FAFSA CHANGES WILL IMPACT YOUR CURRENT STUDENTS

by George Gately, CCA
     NCAG Member since 2012
     Past Board President


All of the students in the high school graduating Class of 2023, and their families, will be affected by the changes in the Free Application for Federal Student Aid (FAFSA). Some will find a more generous offer of assistance; some less generous.


The Federal Student Aid Office has delayed implementation of some of the changes (but not all) initiated in response to the FAFSA Simplification Act, and the FUTURE Act (congressional legislation of December, 2020). Specifics, at the time of this writing, are not delineated, other than in broad outline. Nevertheless, as IEC's we are in the midst of working with students who are rising 11th graders, perhaps rising 10th graders and younger. Therefore, for planning purposes we will prove our professional bona fides by knowing what is coming, regardless of the date of FSA's actions.

The greatest, and potentially negative impact will be on
  • families of divorce
  • families with more than one student in college at the same time
  • small business owners
  • family farm owners.
Here is a summary of current, or soon-to-be-implemented changes:
  • EFC (Expected Family Contribution) becomes SAI (Student Aid Index). SAI is defined as the amount of financial resources of a family available to pay for college. We are assured the difference in nomenclature is substantially that alone. Experience warns us that is probably not accurate in effect. With the replacement of the Data Retrieval Tool (DRT) with the Direct Data Transfer (FADDX), tax returns become more determinative of basic, financial qualification.
  • NEED = COA SAI OFA (other financial assistance). Professional Judgment (PJ) discretion is expanded (or relaxed, depending on how you want to consider it). Furthermore, no school may hold a "No PJ Policy." PJ must be considered, but with no requirement for application of PJ overall, or in particular instances. PJ simply must be documented in the records.
  • Families of divorce will be asked which parent provides the most financial support for the student (rather than, with whom is the student living one-half of a year plus one day, or longer). As of the date of this publication, no time parameters are determined. What does that mean? I can't say for sure, other than it means college financial aid offices are going to dig deeper into the financial arrangements of families of divorce.
  • Child Support will no longer be counted as "untaxed income," but rather as a parent asset.
  • The current asset exclusion of family-owned businesses and family-owned farms is gone. The asset value of each shall be included in the SAI calculation.
  • Simplified Needs Test (which removes assets from an SAI calculation) is based on AGI under $60,000.
  • The number of family members in college at the same time, as a consideration, will be fazed out; although I suspect that PJ will allow for that to be considered. Therefore, it should be noted in "Other Information" provided to the colleges.
Two other considerations represent the proverbial double-edged sword. One is that the end of PELL Grant eligibility after 12 semesters is removed. The other side is that Direct Student Loan time limit of 150% of satisfactory academic progress is also removed. Students will be able to drag out their college education beyond six years. That may assist some students in extraordinary circumstances. Many more students, I suspect, will find it as an easy way to remain in college and delay career-level earnings (which contributes materially to the opportunity cost of higher education, and consequently, reduces the value of a bachelor's degree during a working lifetime).

More can be said, but I refer you to the FSA website (here), and to the FSA Conference 2021 recordings (here: GS5 - FAFSA SIMPLIFICATION).
 

Posted in Financial Aid.

FEDERAL EDUCATION LOAN RATES -- 2022-2023

Here's what we have:
DIRECT STUDENT LOANS (subsidized/unsubsidized): 4.993%
  • 2021-2022 Rate was 3.734%
  • 2020-2021 Rate was 2.75%

GRADUATE STUDENTS - STAFFORD: 6.543%
  • 2021-2022 Rate was 5.284%
  • 2020-2021 Rate was 4.30%

PLUS - for Parents and Graduate Students: 7.543%
  • 2021-2022 Rate was 6.284%
  • 2020-2021 Rate was 5.30% 

For the update NCAG wishes to thank Stuart Siegel (Idaho) one of our most tenured members, and owner of FAFSASoft.com.

Posted in Financial Aid.