It is important to plan ahead with the FAFSA. With an impending deadline, there are important updates that you must be aware of. Understanding these new changes can help you complete your FAFSA application so that it can provide you with the best financial aid possible.
As normal, you must first start with your Financial Student Account (FSA). If you have yet to create your Financial Student Account, you must start by setting up your username and password. If you are classified as a dependent, your guardian is additionally required to make an FSA account as well so they can include their information. It is important to start your FAFSA early as you must wait three days after the creation of your Financial Student Account before you can start your 2021-2022 FAFSA application. You will also need to have your social security number, drivers license number (if applicable, it is not necessary if you do not have one yet), and your 2019 tax return and 2019 W-2. If you have already filed your 2019 taxes, you can use the FAFSA IRS Data Retrieval Tool (DRT). This tool will input your 2019 tax documents into FAFSA automatically.
If you are considered a dependent, your guardian should also have a copy of their 2019 W-2 readily available. If applicable, you should also have a copy of your untaxed income (interest income, child support, and more) and assets (saving and checking account balances, as well as your investments).
One of the new edits to the 2021-2022 FAFSA form is that the income threshold for an automatic zero Expected Family Contribution (EFC) is increased from $26,000 to $27,000 for the 2021–22 award year. Expected Family Contribution (EFC) is the estimated amount of money a family will have to pay to support their child. If your income threshold is 27,000 for the 2021-2022 award year, your EFC will be zero. Additionally, the title “Expected Family Contribution (EFC)” wll be changed to “Student Aid Index (SAI)”
One reason that FAFSA is known to be so daunting is the sheer number of questions required. FAFSA will lower its questions from over 100 to around 36 total questions. This will hopefully make FAFSA more easily completed by its applicants. Another new addition to the upcoming FAFSA is that the IRS Data Retrieval Tool (DRT) will now include all information that you have filed on your Schedule 1.
FAFSA will additionally be changing its rules regarding parental filing. If parents are divorced or separated, the parent who is classified as the custodial parent is required to file their FAFSA. A custodial parent is defined as the individual that the child lives with for the greater period of time during a 12 month period which ends on the day the FAFSA is filed. This is beneficial due to the fact that if the parent who is considered the “custodial” parent makes less than the other parent, then only the custodial parents’ income and assets will be considered for FAFSA. Pell grants were additionally affected with the new changes to FAFSA for the 2021-2022 cycle. The maximum award for the Pell grant was increased to $6,495 from its previous amount of $6,345. Additionally, families who make less than 175% of the federal poverty level are automatically qualified for the maximum award for the Pell Grant.
Direct subsidized loans are a type of loan provided by the Department of Education to undergraduates who exhibit financial need. Subsidized loans are currently available for 150% of a student’s undergraduate career. For example, if a student is in a four year program they are able to receive subsidized loans for six years. With the new changes, subsidized loans will be available until the student finishes their educational program instead.
Unfortunately, there are some downsides to the new FAFSA updates as well. FAFSA was known to provide discounts to families who had multiple children in college at the same time. Following the implementation of the new FAFSA changes, there no longer will be a discount applied to families with multiple college students.
With the new updates, it seems like the process of applying for financial aid is to be made a more simple one in the hopes that more families will be able to send students off to higher education. While beginning the process of acquiring financial aid is still daunting at first, hopefully this article can provide guidance on how to better navigate the new documentation of FAFSA. Using this knowledge, one can better prepare themselves for the academic road ahead with less stress coming from their financial situation.