Bi-weekly digital newsletter – October 13, 2023
New Rules of Financial Aid – #115
| Part 2 of 2 Changes to Federal Student Aid This “In a Crab Shell” is part two of MACC’s feature on changes to the federal student aid program. Readers can find Part 1 here. The FAFSA is at the center of the U.S. student financial aid system; it is the key to unlocking billions in federal, state and institutional aid for more than 18 million students annually. The changes expand Pell Grant eligibility, simplify the FAFSA application and its underlying requirements, and repeal limitations on subsidized student loan eligibility. Overall, the new rules should be beneficial to community college students.  As the student aid system shifts focus from cash flow to wealth, it is expected that students will receive billions more in student aid dollars; and postsecondary education will become more accessible for lower-income students. Recap from Part 1 The U.S. Department of Education’s Office of Federal Student Aid (FSA) has redesigned the federal student aid program to Emphasize funding for students who need it the most Create a more streamlined application process Expand Pell Grant eligibility and award amounts Lower barriers to student aid for certain student populations, including homeless, incarcerated, low-income and others To accomplish those goals, FSA: Changed eligibility criteria Changed the federal needs analysis formula to produce a new needs analysis called the Student Aid Index (SAI) Changed the financial information required, and required that income data be pulled directly and automatically from IRS filings Resources Links to resources are included throughout this “In a Crab Shell” newsletter and in the “Resources” section at the end. *NOTE: The information provided is a synopsis of the best information available at the time of publication. It is provided as a convenience to readers, not as financial aid advice for individual students or their families. Readers are strongly encouraged to consult resources provided by the Office of Federal Student Aid office (FSA) as well as knowledgeable college financial aid professionals. The New FAFSA The FAFSA is the Free Application for Federal Student Aid. It’s an application form that is free to obtain and free to file. The new FAFSA form is about 60% shorter than the old FAFSA. You can see a prototype of the new FAFSA form by clicking the image above or HERE. Then type the following access code: prototype2425. Note: this form is still in draft form and may change. The FAFSA is usually released on October 1 each year. However, this year only, due to the extensive program changes, FAFSA release is planned for sometime during December 2023. Next year, the FAFSA will come out on October 1, 2024, for the 2025-2026 academic year. Timely FAFSA submittal allows students to access 3 types of aid. In Maryland, timely submittal means submitting it no later than March 1. Federal Aid Pell Grants Federal student loans (lower interest rates than private loans) Federal work-study opportunities State Aid State need-based aid Institutional Aid College & university need-based grants and scholarships It is hoped that a shorter FAFSA will increase student completion rates and improve college access and affordability. During the 2016-17 academic year, 38% of Maryland students failed to submit a FAFSA. This represented a loss of $34,440,133 in just Pell Grant funds that year. Get an estimate of your federal student aid eligibility for next year. Click this link. https://studentaid.gov/aid-estimator/?ct=t() Note: the number calculated is an estimate of federal student aid only and will not include state or institutional aid that may be available. For more help The Office of Federal Student Aid (FSA) provides accurate, easy-to-understand information in text and short videos with step-by-step directions in many languages on the FSA website and social media platforms. College financial aid offices are another reliable information source. Student and Family Impacts Overall, students are expected to receive billions more in student aid dollars. The new federal formula is more generous and more people should be eligible. Get an early estimate of your aid eligibility by clicking the image above or here using FSA’s Estimator. Remember, the FAFSA uses Adjusted Gross Income (AGI) which is typically a smaller number than total annual income based on “adjustments” the IRS allows taxpayers to claim. Members of the State Higher Education Executive Officers (SHEEO) Association used a representative data set of previous federal student aid applicants and found that under the new rules: >45% of students would qualify for $1,000-$2,500 more student aid, and 43% more students would become eligible using the new formula to calculate SAI — this increase equates to about 2.1 million more eligible students than under the old formula. Students currently receiving the maximum Pell Grant award of $7,395.00 during (2023-24 academic year) should expect to continue receiving maximum Pell in the 2024-25 academic year. The maximum Pell Grant dollar amount for the 2024-25 academic year has not yet been released. NOTE: These tables use AGI (Adjusted Gross Income) which is typically less than total annual income, depending on claimed adjustments. |
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