Ready, Set, FAFSA on Saturday, February 11th at 10:00 am at Wor-Wic Community College in Fulton-Owen Hall

If you still need help...

Changes coming for Graduating Class of 2024 & Beyond

Summary

The changes required by the FAFSA Simplification Act are by and large positive. They include a decrease in the complexity and number of questions asked, the increase in the income protection allowance, expansion of Pell Grant eligibility and outside contributions no longer being treated as the student’s untaxed income, to name a few. However, some of the changes will have an adverse effect on families and may reduce aid eligibility, such as the elimination of the discount for multiple students in college at the same time. 

Another change that will likely create a great deal of havoc and confusion for divorced and separated parents, in particular, is who will be considered the custodial parent.

1. The FAFSA Will Be Much Shorter and More User-Friendly.

The FAFSA currently asks over 100 questions, but that is slated to decrease to about three dozen. In addition, the wording of the questions will be amended to make them more comprehensible, particularly as they pertain to investment assets.

2. Name Change: So Long, EFC. Welcome, SAI.

The term Expected Family Contribution (EFC) will now be known as the Student Aid Index (SAI). The EFC is an index number that colleges use to determine a family’s financial need relative to other applicants. The term has often been misleading and confusing to families, as it implies that it is either the amount of money a family will have to pay for college or the amount of aid they will receive. The hope is that the new term will help clarify that this number is not the amount that families should or must pay, but rather a number used to assess their financial need.

3. Pell Grant Eligibility Based on AGI and SAI.

The biggest source of financial aid comes from the federal government, and the vast majority of it is awarded through the Pell Grant Program(opens in new tab). It is also the main federal grant that is geared toward students who have an exceptional financial need.

The FSA amendments will use the adjusted gross income (AGI) in addition to the SAI to determine eligibility for Pell Grant award amounts. Students will also be able to estimate their eligibility for the grant before they complete the FAFSA.

The maximum award is $7,395 for the 2023-24 award year, and award amounts can change yearly. Currently, the maximum EFC a student can have and still qualify for the full award is $6,656.

While the Pell Grant is a need-based grant, there is no income cutoff limit. Eligibility depends on the EFC (soon to be SAI), the college’s cost of attendance, enrollment status and whether the student plans to attend school for a full academic year or less.

Additional amendments include a reduction in the award amount for students who are not enrolled full time, meaning students enrolled less-than-half time will not be eligible to receive the grant, and the establishment of a minimum award amount for full-time enrollment, which is $750 for the 2023-24 award year.

4. Discount Eliminated for Multiple Children in College.

Currently, financial aid eligibility increases for families with more than one child enrolled in college at the same time. So, parents with twins/multiples or parents whose children are closer together in age have had the potential to benefit greatly. However, under the new legislation, the FAFSA will no longer provide this discount.  

This change will reduce financial eligibility for families with more than one student enrolled in college at the same time. For example, prior to the change, a family with a calculated EFC of $40,000 could see that drop by as much as 50% if they had two students in college — that would be an EFC of $20,000 per student. Without this discount, the calculated EFC (SAI) would be $40,000 per student. 

5. In Divorce or Separation, Which Parent Fills Out FAFSA Changes.

Currently, in a two-parent household, either parent can complete the FAFSA. However, if the parents are divorced or separated, the custodial parent is required to fill out the FAFSA. The custodial parent is defined as the parent with whom the child lives for the majority of the 12-month period ending on the day the FAFSA is filed.

For example, if the FAFSA was filed on October 1, 2022, for the 2023-24 school year, the custodial parent is the one with whom the student lived with from that date back to October 1, 2021. A big advantage of this is that if the custodial parent is the lower wage earner, then only that parent’s income and assets will be counted for financial aid purposes.  The new legislation will require the parent who provided the most financial support in the “prior-prior” tax year to complete the FAFSA, instead of the custodial parent. The term “prior-prior” means that the financial aid system requires parents to submit their two-year tax returns instead of their most recent ones. For example, the class of 2023 (seniors) were required to submit their 2021 income tax information. Current juniors or rising seniors will use their 2022 tax return.

Thus, the parent who provided the most support in 2022 will be required to complete the FAFSA for the 2024-25 award year. This will typically but not always be the parent who claims the student on his or her tax return. In cases in which the support provided is 50/50, it may default to the parent or household with the highest AGI.

6. No Financial Consequences for Contributions Made by Others.

Currently, families are supposed to report “money received or paid” from others on the student’s behalf on the FAFSA. This means that if grandparents, other relatives, friends or others outside the immediate family provided financial support to help pay for college costs, it should be reported. This type of assistance is considered the students’ untaxed income, which increases their total income and subsequently their EFC.

Let’s take a look at an example: A grandparent contributed $20,000 from a 529 plan they owned toward college tuition in 2022. That lovely gesture would have been treated as the student’s untaxed income and assessed at 50%, which would have resulted in an increased EFC by up to $10,000.

Under the FSA, if that same contribution is made in 2023, it will not face any financial consequences, meaning this form of untaxed income will no longer be considered in the EFC (SAI). In short, outside financial support to help pay college costs will no longer jeopardize a student’s chances for need-based financial aid.

However, it’s important to keep in mind that this is only the case if the amendments go into effect for the October 2023 FAFSA. If another delay in implementation occurs, any non-parent contributions toward college costs will continue to be assessed as the student’s untaxed income.

7. Income Protection Allowance Goes Up.

The FAFSA income protection allowance is an amount of income that is excluded from the financial aid eligibility formula. The parent allowance is for the basic living expenses of a family and currently varies according to household size and the number in college. Students also have an income allowance protection.

The new legislation raises both the parent’s and student’s income protection allowance. However, the number in college will no longer be factored into the formula for the parent allowance. Here’s an example: The parent allowance for a two-person family with one dependent will be $23,330 (currently $19,080) and $29,040 for a family of three (currently 23,760).

The income allowance for students for the 2023-24 school year is $7,040 for dependent students, and the FSA will increase it to $9,410. This means that a student can earn up to this amount and not jeopardize aid eligibility. Said another way, the amount that students will be expected to contribute toward their college expenses will be reduced, and their financial aid eligibility will increase.

Steps: 

1.  Create FSA ID – need email and cell phone you can verify right as you are completing. BOTH parent and student must make - KEEP THIS INFORMATION AS IT WILL BE YOUR FSA IC FOR YEARS TO COME - https://fsaid.ed.gov/npas/index.htm

 2.  Complete and submit FAFSA – You are completing the 2023-2024 (always a year ahead - parent and student sections - watch banner in top left) - https://studentaid.ed.gov/sa/fafsa

3.   Create MDCAPS account (student only - only needed if considering a MD school) - https://mdcaps.mhec.state.md.us/MDCAPS/StudentRegisterForLogin.aspx

Here is the link to access the Ways to Pay for College program: https://youtu.be/LB-BW3Zwk_c?t=8 

“Join Mario Armstrong as he guides you through the twists and turns of finding money for college, and meet Maryland students as they share their own financial aid success stories. This hour special contains interviews with college financial aid advisors and experts that can answer viewer questions.” – from Maryland Public TV youtube

Many will qualify for the MD Educational Grant – no additional documents have to be submitted for this one 😊       

If you win they get posted in MDCAPS– once these open I will send out more details.  Neither open until the new year.

Some of you many qualify for the MD Guaranteed Access grant – additional documentation is required.  Submit this form – giving me permission to send your mid-year transcript to MDCAPS / MHEC on your behalf for this grant: 

MD Guaranteed Access Grant - Transcript Send Form

HIGHLY SUGGEST EVERYONE put at least Wor-Wic on your FAFSA and complete the required documents for this with MDCAPS in case your plans change over the summer – you want to have access to the $ - if you miss the deadlines or change your mind after the deadlines you won’t have this $ to turn to.

Submit this form – giving me permission to send your mid-year transcript to MDCAPS / MHEC on your behalf for this scholarship: 

MD Promise Scholarship - Transcript Send Form