In our last blog, we summarized how the FAFSA Simplification Act will change the FAFSA itself along with some terminology and definitions for the 2023 – 2024 award year effective July 1, 2023. This time, we’ll focus on some additional changes to needs analysis, Pell Grant eligibility, professional judgment and cost of attendance.
The Simplified Needs Test will have a much more descriptive name – Applicants Exempt from Asset Reporting. There is no acronym at this writing, but we’re sure there will be one eventually. The criteria will also change and includes having an automatic zero or negative Student Aid Index (See Part 1 if you don’t know what “SAI” is) and the following:
- parent or student/spouse adjusted gross income (AGI) under $60,000 in the base year (only required to file Schedule C, and only when Schedule C gain/loss is no more than $10,000), or
- student or parent/spouse received a means-tested benefit within the two years prior to FAFSA filing.
As mentioned above, the SAI may be negative down to -$1500. It may be calculated or in the case where the applicant and the applicant’s parents or spouse, as applicable, were not required to file a tax return for the base year, it will automatically be set to -$1500. For dependent students eligible for the maximum Pell Grant, the SAI will automatically be set to zero (Automatic Zero SAI).
Speaking of Pell Grants, eligibility will not be based on the SAI, but rather it will be based on a combination of AGI and percentage of the poverty line. Undergraduate students will automatically be eligible for the maximum Pell Grant if the parents (dependent students) or student/spouse (independent students) were not required to file a federal tax return for the base year. Also, students under the age of 33 who lost a parent in the line of duty (military or public safety) since September 11, 2001 will qualify for the maximum grant. Finally, incarcerated students will be eligible to receive Pell Grants provided all the other eligibility criteria are met.
A number of changes will be made to the way financial aid administrators handle professional judgment (PJ) reviews. First, there can no longer be an institutional policy to deny all student appeals. [KWM1] Also, dependency overrides, once determined, may remain in effect for the students’ entire enrollment at the determining institution. Special circumstances include a number of new scenarios largely related to changes since the COVID-19 emergency, and appeals for additional Pell Grant funds will have a separate set of qualifying special circumstances. The law will have specific guidance for documenting the new categories of special circumstances.
Finally, here are some of the more impactful changes regarding Cost of Attendance (COA):
- The allowance for a computer can be used for students enrolled less than half time
- The transportation allowance may include travel between home, school and work
- The allowance for room and board will need to be split into two components: housing and meals
- Dependent students living at home with parents must have a housing allowance more than zero
- Inclusion of student and parent loan fees in the COA will become mandatory
Additionally, language has been added that makes it explicit that direct loans in combination with other aid cannot exceed the COA. However, students with a negative SAI may receive other types of aid in excess of the COA. It also allows the Department of Education to regulate indirect costs (those outside tuition and fees). Colleges will be required to list all elements of the COA wherever tuition and fees are posted on their websites.
If you have any questions related to potential compliance concerns raised by these changes please contact us at email@example.com to discuss how HEAG can help!