In March, the Office of Federal Student Aid announced that “Better FAFSA” will open in December 2023. The Free Application for Federal Student Aid (FAFSA), which usually opens on October 1 of a given year, is undergoing radical changes in response to the passage of the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act of 2019 and The FAFSA Simplification Act of 2020. The Better FAFSA will transform how data are collected from students and families and the mechanism used to determine Pell Grant eligibility.

First created during the 1992 reauthorization of the Higher Education Act, Congress created the FAFSA to ensure that prospective college students did not need to fill out multiple forms or pay fees to apply for federal, state, or institutional financial aid. Prior to 1992, students would have to complete multiple forms, especially if applying out of state, and sometimes needed to pay a fee to see if they qualified for financial aid.

These changes to the FAFSA are substantial and require a new technology infrastructure to support the user-friendly design of the law, which includes more widespread and automatic data-sharing with the IRS. These are the first major changes since the form went online in 1997.

The biggest change will be an additional pathway in which students can qualify for the Pell Grant. In addition to qualifying based on the federal financial aid formula, students can also qualify for a Pell Grant based on their adjusted gross income as related to the federal poverty level for their family size and make up (single parent family earnings thresholds are measured more generously). This new approach to Pell will allow families to know if they qualify for a maximum Pell Grant, or at least a minimum Pell Grant, based on a user-friendly calculator tool or look-up table.

In addition to this new pathway for Pell eligibility, several other changes include:

• Near mandatory transfer of IRS data to complete financial and family questions,
• Eliminate the use of “number of students in college" for each family as part of the federal financial aid calculus
• Increase to earning limit that determines who must report financial assets
• Removal of the question asking whether students intend to live on- or off- campus, and
• Changes to how family farms and small businesses are treated in the aid calculation.

The last two changes in particular have caused many questions across the community college field.

Colleges looking to learn more should visit the FSA Partners Knowledge Center page dedicated to Better FAFSA and contact their state financial aid association and state higher education executive to find out state-specific information about how these FAFSA changes, and the delay in FAFSA opening, will affect financial aid in their state. 

To make a public comment responding to the draft FAFSA, please visit this Regulations.gov page.

Carrie Warick-Smith is the Vice President for Public Policy at ACCT