The Single Worst Thing about the New Simplified FAFSA

In a bipartisan vote, the FAFSA Simplification Act of 2020 became law on December 27. The rewritten federal financial aid guidelines will replace current guidelines on July 1, 2023, the first day of the 2023-2024 school year, and the redesigned Free Application for Federal Student Aid (FAFSA)—the interface sitting atop this new methodology—will go live on October 1, 2022.

There is much to celebrate about the new law:

  • It reduces the number of questions on the FAFSA from 106 to about 40, making it simpler to complete and submit.

  • Its questions will align more closely with IRS Form 1040 and other schedules, also making it simpler to complete and submit.

  • It scraps the misleading term “Expected Family Contribution” (EFC) and replaces it with the less predictive “Student Aid Index” (SAI).

  • It expands eligibility for Pell Grants, including incarcerated students.

  • It increases the Income Protection Allowance for parents, independent students, and dependent students.

  • It forgives the debt balance on all HBCU Capital Financing loans.

  • In the case of separated or divorced parents, it redefines the parent required to complete the form as the parent who has provided more financial support during the year to date, eliminating a commonly exploited loophole.

But horse trades took place to pay for these improvements, and one giveaway in particular is sure to enrage many need-eligible families. Under current guidelines, if a student has an EFC of, say, $15,000 and she is the only family member in college, the family can expect to pay about $15,000 out-of-pocket at schools that meet full need. If this same family has two children in college, each child splits the EFC 50/50, about $7,500 each. (At schools that use the CSS Profile, the split is 60/60.) Simply put, the total family EFC remains roughly the same, or modestly higher, regardless of the number of children in college simultaneously. This makes sense, since EFC (or SAI) is a measure of a family’s ability to pay, not a measure of the amount of financial aid they are entitled to.

But the new FAFSA has deleted this division of the parent assessment by the number of children in college. If this same family has two kids in college under the new law, they would be expected to pay a minimum of $30,000 towards their children’s college education each year, doubling the amount the FAFSA has determined they are able to pay. This change to the FAFSA will make college unaffordable for many need-eligible families with multiple children in college.

Giving away this one line item—the division of the parent assessment by the number of children in college—was not an oversight and was knowingly written out of the new law. But it must be restored, as difficult as that will be. If not, financial aid offices will be stormed by need-eligible families furious about a change they knew nothing about, suddenly unable to afford the colleges their children have been attending.

There is little time to spare. Restoring this line item will take work—our families, our legislators, our enrollment and financial aid officers, and the press who cover these higher education stories will need to take action. Let’s stop patting ourselves on the back for the improvements to the FAFSA while families have no idea of what’s about to hit them.

Jeff Levy, CEP