The Foundation of the Financial Aid Process
If you’re looking for financial aid for college, the Free Application for Federal Student Aid, better known as the FAFSA, is most likely the place to start. This form, administered by the U.S. Department of Education, is used to gather information about prospective student and their family and their finances to determine their eligibility for federal student aid.
The FAFSA is usually available on October 1 of the year prior to the year in which any financial aid award would be used. However, due to the extensive changes resulting from the FAFSA Simplification Act, the opening date for the FAFSA in 2023 will be December 1.
Whether this change in date affects you and how it affects you depends on your situation.
If you are applying to schools as a freshman, and you were considering Early Decision or Early Action, AND you will need financial aid to attend your school of choice, you may have to wait longer for a financial aid package compared to earlier years. In past years, the deadline for financial aid applications for Early Decision applicants was as early as November 1 or November 15. And, many Early Decision and Early Action notification dates are in December. This year you may find that notification dates have been pushed later, or you may find that financial aid information is not available at the same time as admissions offers.
What Should You Take into Account?
If you are applying for financial aid as a returning student, and you are dependent on federal financial aid, you have a couple of things to consider. The methodology behind the FAFSA calculations is changing. These changes may result in changes to your ability to qualify for Pell Grants or subsidized student loans. So, it is a good idea to complete your FAFSA as soon as possible after it opens. While you can’t change the outcome of these calculations, the sooner you know where you stand with the new FAFSA methodology, the sooner you can work on your strategy to pay for college.
If you are applying for financial aid as a returning student, and you are dependent on financial aid from your school, and your school requires the FAFSA, you will still want to complete the FAFSA as early as possible once it opens. Schools do run out of financial aid funds, and the sooner you complete the application for financial aid, the better chance you may have of being awarded need-based financial aid if you qualify.
The Changes in the FAFSA
The intention of Congress when passing the FAFSA Simplification Act was to – simplify the FAFSA! Many students who would have qualified for financial aid never completed the FAFSA due to its complexity. The new FAFSA will have fewer questions and will be able to rely more directly on your tax returns which reduces the amount of information that you need to enter.
However, there are other changes as well. For example, rather than receiving an Expected Family Contribution when completing the FAFSA, you will receive a Student Aid Index. Assets that need to be reported have changed for some people, such as business owners. And there will be some changes in what needs to be reported as income for some people.
Preparing for These Changes
This FAFSA season will be different. It will be critical to pay very close attention to the questions and to provide the information requested. You won’t be able to assume that they’re asking for the same information that you have provided in past years.
This FAFSA will be new for everyone. You may need to exercise patience as you work with schools, scholarship programs, and others who rely on the FAFSA to award financial aid.
Be sure to research any timelines that apply to you. Schools are adjusting their deadlines for financial aid applications. In some cases, these new deadlines will give you a smaller window to apply between the date the FAFSA opens and the deadline.
Be aware that you may have to make some decisions in a relatively short timeframe. While most financial aid packages from schools are subject to change each year based on your family’s evolving circumstances, these FAFSA changes may result in unexpected changes.
This article is intended to be educational and thought-provoking rather than financial advice. When we work together in a financial planning engagement, we discuss your unique personal situation and your unique goals. During our financial planning process, we examine these factors and many others to determine appropriate financial strategies for YOU.