A Long-Awaited Change to the FAFSA Form

A Simpler Process with Winners and Losers

A long-awaited, supposedly user-friendly version of the college financial aid form known as the FAFSA will be unveiled for the 2024-25 school year. The new form aims to simplify the process of applying for college aid because it’s been found that those who complete a FAFSA, short for Free Application for Federal Student Aid, are more likely to attend college. Along with updating the form, the federal government is expanding eligibility for federal aid in the biggest overhaul in decades.

But some families with more than one child in college at the same time may qualify for less assistance. That’s because the overhaul also tweaked the form’s underlying aid formula, effectively eliminating a “sibling discount.”

“There’s winners and losers,” said Phillip Levine, a professor of economics at Wellesley College and a nonresident fellow at the Brookings Institution who co-wrote a report on the coming changes.

The Importance of FAFSA for College Aid

College students must file the form each year to get financial aid from the federal government. Many states and colleges also base their own aid on the federal form. The FAFSA collects detailed financial information about income and assets from students and their parents and serves as a gateway to grants, scholarships, and loans for higher education. Congress approved changes to both the form and its formula in 2020, but the Education Department has taken several years to finish the update.

Some changes, like shielding more of a family’s income from the aid calculation, tend to increase eligibility for financial help. More students will be eligible for federal need-based Pell grants, and those who previously got partial grants will be eligible for larger amounts, said MorraLee Keller, senior director of strategic programming with the National College Attainment Network. But the update also eliminated what was effectively a discount for families with multiple children in college. About a third of college students have a sibling who is also enrolled, Dr. Levine said. The change in aid eligibility for some families with multiple college students may be substantial, he said, and unexpected — particularly for currently enrolled students who will see a change from their aid package for the upcoming school year.

“Their price is about to go up a lot, and they don’t know it,” Dr. Levine said. His report includes an online tool that families can use to estimate how their aid may be affected.

The Rationale Behind the Changes

One rationale for the change is that financing a college education now involves long-term saving and borrowing, and isn’t something that most people can pay for with their current income. So it’s unfair to give a break to families because they have twins or children close in age attending college simultaneously but not to people with children spaced further apart. It’s troubling that the new formula is going into effect with little warning to students and their parents, Dr. Levine said. “The problem is, you’re flipping a switch,” he said, giving some current students little time to prepare for a potentially larger out-of-pocket bill. Some colleges may be able to adjust financial aid packages to compensate, but that depends on the institution’s finances.

Preparing for the New FAFSA Form

When will I be able to file the new FAFSA?

In recent years, the form became available online on Oct. 1. But this year, it won’t be available until a yet-to-be-specified date in December, the Federal Student Aid office says. That shortens the time that many students will have to complete the form to meet state priority filing deadlines, which begin early in the new year.

Can I do anything now to prepare for the new form?

You will need a Federal Student Aid ID, made up of a user name and password, to complete the form. If you don’t already have an ID, creating one now can save time when the new form comes out. Apply for the ID online. You will need your Social Security number, full name, and date of birth.

Students should apply to a mix of colleges, including in-state public colleges, to make sure they get into one they can afford, Mr. Kantrowitz said.

Do these changes affect aid for the upcoming academic year?

No. Financial aid packages for the school year starting this month or in September are based on the form for the academic year 2023-24, which became available in October 2022.