Six Major Changes: What School Counselors Need to Know
Consent required for new IRS permission box
With contributor consent, the Better FAFSA will directly import all income information needed to complete the FAFSA from the IRS. This eliminates the need for low-income households who do not file taxes to go through an arduous process of confirming their filing status. The former IRS Data Retrieval Tool is being replaced with this direct data exchange. Automating the process of inputting income data will reduce errors and hopefully cut down on the need for verification. Prior to the COVID-19 pandemic, half of Pell Grant-eligible students were flagged each year to prove the information they provided on their FAFSA was accurate and at least 1 in 10 Pell-eligible students did not receive federal student aid because they did not complete the verification process.
With this new system, it’s vital that all contributors check the box to grant permission to transfer IRS data — even if they did not file taxes. If this box is not checked, it will be considered an “unprocessed FAFSA.” When the consent form comes up, the contributor will need to scroll down past the legal language, find the “approve” box and select it to consent.
If contributors do not consent, the student will not be considered for financial aid.
Parents without a SSN can get FSA ID
An FSA ID will be required for anyone (student or parent) to access the FAFSA starting with the 2024-2025 aid year. Additionally, there will no longer be a save key as everyone will be logged in with an FSA ID.
A major change this year is that parents and legal guardians without SSNs can obtain an FSA ID — and as stated above, it’s required. Previously, individuals in this situation had to mail their signature page in and have it matched with their child’s FAFSA manually. The new all-electronic process, which will be unveiled in early fall, will allow contributors who do not have SSNs to obtain an FSA ID. Contributors will have their identity verified through the TransUnion Credit Bureau, or, if they do not have documents in that system that can be used to verify their identity, they will be able to upload their documents to the FSA website.
We recommend hosting multiple FSA ID and authentication workshops, so these steps are completed by necessary parties before the Better FAFSA is released in Dec. 2023.
It’ll be easier to tell which parent is responsible
It can be challenging to determine in some family situations exactly which parent needs to complete the FAFSA with the student. For the 2024-2025 award year, the contributing parent is no longer defaulting to the primary custodial parent. The parent of focus will be the one who provides greater financial support. Recognizing the challenge in identifying who should complete the form, the Better FAFSA will include a “Who’s My Parent” Wizard tool to determine the correct financial contributor.
FSA is preparing an infographic to be released in September to assist students in determining which parent to include.
More students eligible for Pell Grant with new changes
FSA estimates that the FASFA changes will result in about 15% more students qualifying for the Pell grant, and more Pell-eligible students will qualify for the maximum Pell amount. However, some families may see less financial aid because the Student Aid Index (SAI) will no longer lead to greater financial aid for families with multiple children in college. We do not expect this to impact every family with multiple children, and the NextNC Grant will provide state aid to eligible North Carolina families.
A few details of the changes to Pell Grants:
- The maximum Pell Grant will be available to students from households earning less than twice the federal poverty level for their household size. For more about how the Pell Grants are calculated, please see a detailed explanation here.
- The new formula also exempts applicants from households with up to $60,000 in income from having to report assets.
- The Pell Grant will no longer require part-time enrollment status, instead the new formula will allow all students eligible to receive a percentage of their Pell award based on their enrollment intensity.
- The form will no longer ask about felony convictions, so that should allow more students to access Pell Grants. Those subjected to an involuntary civil commitment for a sexual offense may also qualify for a Pell Grant starting July 1, 2023. FSA has more detail about eligibility for students with criminal convictions.
Another major change will be the inclusion of negative SAI, a calculation that will convey to financial aid administrators the students with greatest financial need to prioritize limited financial aid.
The minimum grant ($750 in the 2023-2024 award year) is guaranteed to students from a household earning below 275%, 325%, 350%, or 400% of the poverty level, depending on household structure.
Students in unusual circumstances will have an easier process
When a student faces difficult circumstances that prevents them from completing the FAFSA with a parent, they can apply for provisional independent status. Students in foster care, students experiencing homelessness, those whose parents are incarcerated, and other students in difficult circumstances will be able to indicate on the form that they face unusual circumstances to be granted this status. It also now makes it possible for students who are in situations where it would be unsafe to communicate with their parents to get “provisional independent status” for their FAFSA. See page 243 of the 2024-2025 FAFSA Form Preview presentation for step-by-step descriptions of how this will be implemented.
This change will put Pell Grants and other federal student aid in reach for many more students. The college financial aid office where the student is attending will then be responsible for verifying the unusual circumstances. If this is not verified, the student would need to complete the FAFSA again as a dependent in order to qualify for aid.
New terms to know
- A contributor is anyone who is required to provide information on the FAFSA. Students, spouses, parents and guardians are considered contributors to the FAFSA, and each contributor cannot see information provided by other contributors. Types of contributors include the student, the student’s spouse, a biological or adoptive parent, or the parent’s spouse (stepparent).
- Student Aid Report (SAR) becomes FAFSA Submission Summary (FSS). This gives the student the opportunity to review the answers they submitted and correct any errors.
- The Expected Family Contribution (EFC) will now be known as the Student Aid Index (SAI). EFC was confusing to families because it implied what families were expected to contribute to their child’s education. This change will make it clearer for families because SAI does not reflect the family contribution towards college costs. SAI will now show an index for student aid used by colleges, states, and other scholarship providers to determine financial aid packages.
Tips from the Field
This is the first major redesign of the FAFSA process in 40 years. With such a major change, we’ll be sharing tips as we hear about them to help your students through this process. Here’s what we’ve heard so far:
Have families complete the “What you need for an FSA ID” worksheet prior to starting their FSA ID electronically. It is very important to record the details they use when creating the ID, in case they need to be updated later.
Select all authentication methods so they have another method to try if one fails.
Encourage students to take a photo of their backup code for the FSA ID authentication process. See more about that here.
Even though IRS information will be automatically transferred, we still recommend parents keep their tax returns at hand as they complete the FAFSA. This will remind them what they had reported in their taxes. When information is imported from the IRS, students and families will not be able to see it. Having their tax return can help them if they need to change information (ex: family size/number of dependents if there has been a new family addition since filing).
As the student completes their portion of the FAFSA, we recommend the parent/contributor be present, so they are able to help fill out information (including the contributor social security number) when the student is asked to designate a contributor.
Spread the word early: students may list 20 colleges, up from 10. Start mentioning this now so students are prepared with college information.
Since the FAFSA will be available later this year (Dec. 2023), help students prioritize activities that can be completed ahead of time. For instance: compiling a list of colleges, complete admissions applications, scholarship applications, FSA ID set up, RDS and campus visits.
Why These Changes are Happening
This law makes it easier for students and families to apply for financial aid because it will require the IRS to share data directly with the Department of Education for the purposes of FAFSA applications. Passed in December 2019, it may also reduce the need for FAFSA verification.
FAFSA Simplification Act
This act was passed in Dec. 2020 and simplifies the FAFSA form, while expanding access to federal student aid through Pell grants. It was originally slated to have started this year, but an amendment moved it to the next FAFSA cycle. It will be available in Dec. 2023, but an exact date has not been set.