The FAFSA Simplification Act represents a significant overhaul of the processes and systems used to award federal student aid starting with the 2024–25 award year. This includes the Free Application for Federal Student Aid (FAFSA^®) form, need analysis, and many policies and procedures for schools that participate in federal student aid programs.

The law will also affect every state that uses FAFSA data to award state grant aid and every school that participates in the federal student aid programs.

Please check this video to see what's changed for the 2024-25 FAFSA® form:

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

   Starting with the 2024-2025 school year (Fall 2024, Spring 2025, & Summer 2024), students and families will see a different measure of how their financial aid eligibility is calculated. The Student Aid Index (SAI) is a new formula that takes into account some new factors:

   1. 1. Removes the number of family members in college from the calculation
      2. Allows a negative SAI which increases likelihood of more Federal/State funding 
      3. Overhauls the criteria for Federal Pell Grant eligibility so that more students may qualify for it
2. Modifications to Family Definitions in FAFSA formulas
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 school year)

   Incarcerated students in Federal and State penal facilities will regain the ability to receive a Pell Grant (Starting with the 2023–24 award year)

   Pell Grant lifetime eligibility will be restored to students whose schools 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

   Federal law mandates that data received directly from the Internal Revenue Service (IRS) be used to calculate 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 will be implemented alongside FAFSA simplification starting with the 2024–25 school year.

   Furthermore, the FAFSA Simplification Act also removes questions about:

   1. Selective Service Registration
   2. 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)

Contributor - Anyone who is asked to provide information on the FAFSA – Student, Student's Spouse, Parent(s), and Step-parent(s). 

Consent - Each contributor will now need to provide their consent to their Federal Tax Information (FTI) being included in the FAFSA, even if they did not file a U.S. tax return. 

Federal Tax Information (FTI) - Replaces the Data Retrieval Tool (DRT)

A contributor's tax information transferred directly from the Internal Revenue Service (IRS) after giving their consent.

Student Aid Index (SAI) - Replaces the Expected Family Contribution (EFC)

An eligibility index number that a college’s or career school’s financial aid office uses to determine how much Federal student aid the student would receive if the student attended the school. This number results from the information that the student provides in their FAFSA.

Students and families will see a different measure of their ability to pay for college and they will experience a change in the methodology used to determine aid. With the change to SAI, some students may see a decrease in financial aid eligibility. The SAI formula does not account for siblings in college and requires the net worth of all businesses and farms to be reported as assets.

• The Student Aid Index (SAI) will replace the Expected Family Contribution (EFC).
• The Cost of Attendance (COA) will be the starting point for calculating the SAI. COA includes direct costs (charges for which the university bills you directly) and estimated indirect costs (living expenses) to fund educational expenses for a year.
• The formula for calculating the Student Aid Index (SAI) is: COA – SAI = financial need.
• The new need-analysis formula:
  • removes the number of family members in college from the calculation,
  • allows a minimum SAI of -$1,500,
  • implements separate eligibility determination criteria for Federal Pell Grants based on federal poverty levels and family size. 
• Child support received will be included in assets and not as untaxed income.
• Families who own a small business/farm that also serves as primary residence will now have assets of that business/farm considered in their need-analysis calculation.
• The Pell Grant will no longer be adjusted based on enrollment status (full-time, half-time, etc.). Instead a student's Pell Grant and disbursement amount will be calculated using the student's Enrollment Intensity - which is a percentage value based on the number of credits a student is enrolled for during the term.