The FAFSA Simplification Act

The FAFSA Simplification Act of 2021 brings a slew of changes to the FAFSA that will begin with the 2022-23 application cycle. Perhaps the biggest change is to the EFC—Expected Family Contribution.

The EFC is the number that was calculated by the FAFSA and provided to colleges as a way for them to determine demonstrated need. (Total cost of attendance minus EFC = demonstrated need.) Because most colleges do not meet 100% of demonstrated need, the EFC misled families into thinking that this number was what they would actually pay for a year at a particular college. In practice, most families paid more than the EFC, and were often expected to provide more funds from assets or through student/ parent loans. Thus the new law is changing the name from Expected Family Contribution to Student Aid Index to better reflect this fact.

The new legislation also simplifies the FAFSA process by greatly shortening the number of questions asked. Accordingly, the form will be shortened from over 100 questions to about 35.The hope is that a shorter, less complicated form will encourage more families to complete the FAFSA.

Another big change is for families who have multiple students enrolled in college. Currently, a family’s expected contribution is divided by the number of children in college. As of 2022, this benefit for families with multiple children will change, and families will no longer see a benefit from this provision. This loss will reduce the amount of need-based aid that middle and high income families with multiple family members enrolled in college can expect.

Still another change is in regards to whose income is considered for the FAFSA. Currently, students whose parents live separately submit information for the parent with whom they live during the majority of the time. Once the new law goes into effect, the parent who contributes more financially to the student’s upkeep will be the one whose income will be considered.

Pell Grant eligible students will see another change. Some lower-income students may find it easier to determine how much Pell money they can expect using the new FAFSA.

While changes will not take effect for another year, families should factor in these changes while considering the 4-year cost of college.

Financial aid can be a moving target, but Marie is here to help. Schedule a 20 minute discovery call with Marie today.

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