Navigating the FAFSA Simplification: A Starting Point for Educators

In the ever-changing landscape of education and financial aid, staying informed about policy updates is crucial for educators to guide their students effectively. One significant stride in this direction was enacting the FAFSA Simplification Act in 2020. This pivotal legislation brought forth transformative changes to the Free Application for Federal Student Aid (FAFSA) process, reshaping how students and parents access and apply for financial assistance. As educators, it’s imperative to understand these changes to assist students in considering higher education options.

Understanding the FSA ID Process Changes

The Federal Student Aid (FSA) ID process, a pivotal gateway to the FAFSA application, is now critical to student and parent success in completing the application form. A key change to the simplified FAFSA is the Direct Data Exchange (DDX) of tax information between the IRS and Federal Student Aid. Due to the heightened personal information security standards required by the IRS, an FSA ID username and password are required for everyone whose information is needed on the FAFSA.

Here are the key points educators should acquaint themselves with:

1. Mandatory FSA ID Before Form Access: A noteworthy alteration is that starting from December 2023, access to the “new” FAFSA form will require an FSA ID set up beforehand. This step ensures security and streamlines the application process. Educators should plan to have their students and parents create FSA IDs now to ensure they are confirmed and ready to use once the application opens.
2. Inclusion of Non-Social Security Number Holders: An inclusive change is on the horizon. By December 2023, parents without a social security number can and will be required to establish an FSA ID account. Federal Student Aid has yet to release the exact format of this process. Still, there will be some identity cred-based questions provided by TransUnion that the individual will have to answer as a part of the creation process.
3. Confirmation of FSA IDs: FSA IDs must be verified before they can be used to sign into the FAFSA. This measure bolsters security and safeguards the application process against potential errors. The verification process for FSA IDs with the Social Security Administration takes 1-3 days after applying. Educators should have their students and parents create FSA IDs to ensure they are confirmed and ready to use once the application opens.

Key FAFSA Form Modifications

The FAFSA itself has seen a series of notable revisions in the wake of the FAFSA Simplification Act. Educators should be well-versed in these changes to counsel their students effectively:

1. Consent to Data Transfer Permission: As students and parents individually log in, they will be greeted by a crucial permission box question. This question pertains to the consent for transferring data from the IRS to the FAFSA form. Both the student and the parent(s) contributors must answer yes to this question to become eligible for any form of Federal Aid.
2. Non-Tax Filer Information Confirmation: The new Direct Data Exchange (DDX) process between the IRS and Federal Student Aid will now include individuals who are not required and did not file taxes. Now, the IRS can confirm that information with the data transfer. No longer will educators have to help those families complete a 4706T Non-Tax Filer verification form. But to verify this information, everyone must say yes to consent.
3. Role-Based Experience: One of the most significant changes educators must know about is the new form format. The FAFSA form will no longer be organized within one internet browser window accessed by the student logging into studentaid.gov. Moving forward, separate sections will be unique to each FSA ID. Students will log in with their unique FSA ID, provide consent, and complete their section, answering only questions relevant to the student’s situation and finances. Parent(s) contributors will log in with their FSA ID, provide consent, and complete their section, answering only questions relevant to the parent’s situation and finances. Finally, once all contributor’s sections are complete, will there be an option to submit the form to Federal Student Aid for processing?
4. Which Parent to Invite to Contribute: If a student’s biological/adoptive parents are not married to each other or living together the day that the student begins their FAFSA, now the guidance is to use the parent who provided the most financial support in the last 12 months. This is a change from the previous guidance of using the custodial parent. If the parent that provided the most financial support is remarried as of that day, then their spouse must also be a contributor on the student’s FAFSA, regardless of how they filed their prior-prior year taxes.
5. Transition from EFC to SAI: The familiar term “Expected Family Contribution (EFC)” is now replaced with “Student Aid Index (SAI).” Educators should familiarize themselves with this new terminology to aid students in comprehending their financial aid packages in the Spring of 2024. Now, the SAI will be based on the family size and the prior-prior year poverty tables.
6. Expanded SAI Range: The SAI now boasts a range that extends as low as -1,500. This is a change from the EFC range, which began at 0. This noteworthy change aims to assist the most financially disadvantaged students, providing an opportunity to identify students with the highest financial need and who may need the most financial support to attend their chosen educational institution.
7. Number in College No Longer Affects SAI: A significant shift is removing the impact of “Number in College” on the SAI calculation. This change impacts families who previously had a lower EFC due to simultaneously having several children in college. However, this question will still remain on the simplified FAFSA for college reporting purposes.
8. Businesses and Farms as Assets: Educators should inform students that ALL businesses and farms are now considered assets on the FAFSA. This change underscores the importance of accurate asset reporting. Previously, businesses and farms were only included if they had 100 or more employees. This is no longer the case; everyone must report a net value regardless of size or if permanent residence is on the farm.
9. Expanded School List: The FAFSA will now accommodate up to 20 college listings instead of the previous limit of 10. Educators should guide students in selecting schools judiciously while taking advantage of this expanded option.
10. Parent Demographic Matching: Precise data entry becomes paramount with the new FAFSA form. Students must provide parent demographic information (name, social security number, date of birth, email address) within the FAFSA. They must ensure a perfect match with what their parents entered on the parent’s FSA ID, ensuring a seamless application process.

Conclusion

The FAFSA Simplification Act of 2020 changed the financial aid landscape, redefining how students access and apply for federal assistance. For educators, staying well-versed in these changes is paramount to effectively guiding their students through the application process. By understanding the revamped FSA ID process and the essential FAFSA form modifications, educators can play a pivotal role in helping students navigate the path toward higher education, armed with the knowledge they need to secure crucial financial support.

Get2Collge provides FREE training for educators on FAFSA and various college access topics. Find out more here.