FAFSA Simplification Act: What You Need to Know About Changes to Financial Aid

In today’s post, we’ll be discussing the recent changes to the Free Application for Federal Student Aid (FAFSA) under the FAFSA Simplification Act. These changes aim to make the financial aid application process more user-friendly and accessible. Let’s jump right into the key updates and how they could affect you! 

1. Shorter and More User-Friendly FAFSA:
The FAFSA will ask fewer questions, dropping from over 100 to approximately 40 and the wording of the questions will be simplified- especially regarding investment assets. Because of all the changes, the FAFSA for seniors graduating in 2024 will open on December 1, 2023, rather than the traditional October 1 launch. 

2. Goodbye to EFC, Hello SAI:
The calculation of a families’ need and what they can afford to contribute to a college education will now longer be called the Expected Family Contribution (EFC); it is now called the Student Aid Index (SAI). This change aims to eliminate confusion surrounding the term “Expected Family Contribution,” which often led families to believe it was the exact amount they had to pay for college or the aid they would receive. The SAI is an index number that helps colleges assess a family’s financial need relative to other applicants.

3. Pell Grant Eligibility and Calculation:
The Pell Grant Program will now consider both the adjusted gross income (AGI) and the SAI to determine eligibility. Students can also estimate their Pell Grant eligibility before completing the FAFSA. The maximum award for the 2023-24 academic year is $7,395, but the actual amounts can vary annually. While there is no income cutoff, eligibility depends on the SAI, the college’s cost of attendance, and students’ enrollment status.

4. Increase in Income Protection Allowance:
The FAFSA’s income protection allowance, which excludes a portion of income from the financial aid eligibility formula, gets an increase. This will automatically be calculated into the students’ SAI. Up until a certain amount, parents’ and students’ incomes will not count in the formula that determines need-based aid.

5. Greater Emphasis on Number of Dependents vs. Children in College
Previously, families with more than one child enrolled in college simultaneously would divide the parent contribution portion of the Student Aid Index (previously called EFC) by the number of children enrolled in college. This benefitted families with students that were close together in age. The updated FAFSA will determine need based on the total number of dependents, instead.

5. Changes in FAFSA Completion for Divorced or Separated Parents:
The new FAFSA requires the parent who provided the most financial support in the “prior-prior” tax year to provide financial information. This means the financial aid system requires the class of 2024 (seniors) to use their parents’ 2022 income tax information. Specifically, the parent who provided the most support in 2022 will be required to complete the FAFSA for the 2024-25 award year. Typically, this is the parent who claims the student on his or her tax return, but not always.

6. No Penalties for Outside Contributions:
Under the FAFSA Simplification Act, contributions made by grandparents and others outside the immediate family to help pay for college is no longer treated as untaxed income for the student. This means a 529 plan from grandparents will not impact the student’s eligibility for need-based financial aid, for example.


The FAFSA Simplification Act introduces various changes that aim to simplify the financial aid application process and increase accessibility. While many changes are positive, some may affect aid eligibility, such as the elimination of the discount for multiple students in college and the adjustments to custodial parent requirements.

It’s crucial for students and families to stay informed about these changes and seek guidance from professionals specializing in college planning and funding. At CCA, we are here to support you on your college planning journey. Remember, with proper preparation and knowledge, you can navigate the financial aid process with confidence and secure the resources you need to pursue higher education successfully.