead the new simplified FAFSA is expected to arrive in December amidst the chaos of spirited holiday events. It’s worth a pause in the holiday shopping and cookie baking to file early, since some aid is awarded on a first-come, first-served basis. Even families that might not expect to qualify for aid will need to complete a FAFSA to be eligible for non-need based (unsubsidized) Direct Loans. Spending a few minutes to prepare now before feast preparations and seasonal decorations will help you tackle this item on your to-do list amidst the holiday hubbub. You might even unwrap a surprise or two in our rundown of some of the biggest changes to the *new* FAFSA.
The delay affords families extra time to get their documents in order. So what will you need?
- An FSA ID for the applicant AND each contributor
Head to StudentAid.gov to make your unique ID and see who qualifies as a contributor. Be sure to record your login for use in future years also.
- A copy of your tax return for 2022* for the applicant AND each contributor
The FUTURE Act requires FAFSA applicants to consent to the use of the IRS Direct Retrieval Tool (DRT) so their tax filing data can be directly imported. This includes any amended returns. Having a copy on hand will help you verify data.
- A list of up to 20 colleges the applicant would like to submit their FAFSA to
Dream big! The new FAFSA doubles the amount of colleges you can share your application with so students can compare more aid offers. While the names of other colleges listed are not shared, ranking is. To qualify for maximum state awards, it may be beneficial to list your top choice public university first.
What else is new about the FAFSA? 7 Things to Know Now:
1. Shorter & Simpler
The new form ushered in by the FAFSA Simplification Act is a slimmed down version containing less than half the prior number of questions so families can complete it more quickly. Factor in the mandatory use of the DRT, and it’s easier too.
2. Multiple College Students in One Household? Well…
The expected family contribution (EFC) considered the total number of household members pursuing secondary education at the same time. The new student aid index (SAI) no longer factors in the attendance of other family members. Family size is still reported on the form and financial aid administrators (FAA) are allowed to use professional judgment to manually factor in family member attendance via the appeals process.
3. You may not be the FAFSA Contributor(s) for your Tax Dependent
For divorced couples, the parent (and their spouse) who supplies the most financial support to the applicant is the contributor who must import their tax info to the FAFSA for a student to qualify for aid consideration. This may differ from the parent (and their spouse) that is allowed to claim the child on their tax return, as the IRS sides with the parent who houses the applicant most.
4. Is Child Support Reportable?
Annual child support is now classified as an asset instead of income. This means that only those filers who are prompted by the adaptive form to report asset information will need to include child support payments received.
5. Changes to Items Included in Income
The FAFSA will no longer require filers to add back in many income items that are excluded on individual income tax returns, such as payments to tax-deferred retirement or pension plans, veteran’s non-educational benefits, and worker’s compensation. Visit studentaid.gov for more information on the considerable changes to income inclusion and don’t skip over #6.
6. Another Reason to Send Thanks to Grandparents, Aunts, Uncles, etc.
Under the old system, funds provided for educational assistance from extended family members (i.e. grandparents, aunts, uncles) were more damaging to a student’s aid calculation than parental contributions. The new FAFSA no longer considers gifts to the student to be untaxed income. This creates new opportunities for extended family members who are interested in using a 529 to help plan for education expenses as the value of a plan owned by these individuals would also not be considered a reportable asset.
7. Reconsider Retirement Savings
In a significant change, non-Roth contributions to retirement accounts such as employer sponsored 401k plans or the government sponsored TSP will no longer be factored into your family’s income calculation. This is one more item for savers to consider when deciding whether to save for retirement in traditional or Roth accounts.
The changes to the FAFSA form aim to simplify the application process and ensure that students receive their financial aid offers as early as possible. With a streamlined application, improved data retrieval tools, and expanded eligibility criteria, the FAFSA is becoming more user-friendly and efficient. These changes ultimately benefit students and families by providing a smoother pathway to securing financial assistance for higher education. It's important for all prospective and returning college students to stay informed about these changes and take advantage of the new and improved FAFSA process. Cheers to a smooth FAFSA filing season and a head start on managing education expenses!
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