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The Future of FAFSA: Changes Ahead for Student Financial Aid
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Editor’s note: The Free Application for Federal Student Aid (FAFSA) is undergoing significant simplifications as part of the omnibus spending bill that was enacted in December. This application is essential for students seeking Pell Grants, student loans, and a variety of financial assistance from state entities and educational institutions. Robert Kelchen, an authority on higher education policy, provides insight into the implications of these changes for students and their families.
What Changes Are Coming to the FAFSA Process?
The FAFSA will experience a reduction in complexity, decreasing from 108 questions to just 36. Most applicants will be required to answer only a limited number of questions related to their family’s income and household size. However, it’s important to note that this simplified version will not be accessible to students until October 2022, impacting the determination of aid for the 2023-24 academic year.
Additionally, students from families with incomes that fall below either 175% or 225% of the federal poverty line—depending on their specific circumstances—will be automatically deemed eligible for the maximum Pell Grant. As of 2023, the Pell Grant serves as the primary federal aid option for students from low- to middle-income households. For instance, a high school senior from a household of three, led by a single parent with an income below approximately $50,000, would qualify for the maximum Pell Grant. Currently, only a small percentage of students at this income level receive the maximum amount, highlighting a pivotal shift toward ensuring more predictable financial assistance for families.
New Standards for Eligibility
One key change involves lifting the 1994 prohibition on Pell Grants for incarcerated individuals. This repeal allows those currently imprisoned to pursue higher education funding, enabling them to work towards their degrees prior to release. Research indicates that obtaining education while incarcerated can significantly decrease recidivism rates, benefiting both individuals and society at large.
Furthermore, new provisions will allow students previously enrolled at colleges that closed while they were attending to reset their Pell Grant eligibility. This adjustment ensures that such students can continue their education elsewhere without the hesitation of exhausting their financial aid resources.
The End of ‘Expected Family Contribution’
The concept of “expected family contribution” (EFC) will also be retired. Traditionally used since 1992, the EFC is a calculation that determines how much families are expected to contribute to educational expenses. However, many families find it challenging to meet these expectations due to financial constraints. The formula has been adjusted over time, resulting in fewer students qualifying for the maximum Pell Grant.
Starting in October 2022, the term “expected family contribution” will be replaced with a “student aid index,” a designation that reflects the use of FAFSA data more accurately. This index aims to avoid implying that families must provide a specific sum, though it still serves a similar purpose in identifying family resources for financial aid distribution.
Additionally, the student aid index will now have a lower limit of -$1,500, which allows students with significant financial need to access more financial aid options. This change could enable institutions to better identify students facing the greatest challenges in affording college.
Adjustments to Financial Aid Amounts
In a bid to address rising education costs, the government is raising the maximum Pell Grant to $6,495 for the 2021-22 academic year, an increase of $150 intended to align with inflation. While more students are anticipated to qualify for this maximum grant due to adjusted income thresholds, those with the highest financial need will see limited increases beyond inflation adjustments.
Source
www.higheredjobs.com