What enrollment leaders need to know about the upcoming FAFSA changes
September 22, 2022, By Brett Schraeder, Managing Director, Financial Aid
Updated April 2023
As most of us in enrollment know, the FAFSA is set to substantially change for the 2024-2025 academic year. And as any good strategist would tell you, it’s not too early to think about how these changes will impact your prospective students and subsequently, your communication and financial aid strategy. Analysis and pre-planning are beneficial to ensure a smooth transition.
Explore this post to understand these changes, locate guidance from NASFAA, and leverage EAB resources for solutions. We will continue to update this post as new information and resources are available.
Current EAB Resources:
- Insight Brief: What You Need to Know: Preparing for the New FAFSA
This resource will help enrollment leaders understand upcoming changes, address key special circumstances, and effectively communicate changes with internal and external stakeholders. The brief also includes a discussion guide to help teams consider the full scope of effects and choreograph changes across campus. - Webinar series: Preparing for the New FAFSA
This two-part webinar series uses early guidance to help enrollment leaders know what to expect from upcoming changes in the 2024-2025 FAFSA.
Upcoming Timeline:
- Spring-Summer 2023 – Schools can expect more details to be released by the Department of Education
- Spring 2023 – Schools should begin to model the impact of FAFSA changes (e.g., Pell eligibility) on their financial aid strategy
- Summer 2023 – The Department of Education will release the Better FAFSA preview in July, so schools can begin to communicate with prospective families and local counselors about the new FAFSA and upcoming changes to their financial aid policy. Plan training for admission and aid staff around specific questions that may come up during the recruitment cycle.
- Fall 2023 – The FAFSA Estimator will be released, allowing students to determine eligibility for federal student aid.
- Winter 2023 – The new FAFSA will be available to families in December 2023 (pushed back from October 2023)
Core FAFSA changes
At the heart of this policy change is a desire for more students to complete and submit the FAFSA. Families have historically been overwhelmed by the process, and many abandon the FAFSA all together.
The FAFSA will be considerably shorter and rely almost exclusively on information from a family’s recent tax return, if applicable. Ideally, this will also result in more students submitting their FAFSA, and to multiple institutions.
In EAB’s most recent survey of new college freshmen, 21% of students told us that they only sent their FAFSA to a single school. This is problematic because students are making their college decision without full visibility into their potential aid awards.
In addition to the changes around length and complexity, the new FAFSA will also provide a different method of estimating student aid eligibility. What is currently known as Expected Family Contribution (EFC) will become the Student Aid Index (SAI). In many ways, this will not be a substantial change for families, but it may prevent them from pre-judging their aid award based solely on their FAFSA results because it doesn’t suggest an “amount” they have to pay the way the EFC does.
One other thing to note about SAI is that it will allow for a negative amount of 1,500, whereas the current EFC model only allows a minimum of zero. While this change won’t necessarily provide additional Federal grant dollars to students, it may allow schools to better identify their highest need students. This change may also allow institutions additional leeway in awarding students grant, work and loan amounts to cover more of their college-related costs.
Anticipate Pell expansion
Qualification for Pell Grants will change and should provide broader access and support for low-income students. Eligibility will now be largely based on family income and household size, allowing for the creation of a lookup table which will give families clarity on their eligibility even before filing the FAFSA. It will also allow for a higher income threshold to consider assets for those receiving means-tested benefits like SNAP.
These changes will most certainly expand the number of students who qualify for Pell. As of Spring 2023, our analysis indicates a 10–25 percent increase in Pell recipients, resulting in hundreds of thousands of additional grant dollars for college-bound students. Notably, this change will impact all enrolled students, not just first-time freshmen, which should have an impact on both recruitment and retention.
So, what does this mean for your institution? Most importantly, you will want to model these Pell changes early to appropriately adjust your new and continuing student aid awards to meet the expanded Pell population. This is particularly true for schools who have automatic awarding criteria (e.g., Promise programs) for students who are Pell eligible.
Plan to address these special circumstances
There are a few other important changes that will be apparent to families and may cause some early questions or anxiety. Read below for suggestions and get access to discussion questions and more potential action steps here.
Families with Multiple Students in College
The first change is around the SAI when a family has more than one student in college at the same time. (This topic is getting a lot of buzz in pre-college parent social media circles!) In short, the new SAI methodology will no longer take this circumstance into account. In most cases, the parent contribution to SAI will be the same for each student, regardless of how many family members are in college. In some situations, however, the final SAI may vary based on income or asset disparities between siblings (for example, if one works, but the other doesn’t).
This does not preclude schools from taking this information into account when awarding institutional aid. For low-income families, this may be less problematic, as other formula changes should mitigate the effects of this shift. But maintaining this consideration for middle- and high-income families may be important as they are likely to see a significantly higher SAI with this new methodology.
EAB analysis suggests that if schools choose to divide the new SAI by the number of students a family has in college, it will not dramatically increase the discount rate because you are already packaging students using this approach. If your school decides to go in this direction, it may be wise to let parents know early on that your aid policy will not change in this regard.
Families with Farms or Small Businesses
The other change that may cause some concern for families is around small business and farm ownership. For the first time in over a decade, families who own a small business under 100 employees or a farm that also serves as their primary residence will have the assets of that business or farm considered in their SAI calculation. The impact of this change will vary widely by location and student population, but in places where farms or small businesses are common, it may be wise to survey students and parents or use other methods to determine the potential impact on your community.
While there are still several unknowns regarding the new FAFSA, it is important for schools to be prepared to coach students and families through these changes. The team here at EAB is already hard at work modeling these changes for our partners and we will continue to share insights as we learn more.
Communicate critical messages at the right time
Several of these changes should make the FAFSA easier to complete, and hopefully, increase the number of filings. But for this to happen, families need to be made aware of these upcoming changes. Collectively, we need to change the perception of FAFSA among students and families by showing them that it will be a more straightforward and less burdensome process to file for aid.
Once you have considered how to address some of the complexities of the upcoming FAFSA changes, you need to share specifics with your stakeholders. As guidance continues to be released throughout 2023, be nimble in your messaging.
The following are several key messages that both internal and external stakeholders are looking for:
- Details of the new FAFSA application process
- Pell Grant eligibility, including poverty level/family size/income charts
- An outline of your policy responses, if any are available
- Your institution’s continued commitment to customer service, value, and affordability
Learn when, where, and how to communicate these messages in our latest resource,
What You Need to Know: Preparing for the New FAFSA
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