After delays and confusion, a significant change in the college financial aid landscape has arrived with the overhaul of The Free Application for Federal Student Aid (FAFSA).  

These changes, which took effect December 31 in a “soft launch,” promise applicants a more streamlined and user-friendly experience. Here’s what you need to know about “Better FAFSA,” as it’s branded.

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10 Key Changes in the 2024-25 FAFSA

1. Delayed Launch for Enhanced Functionality

The FAFSA for the 2024-25 academic year is now available — but only periodically during what the Department of Education calls a soft launch. The December 31 opening date was a shift from the usual October 1 opening due to the scope of the changes and the need for more implementation time. For fall 2024, the starting date will revert to October 1.

2. ‘Better FAFSA,’ a Promise of Simplification

The revamped FAFSA, branded “Better FAFSA,” is part of the FAFSA Simplification Act spearheaded by the U.S. Department of Education. This initiative aims to simplify the often-daunting process of applying for student aid. With over $150 billion in college grants, work-study funds, and federal loans at stake, these changes are highly anticipated.

3. Faster Feedback

One of the most notable improvements is the faster feedback mechanism. Upon completing the FAFSA form, students will now receive a confirmation along with an estimate of their student aid eligibility. This feature is designed to provide clarity and aid in financial planning for college.

4. Student Aid Index (SAI) Replaces Expected Family Contribution (EFC)

The Student Aid Index (SAI) has replaced the EFC. No longer will families receive an EFC calculation after submitting the FAFSA. Instead, they will get a Student Aid Index amount that will be calculated differently.

5. Multiple Students in College Not Considered in SAI Calculation

The new SAI calculation no longer considers the number of students, in a family, attending college when determining aid. This means families with multiple college students could receive less aid than in previous years. Colleges requesting the CSS Profile may continue to consider multiple students in colleges as part of their aid offer. 

6. Revised Parent of Record Determination

For divorced or separated parents, the parent of record will now be the one who provided the most financial support over the past 12 months, including child support payments. This replaces the previous criterion based on with whom the student lived the most.

7. Mandatory IRS Direct Data Exchange

All people who contribute to the FAFSA form must now consent to allow the Department of Education to receive their tax information directly from the IRS, significantly reducing manual data entry. These “contributors” could include the student, student’s spouse, biological or adoptive parents, or the parent’s spouse. Without this consent, the student’s FAFSA will be considered incomplete, they will not receive an SAI calculation, and the student won’t be eligible for federal student aid.

8. All Form Contributors Need FSA IDs

Everyone contributing to the student’s FAFSA needs to create or already have their own FSA ID. This enables them to access and complete their section of the FAFSA. This is a change. Previously, only the parent signing the FAFSA had to have an FSA ID.

9. Students Can Add More Colleges

Another big change is that students can add 20 colleges to FAFSA instead of 10 in previous years. 

10. Changes for Grandparents and 529 Plans

Money given by grandparents through a 529 plan will no longer be reported as the student’s untaxed income on the FAFSA, allowing grandparents to support their grandchildren’s education without impacting financial aid eligibility.

Implications and Advice for FAFSA Applicants

• Prepare for delays: The December release may lead to processing backlogs. Apply early to avoid delays.
• Adjust academic planning: The shortened application window means less time to gather documents. Start preparing early.
• Concerns for winter break planning: The release timing may clash with winter holidays, complicating assistance from school counselors or financial aid offices. Plan and seek help early.
• Stay updated on deadlines: Be vigilant about university-specific financial aid deadlines and any changes due to the new FAFSA launch date.
• Understand parental information requirements: Familiarize yourself with the new rules for divorced or separated parents and stepparents.
• Leverage grandparent contributions: Encourage grandparents to contribute through 529 plans, knowing it won’t affect your FAFSA.
• Consent for IRS data exchange: Be ready to provide consent for the IRS to share tax information.
• Seek guidance if needed: Contact financial aid offices or advisors for assistance.

Current FAFSA for 2023-24 Academic Year Remains in Effect

The current FAFSA cycle that opened Oct. 1, 2023 for this current academic year is still open. It closes June 30, 2024, although many state and college deadlines are much earlier. 

Families applying for the 2024-25 academic year need to wait until the new FAFSA applications open, which the government says will be by Dec. 31 of this year. 

Bottom Line

The “Better FAFSA” is set to make federal student aid more accessible and reflective of modern family finances. Students and families must understand these changes to navigate the new application process effectively.

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Use R2C Insights to help find merit aid and schools that fit the criteria most important to your student. You’ll not only save precious time, but your student will avoid the heartache of applying to schools they aren’t likely to get into or can’t afford to attend.  

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