Good news: The FAFSA is now up and running but beware of some key changes
🎓The new FAFSA form is now up and running 24/7 for eligible filers
💲 A soft launch proved nightmarish for those trying to file for financial aid
🎓Key changes affect multiple students in college, small businesses, and more
It looks like the nightmare behind the FAFSA filing for parents of college students is over.
A new version of the federal student aid application known as the FAFSA is now available to all college applicants for 2024-2025 on a 24/7 basis, following a soft launch that proved to be very troublesome for filers.
The Soft Launch
The FAFSA is typically available in most years on Oct. 1 but this year, the Department of Education made the most changes to the financial aid system in the last 40 years, said John Tillman, president of Ecliptic Financial Advisors in Sea Girt.
One of the things they changed is that they tried to simplify the FAFSA and reduce the amount of information that went on it, Tillman said. As a result, they did a complete redesign of the form.
Originally, they had hoped to have it available at the normal time in October. But Tillman said over the summer, the Department of Education realized the FAFSA would not be done in time, so they projected to have it done and available in December.
By the law, the department can’t have the FAFSA form available later than Jan. 1, he added. But the department got behind and when it realized that by Jan. 1 the FAFSA form would not be ready, it decided to do a soft launch of the new FAFSA form on Dec. 31, 2023.
What happens is that FAFSA is available but it’s not available 24/7. It’s available at different times. The Department of Education is putting it up and taking it down to fine-tune it and get it to be where it needs to be, Tillman said.
As a result, some people were able to access the form during the soft launch and others were not. Even if some did access it during the time it was available, some information was getting inputted incorrectly and other information was getting lost in the system.
But Tillman is happy to report that the Department of Education has announced the FAFSA form is up and running 24/7.
However, he suggests holding off a few days before filing just to make sure everything is running smoothly and all the kinks are out.
“The only exception I would say on that is if you have a student who applied to a school “Early Action” or “Early Decision,” and the school is telling you that they want the FAFSA by a particular date, and that date is coming up, then I would say, yes, go ahead and give it a shot,” Tillman said.
Will the soft launch delay schools doling out financial aid packages to students? Tillman said he believes that even with the glitches related to the soft launch, the schools should get the aid award packages out to students in a similar time fashion.
“Typically, when financial aid awards come out in the spring, most schools want you to give them an answer on financial aid by May 1. During COVID, the schools did extend that from May 1 to June 1. My guess is that’s going to happen again,” Tillman said.
Key Changes to FAFSA
There were many changes to the FAFSA form for 2024-2025, but some changes are key, Tillman said.
Starting this year, everyone who needs to provide information for the FAFSA, must create an FSA ID, Tillman said. In previous years, only the student and one parent needed to have an FSA ID. For the 2024-2025 form, anyone who needs to provide information such as the student’s spouse, biological or adoptive parent, or the parent’s spouse, must have an individual FSA ID.
The reason for this is that it’s mandatory that you use the IRS Data Retrieval Tool. That means you must connect to your filed IRS tax return. So, when you sign it, the FSA ID gives authorization to that, and the FSA ID is the signature on the FAFSA, Tillman explained.
Student Aid Index
Another huge change to the FAFSA this year is the Student Aid Index or what you may know as the Expected Family Contribution. This is the amount of money that the Department of Education feels you can afford to pay each year for each of your children in college.
“The big change is that in years past you used to get a credit if you had more than one student in school. So, whatever your Student Aid Index was, it would have been divided in half if you had two students in school. The federal government is taking that away,” Tillman said.
That means you lose that benefit of being more eligible for aid if you have two or more kids in school.
“It’s going to be a big impact this year. It’s going to make families with multiple students in school much less eligible for need-based aid,” Tillman said.
It’s not clear how schools are going to treat this yet. Some schools said they are going to still recognize for their aid if there are multiple students in school, and others will not. It’s a wait-and-see game over the next few months and a big impact for families of multiple kids in school, Tillman said.
The IRS Retrieval Tool
The updated FAFSA will include fewer questions, which will make the application easier to fill out. But all contributors must give their consent for their IRS information to be directly imported into the FAFSA. In previous years, the IRS Retrieval Tool was optional. Now, if a contributor doesn’t consent to having their information imported, the student will not be eligible for aid.
Pell Grant Eligibility
The good news with the 2024-2025 award year is that more students will be eligible to receive a federal Pell Grant. According to the Department of Education, an estimated 610,000 new students will be eligible for a grant. It will also allow 1.5 million more students to receive the maximum Pell Grant award, which will bring the number of students who are eligible for the maximum award to over 5.2 million. The maximum federal Pell Grant award available last year was $7,395.
Another big change to the FAFSA involves having to include small businesses. Tillman said that in the past if you owned a small business with less than 100 employees and you owned 50 percent or more of that business, you did not have to include that as an asset on the FAFSA.
But this year, it changed. Now, if you own a small business, you’re going to have to value your ownership in that business and list it as an asset on the form.
More Schools Added
The FAFSA will send your financial information to the schools you say you’re interested in attending. It previously only allowed you to send your information to 10 schools, but the new application will allow you to send your application to up to 20.
The way it used to work is that you would put your first 10 schools on the form, submit the FAFSA, and then once you received confirmation that the FAFSA was processed, you could go back in, delete schools, and add in more schools.
What they’ve done this year is that you can add 20 schools from the start, which Tillman said is fantastic because that means you don’t have to go back in, delete schools, then add more.
The FAFSA will be available in 11 most common languages. Previously, it was only available in English and Spanish.
As of Jan. 9., over a million students had successfully submitted applications, according to the Department of Education. Every year, more than 17 million students fill out the FAFSA.
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