Changes for 2023 from the FAFSA Simplification Act

With college application season right around the corner, we wanted to provide important updates and changes to the Free Application for Federal Student Aid (FAFSA), that have occurred as a result of the FAFSA Simplification Act.

As you may know, FAFSA is the form that college students must complete to apply for federal financial aid and, in the past, has been known for being extremely convoluted. The FAFSA Simplification Act was passed in 2020, but several of the changes are being rolled out with aid applications for the 2024-25 school year. They include:

  • Simplification of FAFSA process – The number of questions on the FAFSA form is being reduced from 108 to around 40 questions, aiming to streamline the application and make it less time-consuming for applicants. Additionally, the new system will facilitate the submission of tax information through IRS Direct Data Exchange, making it easier for applicants to provide the required financial details without having to dig up tax returns.
  • Changes to Pell Grant eligibility – The Pell Grant Program is geared toward students who have exceptional financial needs and the FSA amendments have changed how eligibility and award amounts are calculated. Additional amendments reduce award amounts for students who are not enrolled full-time. Amounts change yearly but for reference the maximum Pell Grant for the 2023-2024 award year is $7,395.
  • Elimination of discounts for multiple children in college – In the past, families with multiple children enrolled in college at the same time were eligible for additional financial aid. This change eliminates this discount and reduces financial eligibility for these families moving forward.
  • Discontinued Selective Service requirement for males – While men between the ages of 18 and 25 in the U.S. are still required to register for Selective Service, regardless of their college plans, it is no longer a requirement to receive financial aid.
  • Drug conviction changes – Previously, students with drug convictions could face disqualification from financial aid. The question about drug convictions will no longer be included in the FAFSA, allowing convicted but not currently incarcerated students to be eligible for all financial aid.
  • Changes for divorced or separated families – Previously, when parents were divorced or separated, either parent could complete the FAFSA. For parents who are still living together, divorced or not, this remains true. For parents who are divorced or separated and not living together, a recent change now requires the “custodial parent” to be the one filling out the FAFSA. The custodial parent is determined as the parent that the child lived with most often over the last 12 months or the one who provided the most financial support over the last 12 months.
  • Changes to reporting grandparent contributions – Grandparent-owned 529 plans used to count against financial aid eligibility, but new rules mean they no longer do.

Due to the number of changes made to the process, the FAFSA availability date has been postponed to December 2023. Students and caregivers can access the FAFSA, look up the deadline, and check the status of their application for free on the Federal Student Aid website.

If you would like to review your current planning strategy or are getting ready to start saving for future college students in your life, we are here to help.

The information and analysis expressed herein is for general and educational purposes only. You should make your investment decisions based on your personal financial goals and the reward/risk level with which you feel comfortable.  Investing involves risk, including the potential for loss of principal.  Past performance does not guarantee future results. Please consult Centerpoint Advisors, LLC about your investment needs, investment objectives, risk tolerance and any changes in your life that may impact your financial objectives.