College students must file the FAFSA form each year to receive financial aid from the federal government. Many states and colleges also base their own aid on the federal form. The FAFSA collects detailed financial information from students and their parents and serves as a gateway to grants, scholarships, and loans for higher education. The Education Department has taken several years to update the form and its formula, which was approved by Congress in 2020.
The changes to the form increase eligibility for financial help, such as federal need-based Pell grants. However, the update also eliminates the sibling discount, which affects families with multiple children enrolled in college. This change may have a substantial and unexpected impact on aid eligibility for some families.
The new formula will go into effect with little warning to students and their parents, which may result in larger out-of-pocket bills for some current students. Some colleges may be able to adjust financial aid packages to compensate, but it depends on the institution’s finances.
Other changes on the form include replacing the “expected family contribution” with the “student aid index” as a guideline for the amount of financial help a student qualifies for. The number of questions on the form has been greatly reduced, making the process easier for families.
