Solomon Private Wealth recently shared some important information regarding recent changes to the Free Application for Federal Student Aid (FAFSA):
The Department of Education has described the recent changes to the FAFSA as the “most ambitious and significant redesign of the federal student aid application in decades,” aiming to create a more streamlined and user-friendly experience.
As you may be aware, the FAFSA form is crucial for students applying for federal student aid, including grants, work–study funds, and loans. Even if you believe your family’s income disqualifies you, it is still recommended that your child submit a FAFSA form each year to provide financial flexibility. Additionally, the information provided on the FAFSA form is used by states and certain private aid providers to determine eligibility for additional assistance.
Typically, the FAFSA form becomes available on Oct. 1 of each year. However, for the 2024–2025 school year, the form will not be available until December 2023 due to the proposed changes. Once released, we recommend completing the FAFSA as soon as possible, as some states and colleges award funds on a first-come, first-served basis.
The new FAFSA form from the Department of Education will have 46 questions, less than half of the previous 108 questions. In addition to this change, there are several other adjustments, including:
– The Expected Family Contribution will now be known as the Student Aid Index.
– Families with multiple children in college will no longer receive a discounted Student Aid Index.
– Small business owners and family farms will no longer be able to exclude certain assets from the eligibility calculation.
– In the case of divorced parents, the parent who has spent the most money on the child will complete the FAFSA.
– Contributions made by grandparents and others from qualified college savings plans will no longer be taxed as the child’s untaxed income.
– The financial aid formula will be more generous to lower-income students.
While covering the costs of higher education for your children or grandchildren may seem daunting, proper preparation can make it more manageable. It is important to remember that few students pay the full sticker price because college is expensive. Although college costs have doubled over the past 30 years, so have the financial aid packages and merit scholarships offered by colleges to students.
If you would like to learn more about how to start preparing for college costs, please feel free to contact us. We have illustrations that show the advantages and disadvantages of various college-saving options.
Brad Small is the founder and CEO of Solomon Private Wealth.