FAFSA® Simplification: Are You Ready?

Melissa Maichle .

The Consolidated Appropriations Act of 2021 included a number of changes to federal financial aid processing and student eligibility lumped together under the umbrella FAFSA Simplification. While the most impactful changes won’t come until the 2024-2025 award year, there are a couple of things you should know for the upcoming academic year (2023-2024). Here is a summary:

  • Cost of Attendance (COA) – there are a number of required changes to how you build your COA related to labeling and categories in order to add clarity and more detail for students and their families. Certain expenses allowed for traditional, on-campus students will now be allowed for incarcerated students. Also, non-federal loan fees can no longer be included. Institutions must make COA information publicly available on their websites.
  • Professional Judgement (PJ) – there are now two categories of PJ, Special Circumstances and Unusual Circumstances. The first refers to financial situations, like job loss, for example, where the FAA would be justified in changing an element or elements of the COA or EFC to recalculate eligibility. The second is for cases where the FAA is making a change to the student’s dependency status. Adjustments under both categories may be made for a single student if the situation warrants. Institutions can no longer maintain a policy of denying all PJ requests and must have policies and procedures for processing them. Further, institutions must disclose publicly that students may pursue aid adjustments under one or both categories. Finally, an FAA may continue a dependency override approved by another institution in the current or a prior award year.
  • PJ During a Disaster, Emergency or Economic Downturn – The Act has codified changes made in response to the COVID-19 emergency, to use $0 earned income for the student or their parents with documentation that they received unemployment benefits and make any other adjustments necessary to reflect the totality of family’s financial situation.
  • Pell Grant – The Act restores Lifetime Eligibility Used for students impacted by loan discharges associated with closed schools, false certifications, identity theft and successful borrower defense claims. ED will update its systems automatically, so FAAs do not have to do anything for students to receive the benefit. Incarcerated students that meet the eligibility requirements will be able to receive Pell Grants.
  • FAFSA Changes – The form no longer contains Selective Service (so, students can no longer register via FAFSA filing) or drug conviction questions. For students previously deemed independent due to homelessness, their answers to the related questions will be eligible for renewal. Questions regarding sex/gender and race/ethnicity that will be added to the 2024 – 2025 FAFSA form, will be asked in a survey after the 2023-2024 FAFSA is submitted.

And this is just the tip of the iceberg! See the November 4, 2022 Electronic Announcement for the details and resources available to assist with implementation. And, if you want to get a jump on 2024 – 2025, check out the Case Studies on NASFAA’s FAFSA Simplification resource page.

As always, the Higher Education Assistance Group is available to help you navigate regulatory changes big and small, so email us at info@heag.us to speak with one of our regulatory experts.