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What is the FAFSA Simplification Act?

In 2020, the FAFSA Simplification act was enacted into law as part of the Consolidated Appropriations Act of 2021. The FAFSA Simplification Act represents a significant overhaul of federal student aid, including the Free Application for Federal Student Aid (FAFSA) form, need analysis, and many policies and procedures for schools that participate in the Title IV programs.

The FAFSA Simplification Act actually does simplify the Free Application for Federal Student Aid form. For most people, it will go from more than 100 questions down to 36. As anyone who has filled out a FAFSA knows, this is very good news.

The new form will be available by December 31st, 2023. In the meantime, here are a few things we do know about the revised FAFSA rules for 2023.

Major changes required by the law include the following:

1. Replacing the Expected Family Contribution (EFC) With the Student Aid Index (SAI)

Starting with the 2024–25 award year, students and families will see a different measure of their ability to pay for college, and they’ll experience a change in the methodology used to determine aid. The new need analysis formula removes the number of family members in college from the calculation, allows a minimum SAI of -1500, and implements separate eligibility determination criteria for Federal Pell Grants.

Families with more than one member in college

Under the old Estimated Family Contribution system, if you had multiple family members in college at the same time, your EFC was split between them. Under the new Student Aid Index, the Better FAFSA will still ask the question, but it doesn’t consider the number of family members in college in its calculations.

For example and using some very simplified numbers: Under the old FAFSA, if your EFC was $3,000 and you had three eligible family members enrolled in college at the same time, each enrolled student could have an EFC of $1,000. This would have increased the amount of federal aid they could receive. Now in the Better FAFSA, each of the three will have an SAI of $3,000, decreasing the amount of federal aid.

2. Modifications to Family Definitions in FAFSA® Formulas

Expect changes in how a student’s family size is determined aligning more with what was reported on the student/parents tax returns. 

  • Family size will be based on the number of tax exemptions claimed on the tax form(s) transferred into the FAFSA. If the family size has changed since filing the 2022 tax forms, a family size question will allow for reporting the updated family size.

3. Expanding Access to Federal Pell Grants

  • The FAFSA Simplification Act will expand the Federal Pell Grant to more students and will link eligibility to family size and the federal poverty level (starting with the 2024–25 award year).
  • Incarcerated students in federal and state penal facilities will regain the ability to receive a Federal Pell Grant (starting with the 2023–24 award year).
  • Federal Pell Grant lifetime eligibility will be restored to students whose school closed while they were enrolled or if the school is found to have misled the student (starting with the 2023–24 award year). 

4. Streamlining the FAFSA® Form

Where possible, the law mandates that we use data received directly from the IRS to calculate Federal Pell Grant eligibility and the SAI. This data exchange has been made possible by the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act), which we’ll implement alongside FAFSA simplification starting with the 2024–25 award year. The FAFSA Simplification Act also removes questions about Selective Service registration and drug convictions. It also adds questions about applicants’ sex, race, and ethnicity, which have no effect on federal student aid eligibility (starting with the 2023–24 award year).

Are there changes to the California Dream Act Application (CADAA)?

The California Dream Act Application (CADAA) allows undocumented AB540 eligible students interested in attending eligible California colleges, universities, and career education programs to apply for state financial aid. 

The California Student Aid Commission is also expected to make changes to the 2024-25 CADAA, however detailed changes are not available at this time.

The CADAA for 2024-25 is expected to open in December 2023, the same date as the FAFSA.  Students will be notified when an actual opening date is available.

The priority deadline for Cal Grant has been extended to April 2, 2024, for FAFSA and CADAA filers. But remember, if you are attending a California Community College, like Antelope College, you have until September 2nd to secure your Cal Grant funding.