Applying for Financial Aid for the 2024-2025 School Year? FAFSA Changes You Need to Know
Applying for Financial Aid for the 2024-2025 School Year?
It will be a bit different this time—and hopefully easier. In an effort to make the Free Application for Federal Student Aid (FAFSA) less daunting and more accessible for applicants, the new form for the upcoming 2024–25 school year will utilize a different (and more streamlined) methodology when determining how much aid students receive. The amount of aid received may change for some students.
What’s Going On?
In 2020 the United States Congress passed the FAFSA Simplification Act1, which aimed to open up access to college for more students. It did so by making the FAFSA shorter, due to “several long-standing concerns that the length and complexity of the FAFSA, and the lack of transparency and predictability its use provides for students and their families, may discourage postsecondary educational access and attainment,” according to the Congressional Research Service.
While shortening and simplifying the application, the legislation also makes changes to the underlying processes and methodologies for determining federal student aid eligibility, which go into full effect in the 2024–25 award year. While some students may receive less aid, overall the changes equate to more aid going out to more students.
What Are the Primary Changes?
First of all, the application is shorter. There will now be a maximum of 46 questions (some students won’t be asked all of them), compared to 101 questions under the old FAFSA. This is primarily due to the fact that there are a number of categories of support that no longer need to be reported. Additionally, it will be available in 11 languages, instead of just two.
But let’s dig into the fine print. In short, the outgoing FAFSA system relies on a metric called the Expected Family Contribution when determining how much federal aid a student would receive, a system that relied more heavily on a family's financial status as a whole. The new FAFSA system relies on a metric called the Student Aid Index, or SAI. Here are a few ways in which the new methodology is different:
- Students who report no income could get more aid: The SAI formula allows a dependent student’s income contribution to be negative (as low as -1,500), such as from a tax write off, which means that students with $0 income can see an SAI that’s $1,500 lower compared to the old EFC system. This potentially makes these students eligible for more aid.
- More, and bigger, Pell Grants: The federal Pell Grant program is the single largest source of federal grant aid supporting postsecondary education students. The new legislation authorized an increase of $3 billion in funding, equating to a 4 percent to 7 percent increase in the number of students who will be eligible for federal Pell Grants. Students who are incarcerated or have felony convictions will also be eligible. The grants can also be 10 percent larger, with a maximum award of $7,395.
- New rules for separated or divorced parents: Previously, the FAFSA considered the financial information of the parent that the student lived with the most during the previous 12 months. Under the new methodology, a student with divorced or separated parents will report information on “the parent who provides the greater portion of the student’s financial support,” called the “parent of record.”
- Students no longer get a benefit for having other siblings in college: Whereas the old system offered more assistance to families who had more than one child in college concurrently, the new SAI formula takes every student into consideration individually, which may affect aid.
- New rules for support from friends, grandparents, and other extended family: Students no longer need to report such support on their FAFSA using the SAI methodology, allowing them to receive financial help from extended family without having to worry about it affecting their federal support.
- Many retirement plans are no longer counted as income: Currently tax-deferred retirement plans are treated as untaxed income, but under the SAI system these won’t get counted because they don’t come from IRS data (which is what the FAFSA will use moving forward). Reporting less income can mean that families are expected to contribute less and are sometimes eligible for more aid.
- New rules for farm/small business-owning families: In short, a part of the current FAFSA called the “small business exclusion” is going away. Under the current metric, parents/families who own privately held businesses with less than 100 employees do not need to report their business’s net worth or assets on the FAFSA. Under the new SAI formula, that exclusion is going away, which means such families may be expected to contribute more.
A Delay in Application
In addition to the changes in methodology, the new FAFSA for the 2024–25 school year won’t be available until December 2023, as opposed to the FAFSA’s usual release in October. Applicants and their families are still urged to get all of their financial information ready beforehand.
Information on the FAFSA application, including forms, can be found at studentaid.gov.
We’re Here to Help!
Does all this seem like a lot? Don’t worry—Illinois Institute of Technology’s Office of Financial Aid is well-equipped to help incoming and current students navigate the changes, which were designed to make things simpler and easier. We have familiarized ourselves with the new FAFSA and can help walk students through the application process.
Incoming students can also utilize Illinois Tech’s federal Net Price Calculator to get a tailored estimate of aid based on the new Student Aid Index within minutes. Additional cost and aid eligibility tools will be available for students this spring.
For general questions about the new Student Aid Index, please refer to the Office of Financial Aid’s relevant FAQ page.
If you have any questions or need additional information about the FAFSA application process, please contact the Office of Financial Aid at 312.567.7219 or finaid@iit.edu.