Changes to Expect on the FAFSA in 2021
Graphic of FAFSA

Are you filling out the Free Application for Federal Student Aid, also called the FAFSA. It’s usually a complicated process most college students have to complete every year. The 2021-2022 FAFSA is going to include some small changes, however, making the process a little more simple. With this good news, also comes the lack of news. The FAFSA lacks accommodations for the pandemic. This is something that should have been made because of COVID-19.

The 2021-2022 FAFSA opened on October 1, 2020. Students have to apply if they want to be considered for federal financial aid and grants and scholarships. They have no choice but to fill the form out each and every year. This new form circles around you and your family’s tax information from 2019. However, in 2019 many families have experienced consequences such as unemployment or loss of income. This is something that is not shown in 2019 tax information. Even with an extended deadline from April 15th to July 15th to file taxes last year, the way people will answer questions on the FAFSA is not going to change.

This year, many people will turn to financial aid appeals or personal loans in order to receive more aid. Although there have not been any changes made to the form because of the global pandemic, there have been some other changes made that one should take note of.

1. Changes to Data Retrieval Tool and Schedule 1 Question

This question was added to the FAFSA last year, as well. It was edited slightly to adhere to changes made with the IRS tax form. How the IRS Schedule 1 tax form affects a family’s expected family contribution, or EFC, were changed as a capital gain exception was removed and a virtual currency exception was added. This is significant because the type of federal tax form one files determines how one’s EFC is calculated. In addition, people who choose to use the IRS Data Retrieval Tool in order to fill out their tax information on the FAFSA will now see a question that asks if one filed a Schedule 1 automatically completed by this tool. If one uses the Data Retrieval Tool for this question, however, it should populate for you. 

2. EFC Income Threshold Has Increased

The threshold that has to be met in order to receive an EFC of zero has not increased from $26,000 to $27,000 a year. An EFC of zero means that a student will receive the maximum amount of aid possible because the EFC is the amount that is calculated from the information that you give on the FAFA which estimates the family’s ability to pay for college. However, an increase of just $1,000 is going to do little for students and families suffering from job and income loss as well as medical bills due to the pandemic. Many other sectors of the economy have received aid because of COVID, why not students?

3. An Enhanced Phone App

The mobile app for the FAFSA has been updated. Some new features include a new dashboard and redesign that lets people personalize their homepage so they can see an overview of upcoming student loan payments, their financial aid, and gain quick access to content and resources. Students can also now see an overview of aid overpayments, remaining federal student loans, and one’s eligibility for the Pell Grant. In addition, the Department of Education has announced that a FAFSA simulator is coming. This will let the department get feedback from families and what they think about their experience with the FAFSA. 

4. Tax Form Screenshots Will Help More

If someone now navigates to the help page for the new FAFSA, there have been new images uploaded that will try to help students better locate information needed in order to answer certain questions. The screenshots will now highlight which specific form has the information you need and where on the form that information is located. 

Looking ahead, the government has tried to make the FAFSA even more simple with the passing of the FAFSA Simplification Act which was included in the Consolidated Appropriations Act of 2021. All of this was passed with the second coronavirus relief bill. However, these changes will not be effective until July of 2023 and afterward. Here are the changes that one can expect in a few years from now:

1. The application will be translated into more languages

Currently, the FAFSA is only in Spanish and English. By providing more options, it will make the application easier for students, and especially parents who don’t speak Spanish or English fluently. 

2. There will be fewer questions

On the form as of now, there are 108 questions. However, on the new form, the number of questions you have to answer will depend on your financial situation. The maximum for everyone will be 36 though with some questions containing multiple parts.

3. Whether or not to include assets will become more clear

Right now, people who apply have to include their own or their parents’ assets in order to give a more clear picture of their financial situation. If they don’t include any assets, applicants have to answer questions about taxable income in order to move forward with the application process without naming their assets. However, if one meets one of the requirements listed below, an applicant is exempt from including assets. 

– The applicant received a means-tested benefit like the Supplemental Nutrition Assistance Program, also named SNAP.

– The student or their parents have an adjusted gross income that is less than $60,000. In addition, they don’t file a Schedule C with net business income over $10,000 loss or gain or file a tax return with the schedules A-H. 

– The applicant is a non-tax filer. 

– The applicant qualifies for a negative Student Aid Index in which they will receive the maximum Pell Grant Award or they qualify for an automatic zero. 

4. Two questions will be removed. 

Applicants for the FAFSA won’t have to register for the Selective Service in order to fill out the application. The question will be completely removed from the form. In addition, if one is convicted for drugs, one will no longer disqualify for applying as the question won’t appear on the form. 

5. Student Aid Index will replace the Expected Family Contribution

The Expected Family Contribution, or EFC for short, is going to be renamed. The new name will be the Student Aid Index, or SAI. This, similarly to the EFC, will be used to calculate financial aid (excluding Pell Grants). The student’s aid will be measured as the cost of attendance minus the Student Aid Index in addition to other financial assistance. This change hopes to correct the assumption that the calculation is the amount that one’s family can contribute.

Many times, families will pay more than the EFC amount that is calculated after taking out loans in order to fill the gaps that aid doesn’t reach. The number isn’t actually the amount that one’s family can contribute, however. College financial aid offices just use this number in order to measure the student’s need for aid. The information one inputs into the FAFSA and the information that populates from the IRS determines the SAI number. It will equal the total of your income, your assets, and your parents’ available income. 

6. More factors will be added to the amount of money it takes to attend the school

The student’s financial aid is calculated by subtracting the EFC which will be named the SAI from the amount of money it takes to attend the school. However, the new FAFSA will adjust the cost of attendance to include things such as:

– Meal plans have to assume that students are getting three meals a day. 

– Colleges can’t set the housing allowance to zero for students that live at home with parents. 

– Private student loans will no longer be included in the allowance for loan fees. However, private loans don’t charge fees and federal loans do.

– Colleges have to include the cost of obtaining a certification, professional credential, or professional license. 

7. Students who apply may be rewarded more need-based aid

If an applicant is eligible for the maximum federal Pell Grant, their SAI will be set to zero automatically. This new change will also let one’s SAI be less than zero. Both will let applicants receive more need-based aid. 

8. Getting awarded a Pell Grant will be easier

The factors that go into qualifying for the Pell Grant will become simplified. If the student of their parent(s) falls below the income thresholds for tax filing, they will receive the maximum annual grant. These will also go to people with an adjusted gross income below 225% (if one is single) or 175% (if one is married) of the poverty line. The new FAFSA will also increase eligibility for a Pell Grant for students who had received a Pell Grant in the past and were unable to finish their education because of their school closing or if their loans were discharged under borrower defense to repayment. The new FAFSA will also restore eligibility for the Pell Grant to incarcerated students. 


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