All About the FAFSA Simplification Act

OSFA is abuzz with the FAFSA Simplification Act, which passed as part of the 2020 Consolidated Appropriations Act (i.e., the federal budget bill). FAFSA Simplification streamlines the financial aid application process while implementing sweeping financial aid changes, including new terminology and changes to the financial aid eligibility calculation. The 2024-25 application will be delayed from October 1 to sometime in December 2023. Application: The application will be “role-based” (roles refer to FAFSA contributors: students, parents, and/or spouses), tailored to each role, and ask fewer questions. Federal tax information will be exchanged directly from the IRS to the U.S. Department of Education. Terminology: The figure calculated by the FAFSA previously known as the Expected Family Contribution (EFC) will be renamed the Student Aid Index (SAI) to reduce confusion about the total amount students and families will pay at each college. Eligibility calculation: The formulas used to calculate students’ Student Aid Index (SAI) will change, increasing the income protection allowance, excluding the number of family members in college, and including the net value of family farms as well as the net value of businesses with fewer than 100 employees. Pell Grant calculations will also change. Overall, the number of Pell Grant recipients and the dollar amount of Pell Grants awarded will rise. While many families will have more aid eligibility under the new calculation, some may have less eligibility, including those with siblings in college, family farms, and small businesses. OSFA will evaluate families’ individual circumstances when aid is negatively impacted.