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Dept. of Education Announces Sweeping Changes to the Federal Student Aid Process for the 2024-2025 Year

The FAFSA Simplification Act is a law that was passed on December 27, 2020, as part of the Consolidated Appropriations Act, 2021.  The act aims to simplify the Free Application for Federal Student Aid (FAFSA) form, need analysis formula, and many policies and procedures for schools that participate in the Title IV Programs.

 

The changes include (this list is not exhaustive):

  • Reduces the number of questions on the FAFSA from 108 to 46
  • Allows students to put more colleges on the application
  • Changes some of the terminology involved with the FAFSA, such as:

              -  The Expected Family Contribution or EFC will now be called the Student Aid Index or SAI
              -  The Student Aid Report or SAR will now be called the FAFSA Submission Summary or FSS

  • Eliminates The IRS Data Retrieval Tool (IRS DRT) and replaces it with the IRS Direct Data Exchange (DDX), which will be mandatory. With this new system, all applicants, spouses and parents will be required to obtain an FSA ID and log in and consent to the IRS tax data transfer.
  • Number of children in college will no longer be taken into account in the formula.
  • The Income Protection Allowance will see an increase in all areas, resulting in most cases in a decrease in the SAI.
  • Certain types of untaxed income, such as worker's compensation and veterans educational benefits will no longer be reported on the FAFSA.
  • Aid eligibility now directly tied to the family's AGI being within a certain percentage of the poverty level.
  • The parent responsible for filing the FAFSA will be based on whichever parent provides more support to the student, not the parent with whom the student resides.
  • Number in household, (now called "Family size") will come from the dependents reported on to the IRS on the tax return.

 

Because of the complexities involved with the new rules and regulations, the 2025-2026 FAFSA will not be available until December 1, 2024 at the earliest.

 

Stay tuned for more information as it becomes available.