FAFSA changes will change how much families are expected to pay for college
HOUSTON - If you have a college-age student, there are big changes to the Free Application for Federal Student Aid, or FAFSA form this year.
Some families may end up having to pay more, while others will pay less.
The FAFSA Simplification Act means fewer questions, from 100 down to 50, as more data can be pulled from IRS forms.
The Expected Family Contribution is being replaced with the Student Aid Index, or SAI. It estimates how much families can pay for a student's education. The break on the SAI that families received for having multiple students in college is gone, which some analysts say may leave families paying as much as twice as much.
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"Before that would be evenly divided among all your children. So if you had three children you would divide $20,000 by three. And that’s what your number is. But now they took that discount away for having multiple students. Now it’s $20,000, $20,000, $20,000," explained Kevin Roark, Director of College Planning for Kapeco.
Students of divorced or separated parents must report the income of the parent who provides the most financial support, rather than simply the parent they live with most of the year.
"So for separated households, you only have to claim one parent on the FAFSA. But now it's who has more money. So that Student Aid Index is going to be greater," said Roark.
But some income won't be considered in the SAI.
"The student can earn up to $9,000 a year, without being penalized," he said.
And some untaxed income, such as living allowances for service members or gifts from grandparents, won't be counted as income in the SAI either.
"Grandma and grandpa can gift the family money, which is untaxed income, and it's no longer a penalty," said Roark.
Some students may automatically qualify for the maximum Pell Grant if their household income meets certain percentages of the federal poverty guideline based on family size. Pell Grants will also be available now to incarcerated students and those defrauded by a school that closed.
Due to these changes, the FAFSA filing period won't open until December this year, instead of its usual October start. But students should file as early as possible when it opens, as some need-based aid is first come, first served.