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Affordability FAFSA

FAFSA Updates: All The Big Changes You Need to Know (2021)

2020 wrapped up with the passage of a $900 billion fiscal stimulus package and a $1.4 trillion government funding deal, which also included some long-awaited reforms to the Free Application for Federal Student Aid (FAFSA). There has been a lot of discussion about the rebranding of the EFC (Expected Family Contribution), but there are some very important practical changes that families should be aware of.

When will changes apply?

The changes will apply to families applying for the 2023-2024 academic year. Parents completing the FAFSA as early as October 1, 2022 will be impacted.

Student financial aid expert, Mark Kantrowitz, highlights the most important FAFSA changes in this information-packed interview.

Lynn O’Shaughnessy gets to the bottom of the changes coming to the FAFSA. Check out the post on New FAFSA Changes–Winner and Losers.

What are the most significant changes to the FAFSA?

Here is what you need to know.

  • ‘Expected Family Contribution’ will be replaced with the ‘Student Aid Index.’ Outside of semantics, it’s unclear if this change will have any real impact on families.
  • The length of the FAFSA will decrease significantly — down from 108 questions to about 3 dozen.
  • The IRS Data Retrieval Tool will be able to pull more data. Hopefully, this tool will also be made more reliable, given how buggy it seemed in the fall.
  • Custodial parent rules will change so that the parent providing the most financial support will be considered the ‘custodian’ and not the parent who is housing the student.
  • Contributions to college expenses made by grandparents (or other family members or friends) will not penalize students. This is a significant change as these contributions are currently treated as the student’s untaxed income and are assessed up to 50% by the FAFSA formula.
  • Households with multiple children in college at the same time will no longer be eligible for a break in financial aid eligibility. This is particularly significant for parents of multiples. We’re hoping lawmakers might find reconsider this rule as this change will have a significant negative impact on many families.


Also, check out Mark Kantrowitz’s great article on eligibility and family filing rules.


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