FAFSA Changes: Now and To Come

Changes to FAFSA 2021: What You Need to Know

[Summarized by NCAG Blog Editor, Melissa Brock; brockm1@central.edu]
You've probably already heard that the FAFSA will undergo a makeover. But what does that mean?


The Free Application for Federal Student Aid (FAFSA) will finally become simpler to fill out and improve the quick delivery of student financial aid. It comes with a few other changes as well. 


However, note that most of the changes won't go into effect until the Oct. 1, 2022 FAFSA becomes available, but you'll find some FAFSA changes in 2021. 


How will these changes affect families? Let's go over what you need to know.

Why Changes Were Needed

As an independent educational consultant, you've probably encountered a few families who have balked at the idea of filing the FAFSA for any number of reasons. As a former admission counselor, I heard this a lot: "We won't qualify for anything because our income is too high."


That's certainly one of the reasons, according to a National Center for Education Statistics study, which showed why many students opted to not fill out the FAFSA. Of course, students who don't file it automatically eliminate themselves from receiving federal aid and possibly institutional aid.


Among fall 2009 ninth graders who graduated from high school, approximately 65% of students reported completing the FAFSA. On the other hand, 24% did not complete it.


Those who did not file cited the following reasons:

  • 33% thought they could afford school or college without financial aid.

  • 32% thought they may not qualify for financial aid.

  • 28% did not want to take on debt.

  • 23% said they didn't have enough information at their disposal about how to complete the FAFSA.

  • 22% did not plan to continue education after high school.

  • 15% did not know they could complete a FAFSA.

  • 9% thought the FAFSA forms would take too much time or were too much work.

FAFSA and Government Aid History Lesson

As an independent educational consultant, you know that colleges use FAFSA information to determine federal aid eligibility for items such as federal grants and loans. Colleges also use specific information from the FAFSA to award institutional aid. But do you know how some of these changes to the FAFSA and other government financial aid mandates have evolved over the course of history? Let's take a look.

  • 1965: President Lyndon Johnson signed the Higher Education Act of 1965 into law and solidified the U.S. federal government as the primary provider of financial aid. A portion of the Act established the Educational Opportunity Grant (EOG) Program, which allocated funds directly to colleges. 

  • 1972: The EOG program became both the Federal Supplemental Educational Opportunity Grant (FSEOG) program, which delivered funds directly to colleges, and the Basic Educational Opportunity Grant (BEOG) program -- the early version of the Pell Grant, which delivered funds directly to students.

  • 1978: The Middle Income Student Assistance Act of 1978 opened eligibility for subsidized loans to all undergraduates, regardless of whether they demonstrated need or not. Pell Grants could also then go to middle-income students. 

  • 1980: The Pell Grant became available to part-time students and students at vocational or community colleges. 

  • 1990s: The following were established: PLUS Loans, the Hope and Lifetime Learning tax credits and Unsubsidized Stafford Loans. PLUS loans also became available to the parents of all college students, regardless of demonstrated need. They allowed parents to borrow up to the full cost of attendance.

  • 2011: Institutions were required to post a Net Price Calculator on their websites to show more cost transparency at each college.

  • 2017: The FAFSA is made available to the public on October 1 every year for the future academic year. 

  • 2021: The Consolidated Appropriations Act of 2021 shortened the FAFSA from 108 questions to 36 to encourage more eligible students to fill out the form.

Overall Changes to the FAFSA

Let's take a closer look at all the changes that will occur.

Change 1: The FAFSA will shorten.

The FAFSA currently contains 108 questions, which can seem like a daunting task to families All students must fill out the FAFSA in order to qualify for federal, state and institutional financial aid, including federal student loans, grants and work-study. The form currently includes 108 questions and will go down to 36 questions.


Families' income information reporting will change. Currently, families must access the data themselves using the IRS Data Retrieval Tool. This new method replaces the Central Processing System (CPS) and uses a new interface to receive federal tax information directly from the IRS. That reduces the number of questions required for families to self-report income. 


Students also will no longer have to answer whether they have had any drug-related convictions, meaning drug offenses will no longer bar students from getting federal financial aid.

Change 2: ​​The Expected Family Contribution (EFC) will go away.

You'll be able to axe the letters "EFC" from your vocabulary. The term, which refers to an index number that colleges use to determine family eligibility for financial aid, has long been confusing to families. You may have experienced families that assume that EFC meant that they'd either have to pay the EFC amount for college or that their students would receive the EFC amount in aid. 


Here's the new term you'll use: Student Aid Index (SAI), and you'll also experience a change in the methodology used to determine aid. The new formula removes the number of family members in college from the calculation (though some families may not be happy about this change) and allows a minimum SAI of -$1,500.

Change 3: Federal Pell Grants will expand.

The FAFSA Simplification Act will allow more students to receive Federal Pell Grants. It'll link eligibility to family size and will also base it off of the federal poverty level.


Incarcerated students participating in prison education programs will regain the ability to receive a Federal Pell Grant. Students who had a drug-related conviction in the past can also qualify. Eligibility will also encompass students whose school closed while they were enrolled and for students who found out that their schools misled them.


For the 2020-21 school year, the maximum Pell Grant is $6,345 per student; it will rise to $6,495 per student for 2021-2022.

Change 4: Federal Direct Loan program length will increase.

A change in Federal Direct Loans will repeal the lifetime limit on the period for which a borrower can receive subsidized loans of up to 150% of the length of their education program, often referred to as Subsidized Usage Limit Applies (SULA).


For example, right now, if a student attends a four-year program, that student can only receive direct subsidized loans for a total of six years. With this change, students can get subsidized loans for as long as it takes to complete their education program.

Change 5: Unemployment during a national emergency can change eligibility.

Under the new changes, colleges can take unemployment and a national emergency together into account. It allows financial aid administrators to exercise professional judgment in adjusting student, parent or spousal income when determining the student's eligibility for aid. Students can show evidence of receiving unemployment benefits to get their income adjusted to zero, for example.

FAFSA Changes for 2021

The FAFSA opens October 1, and you might wonder whether anything has changed for 2021.


The short answer: Yes. 


The changes based on the FAFSA Simplification Act for this year includes: 

  • Repeal of the Subsidized Usage Limit Applies (SULA) requirements, which limits the number of academic years a student may receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans.

  • Negative consequences associated with an affirmative response to the drug conviction question on the FAFSA form will no longer apply.

  • Male students will no longer have to register with the Selective Service System in order to receive federal financial aid.

How You Can Prepare Families

The FAFSA Simplification Act requires changes to most aspects of the processes and systems used to award federal student aid. 


You can prepare families by learning as much about the new FAFSA changes as possible. Help families fill out the FAFSA this year so you can get a sense of these new changes. More changes will come next year, so you may not see a huge difference quite yet.


Also, divorced families who file the FAFSA will notice a change, particularly if they've filed the FAFSA before. In the past, the parent with the highest adjusted gross income (AGI) had to file the FAFSA when custody was split 50/50. However, under the new legislation, the parent who offers the most financial support will complete the FAFSA.


Stay tuned for more information about FAFSA changes and admission updates through NCAG's blog. We'll continue to be a trusted resource for you as you navigate future FAFSA and federal changes.


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