At the end of 2020, Congress made some changes to the Free Application for Federal Student Aid (FAFSA.) FAFSA is the application for students and their parents to receive government aid for university expenses.
The main change that families should know about is that the process has been simplified significantly to make it more accessible for all applicants. If you’re applying soon, note that you won’t see these changes just yet. But this change will roll out for the 2023-2024 school year, which means the application will look different in the fall of 2022.
Financial Aid changes – A simpler process
Previously, the FAFSA process was lengthy and a bit complicated. Families had to answer up to 213 questions on the 6-page application.
Once it’s simplified, the form will include only 36 questions over two pages.
The main reason for streamlining this process was to get more households to fill it out. Students need to have a completed FAFSA to be eligible for federal grants and loans and work-study programs.
According to this 2018 federal report, 24% of graduating high school students surveyed did not fill out a FAFSA form. Of those, 32% thought their family would be ineligible for financial aid; 23% did not have enough information to fill out a FAFSA; 15% did not know they could complete a FAFSA, and 9% thought the FAFSA forms were too confusing or time-consuming.
Hopefully, a simpler process will encourage more families to understand and fill out a FAFSA application.
Expected Family Contribution Changes
The other big change will happen for parents who have more than one child in college at the same time. Right now, parents in that situation get a break on their Expected Family Contribution (EFC.)
The EFC is the calculated amount that families are expected to pay for one year of college. If a family has two students in college at the same time, that amount decreases 50% per student. If they have three students in college at the same time, it decreases 75% per student.
This benefit will be scrapped beginning in the 2023-2024 school year.
That could be a big change for families because it determines how much financial aid they receive. So if you have more than one child who will be in college over the next couple of years, prepare for that EFC to be gone.
Saving for college
Whether your child is just starting kindergarten or they’re getting ready for high school, anything you can put aside to save their education helps. Here are a few of my previous posts about how to save and pay for college:
Do you need help preparing for retirement? Contact me today to set up a meeting to talk about your goals. You can also download my free ebook for physicians for tips and information about getting your finances on track.