The Education Dept. is delaying the simplification of the FAFSA. It’s delaying the changes to the federal financial aid application to streamline the process. 

However, it disappointed advocates who are concerned about the pandemic’s continuous effect on students from low-income families.

What is Free Application for Federal Student Aid (FAFSA)?

“The FAFSA is a form filled out by current and prospective college students in the US to determine their eligibility for financial aid.”

Universities, individual colleges, states, and private scholarship programs rely on the information that’s provided in the FAFSA. The main role of the FAFSA is to assess the amount of financial aid a student is eligible for, including:

The information provided in the FAFSA defines whether you qualify for non-need-based financial aid, need-based financial aid, or both. The FAFSA determines if you’re eligible for:

  • Federal Work-Study
  • School-based merit aid
  • State-based financial aid
  • School-based financial aid
  • Federal need-based grants
  • Subsidized Federal Student Loan
  • Unsubsidized Federal Student Loan

To determine the financial need of a family, the FAFSA asks questions about student’s and parent’s assets, income, and other factors. It is accompanied by Expected Family Contribution (EFC). 

The EFC determines how much of the college’s cost the student must pay with its resources. In July 2023, the EFC will be renamed the Student Aid Index (SAI) to clarify its meaning. The EFC does not specify how much the students should pay for college. 

Colleges use the EFC to determine the amount of student financial aid the applicant can get. The FAFSA estimates that 20% of students’ assets and 5.64% of parents’ assets will be available for spending in an academic year when it comes to assets.

These students’ and parents’ assets include bank accounts and investments. But, these assets exclude any equity in the family home. They also do not include:

  • Annuity
  • Life insurance policy
  • Value of retirement accounts

How Would The Simplification Of The FAFSA Change Student Financial Aid Eligibility?

The simplification of the FAFSA will change federal student aid eligibility. The significant changes include:

  • The allowance for state and other taxes will be dropped.
  • The Selective Service registration requirement will be abolished.
  • The new FAFSA prohibits charging fees to complete the FAFSA. Paid preparers will not be allowed.
  • The US Dept. of Education will be able to regulate the attendance’s cost for the first time, except for the tuition and fees.
  • The emergency financial aid funds for a component of the attendance’s cost will not decrease the student’s financial need.
  • Colleges will not be able to set the room and board component of the attendance’s cost to zero if the students live at their home with their parents.
  • The suspension of financial aid eligibility for students who were convicted of selling or possessing controlled substances while receiving federal student aid will be revoked.
  • The federal student aid application will have a new question about the student’s race/ethnicity. But, this question will not affect student’s eligibility for federal student aid.

Why Did The Education Department Delay The Simplification Of The FAFSA?

The Education Dept. said that it would need another year to implement provisions to streamline the FAFSA. In December, Congress included the FAFSA in the $1.4 trillion spending package.

Richard Cordray, head of the Education Department’s Federal Student Aid Office, wrote in a blog post, “We are already working hard to modernize the FAFSA system.”

He further wrote, “We are taking care to ensure that you can apply for federal student aid and receive it at any point. That’s why we are breaking up this extensive work into bite-sized pieces.”

What Changes Will Be Made To The Simplification Of The FAFSA?

House and Senate leaders agreed to decrease the number of questions on the FAFSA from 108 to 36. They also agreed to limit the requirements for homeless students and those who were previously in foster care to receive federal student aid. 

They decided to shield more money that working students make from the formula used to determine the financial aid. The spending bill makes sure that more families in dire financial need receive more financial aid. 

According to lawmakers, these changes will allow an additional 1.7 million students to qualify for the maximum award every year and make an additional 555,000 students eligible. However, it will take some more time to get there.

Updates About The Simplification Of The FAFSA

  • Over 600,000 fewer students enrolled in universities and colleges this spring than in the same period the previous year, as reported by the National Student Clearinghouse Research Center.
  • The year-over-year decline is the greatest in a decade. The most significant declines are occurring at community colleges, which enroll several students from low-income households.
  • Kim Cook, National College Attainment Network’s executive director, said, “The urgency for students to access need-based financial aid has only increased since the passage of this legislation.” He further said, “We know these sweeping changes require attention to detail and improved systems to improve, not complicate, the process for students.”
  • Higher-education experts were skeptical that the department could meet the deadlines set forth by Congress partially due to the outdated system underpinning FAFSA Form
  • Richard Cordray pointed out the need to update the technology in his post. Cordray said, “Believe it or not, the current system is 45 years old, and while we’ve made it work all these years, it’s still too limited to support all these new changes.”
  • Democratic and Republican Congressional aides say that lawmakers are working on a bipartisan plan. This plan will give the federal student aid office the flexibility to implement all the changes effectively.

The Bottomline

Work was supposed to be completed in time for the 2023-2024 application cycle. But, it will now be completed by 2024-2025. That’s why the simplification of the FAFSA was delayed.

The Education Department is implementing the changes gradually. It said some overhauls would come earlier than expected, which includes drug conviction requirements for financial aid eligibility and the removal of Selective Service.

The student advocates still expressed some concerns about the new approach because the financial turmoil caused by the COVID-19 continues to keep higher education out of the reach of vulnerable students.