Two very important abbreviations to consider as high school seniors prepared to go to college were GPA and ACT.
But as those academic markers – representing a students’ grade-point average and their score on the American College Testing exam – fade in importance, another abbreviation is as essential as ever: FAFSA.
The Free Application for Federal Student Aid is a tool that calculates a family’s ability to contribute to educational expenses. The resulting Student Aid Index (SAI) is then used to determine each student’s eligibility for funding. It’s a tool that is undergoing significant changes this year.
“This year marks some of the largest changes to the federal financial aid process that we’ve had in more than 40 years,” said Associate Vice President for Student Financial Planning Jayne Schreck. “The FAFSA will be simplified with fewer questions. But the way in which families interact with the application online, and the way the formula calculates behind the scenes will both change.”
A later timeline
Because of the changes, the FAFSA process is experiencing a delay at the federal level, said Schreck.
“So instead of the FAFSA being available Oct. 1 like it has been for the last several years, we’re anticipating the FAFSA application will not be available until mid- to late December,” she said.
For current college students, that’s not much of an issue. But for families who are sending a student off to college in the fall of 2024, it is.
“Families with seniors in high school right now are really anxious to learn about the cost of college and the financial assistance that might be available to them,” said Schreck. “Having the FAFSA in October gave students many months during their senior year to look at costs and contemplate schools and really find the right fit that is also affordable. This year, the Department of Education is going to condense the timeline a little bit, and students are not going to have their financial aid packages until late January or early February from most schools. They’ll have fewer months to make those final decisions and make plans accordingly.”
But some preliminary steps can be taken to avoid even longer delays, she said.
“One of the first steps that needs to happen in order for a family to submit the FAFSA is that they have to have an electronic signature that is recognized by the federal government as their legal signature. It’s called an FSA ID, and they can go ahead and apply for that now on the website studentaid.gov. Both the dependent student and their parent will need an FSA ID.”
‘Good, positive’ changes
“The DOE had their own formula on the FAFSA, and it really didn’t tie well to other federal poverty charts or household size/income charts,” said Schreck of another large change to the process. “These formula changes are going to force the DOE to reference other federal charts that exist in other government departments, so they’re all held accountable and make more logical sense at the federal level.”
Using those formula changes, Schreck and her staff have crunched real-life numbers and predict some good news for many students next year.
“Although there is a delay with the FAFSA, I think the changes, in the end, will be a good, positive thing,” she said. “We’ve done some simulations with the new formula compared to the old formula. I took the results of the FAFSA from all of our current students and put them through a simulator of the new formula that the federal government has provided us. It’s not perfect … because some of the fields that will be asked on the new 2024-25 FAFSA are missing from the 2023-24 FAFSA. But taking the best simulator that we have and using that tool, we have shown that among our current student body, more of them would receive federal grant funding and there would be an anticipated increase for many of them.”
Another positive change, said Schreck, is that the sharing of tax information on the FAFSA that was previously an elective step is now mandatory.
“It makes a huge difference and is a benefit for both families and us, because it’s fewer individual income tax forms we have to collect from families and verify manually,” she said.
Small businesses and family farms
Among several other changes to the FAFSA, one that might make a difference to many families in west central Illinois concerns small businesses and family farms.
“In the recent past, the federal government hasn’t considered the equity of your small business or a family farm,” said Schreck. “This is probably the biggest change. They are going back to a philosophy from years ago where the equity in your small business or farm would be included in the FAFSA again.”
That is going to affect some families, said Schreck.
“The federal government assumes that a portion of a family’s assets is available for education, and this in turn affects the SAI calculated on the FAFSA,” she said. “And the SAI drives eligibility for aid. The higher the SAI, the lower aid a family gets, and vice versa.
“However, there are always trade-offs. We anticipate that the previous requirement to report tax-sheltered contributions to retirement will be significantly reduced or removed entirely for many families. This in turn will lower the reportable income of a family and reduce the SAI calculated on the FAFSA, thereby increasing assistance to families.”
For more information about the FAFSA, contact Schreck at firstname.lastname@example.org or (309) 457-2129.
***Courtesy of Barry McNamara, Monmouth College***