Major changes required by the law include the following:

1. Replacing the Expected Family Contribution (EFC) With the Student Aid Index (SAI)
Starting with the 2024–25 award year, students and families will see a different measure of their ability to pay for college, and they’ll experience a change in the methodology used to determine aid. The new need analysis formula removes the number of family members in college from the calculation, allows a minimum SAI of -1500, and implements separate eligibility determination criteria for Federal Pell Grants.

2. Modifications to Family Definitions in FAFSA® Formulas
Expect changes in how a student’s family size is determined, aligning more with what was reported on the student/parents tax returns. 

3. Expanding Access to Federal Pell Grants

• The FAFSA Simplification Act will expand the Federal Pell Grant to more students and will link eligibility to family size and the federal poverty level (starting with the 2024–25 award year).

• Incarcerated students in federal and state penal facilities will regain the ability to receive a Federal Pell Grant (starting with the 2023–24 award year).

• Federal Pell Grant lifetime eligibility will be restored to students whose school closed while they were enrolled or if the school is found to have misled the student (starting with the 2023–24 award year). 

4. Streamlining the FAFSA® Form
Where possible, the law mandates the US Department of Education will use data
received directly from the IRS to calculate Federal Pell Grant eligibility and the SAI. This data exchange has been made possible by the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act), which will be implemented alongside FAFSA simplification starting with the 2024–25 award year. The FAFSA Simplification Act also removes questions about Selective Service registration and drug convictions. It also adds questions about applicants’ sex, race, and ethnicity, which have no effect on federal student aid eligibility (starting with the 2023–24 award year).

Benefits to Students, Families and Borrowers

Students and families will see a different measure of their ability to pay for college and experience a change in the methodology used to determine aid. The benefits of FAFSA simplification include:

• A more streamlined application process
• Expanded eligibility for federal student aid
• Expanded eligibility for the Federal Pell Grant
• Reduced barriers for certain student populations
• A better user experience for the FAFSA form
• Enhanced data sharing with IRS to simplify the applicant’s experience

Summary of Changes to the FAFSA:

• The number of questions will be reduced and the application will maximize the use of previously collected data.

•  Students will be able to list up to 20 schools on their FAFSA via the online application.

• The Student Aid Index (SAI) will replace the Expected Family Contribution (EFC).
• The SAI will no longer take into account the number of students in college.
• Foster, homeless, and unaccompanied youth—as well as applicants who cannot provide parental information—will be able to complete the form with a provisional independent student determination and receive a calculated SAI.  Students who have their independent student status approved by a financial aid administrator will also be eligible for a renewal of their dependency status in subsequent years if their circumstances remain unchanged.

• Anyone asked to provide information on the aid application—student, spouse, student’s parent(s) and/or stepparents(s)—is called a “contributor” to the application.
• Students, spouses, parents, and stepparents (contributors) will now need to provide their consent to provide their Federal Tax Information (FTI) in the new Consent to Retrieve and Disclose Federal Tax Information section of the FAFSA for federal student aid eligibility.
  1. A direct data share with the IRS will replace what is currently known as the IRS Data Retrieval Tool (DRT).
  2. If any contributor to the FAFSA form does not provide consent, submission of the form will still be allowed. However, a Student Aid Index (SAI) will not be calculated.
• The Custodial Parent on your FAFSA will be the parent(s) who provided you with more financial support, instead of the parent(s) with whom you lived more during the past 12 months.

• All FAFSA contributors must have an FSA ID to log into the online form. There will be a new process to get an FSA ID for parents and spouses without a Social Security number.

• Applicants will be asked to report their sex, race, and ethnicity on the FAFSA itself, but students will be offered a choice of “Prefer Not to Answer.” Schools and state agencies won’t see responses to these questions on the FAFSA.
• Resources for completing the FAFSA form will be expanded to the 11 most common languages spoken in the United States

Changes to Calculating Your Aid Eligibility
Students and families will see a different measure of their ability to pay for college, and they will experience a change in the methodology used to determine aid.

• The formula for calculating the Student Aid Index (SAI) is: COA – SAI = financial need.
• The new need-analysis formula:
  1. Removes the number of family members in college from the calculation,
  2. Allows a minimum SAI of -$1,500,
  3. Implements separate eligibility determination criteria for Federal Pell Grants based on federal poverty levels and family size.
• Child support received will be included in assets and not as untaxed income.
• Families who own a small business/farm that also serves as primary residence will now have assets of that business/farm considered in their need-analysis calculation.

Next Steps and Additional Information:
Please monitor your email for updates from the Financial Aid Office and the U.S. Department of Education.