The Consolidated Appropriations Act of 2021: FAFSA Simplification – Part 1

Melissa Maichle .

When President Trump signed the Consolidated Appropriations Act (CAA) of 2021 into law on December 27, the spotlight was on the $90B stimulus package it contained. However, a number of changes to the financial aid programs are included in the FAFSA Simplification Act, which was part of the package.  These changes will go into effect on July 1, 2023 for the 2023-2024 academic year.

Here is a summary of changes related to the FAFSA (there are other eligibility changes that we’ll address in our next blog):

  • The number of questions will be reduced from 108 to about 36.
  • For dependent students with divorced or separated parents, only the custodial parent is required to supply financial information, like today. However, the definition of the custodial parent will change from the parent the student lived with most often during the base year to the parent who provided the most financial support to the student during that time period.
  • Untaxed income and benefits have been streamlined to include only deductions and payments to retirement plans listed on the federal tax return: the untaxed portion of IRA or pension distributions; tax exempt interest income and foreign income that is exempt from federal taxation or for which a tax credit is received. Annual child support received is no longer categorized as untaxed income, but rather as an asset.
  • The definition of an independent student has changed slightly. The criteria for independent student status currently ‘Married’ will change to ‘Married and not separated.’
  • There are several changes to the Income Protection Allowance (IPA). The number of children in college will not reduce the allowance. Plus, the IPAs in 2023-24 are set to increase over 2021-2022 amounts by 20% for parents; 35% for dependent students, independent students without dependents, and married students with dependents; and 60% for single independent students with dependents.
  • The FAFSA will still collect information about other household members in college at least half-time, but the need analysis results for the parents of dependent students and for independent students will no longer be divided by that number.
  • Students will no longer lose eligibility for a prior drug-related conviction or for not registering with the Selective Service. As such, those questions will be removed.
  • Finally, if you are tired of explaining to families that the Expected Family Contribution (EFC) is not really the expected family contribution, you will be happy to learn that it has a new name, the Student Aid Index (SAI). Eligibility for all federal aid with the exception of Pell Grants will be determined by the SAI.

Stay tuned for our next blog where we’ll get into the nitty gritty of the changes to need analysis, professional judgment and more.  The Higher Education Assistance Group is always here to service schools and their immediate needs, from interim staffing to your compliance concerns.  Please contact us at for more info.