Are you gearing up for the college financial aid journey this year? Brace yourself for some changes in the Free Application for Federal Student Aid (FAFSA) process. Let's dive into the key modifications and discuss how to navigate them seamlessly.
1. Delayed Application for Federal Student Aid Release
This year, the FAFSA form will make its debut on Decemebr 31st, three months later than usual. The rush to complete the form could impact families, potentially leading to delayed college decisions. To stay ahead, consider starting the process as soon as the form becomes available.
2. Changes in Calculation
The Education Department has tweaked its formula for calculating family needs. Retirement account contributions are no longer part of the income consideration, while family farms and small businesses are now regarded as assets. The aim is to enhance grants and simplify the aid qualification process.
The Wall Street Journal reported that Iowa College Aid, a state agency, simulated the impact of this change on a dependent student from a family of four with $60,000 in income and a farm net worth of $1 million. Under the new formula, the amount they would be expected to pay for the child’s college would increase to $41,056 from $7,626.
3. Impact on College Decisions
Families whose children are set to play sports or earned grants and merit scholorships may face uncertainty about the actual cost due to the FAFSA delay. The challenge lies in making informed decisions without knowing the final financial aid picture.
4. Increased Grants and Access
On a positive note, the changes are expected to benefit low-income students. Approximately 610,000 more students from low-income backgrounds will receive federal Pell grants, and 1.5 million more students will have access to the maximum award. However, the Wall Street Journal highlighted a downside, "parents who are sole proprietors might have to borrow against their business assets to pay tuition".
5. Timeline for Financial-Aid Awards
Although the FAFSA will be accessible on December 31st, colleges may not receive the data until later in January. This processing delay could push the delivery of financial-aid awards to March or later. To mitigate potential holdups, complete the form promptly.
6. Request Your FSA ID Early
Obtaining an FSA ID, the key to accessing and signing the FAFSA, is now a separate requirement for each applicant. Request your FSA ID early, as it takes about three days to receive it. If you have an existing FSA ID, you can use the same credentials from previous years.
7. Utilize Online Tools for Guidance
The Federal Student Aid website provides a chatbot called Wyatt, developed by Benefits Data Trust. Wyatt answers questions and sends reminders, significantly improving FAFSA completion rates. Additionally, online tools can estimate financial aid before completing the application, providing a rough idea of eligibility.
In navigating these changes, staying proactive is key. Start the FAFSA process early, request your FSA ID in advance, and leverage online tools for guidance. By doing so, you'll be better equipped to make informed decisions about college finances. Remember, the path to higher education might have a few twists, but with preparation, you can navigate it successfully.
About the author
Mark W. Sullivan, EA founded Sullivan Consulting in 1998. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.
Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C..
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Copyright 2023 Mark Sullivan Consulting, PLLC
"Families May Have to Make College Decisions Before Knowing Full Cost", Oyin Adedoyin, The Wall Street Journal (12/1/2023)
"Congress's College Financial Aid Fiasco", The Editorial Board, The Wall Street Journal (12/22/23)