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FAFSA Applications Open Soon: What You Need to Know Thumbnail

FAFSA Applications Open Soon: What You Need to Know

By Carolanne Chavanne, CFP®

Applications for FAFSA, or the Free Application for Federal Student Aid, are right around the corner. FAFSA is a gateway to accessing critical financial assistance for your child’s college education. Here, we’ll explain what you need to know when applying for FAFSA, and we’ll share some important changes for the 2024–2025 school year.

What is FAFSA?

FAFSA, an acronym for the Free Application for Federal Student Aid, functions as the gateway to various financial aid resources, including grants, scholarships, work-study opportunities, and federal student loans.1 By evaluating your family’s financial situation, FAFSA enables federal agencies, educational institutions, and certain states to assess your eligibility for financial support.

The FAFSA is free and the most important thing you can do if you want to qualify for financial aid.

How to Apply for FAFSA

Applying for FAFSA is an important step in college planning. Here’s how:

  1. Compile Essential Documents: Gather pertinent documents, such as Social Security numbers, tax returns, records of untaxed income, and identification credentials.
  2. Create a FSA ID: The Federal Student Aid (FSA) ID serves as your digital signature and is fundamental to signing the FAFSA electronically.
  3. Submit the Form: Access the official FAFSA portal (fafsa.ed.gov) to begin the form completion process. The form will ask for things such as your income, federal tax information, and other information to verify your eligibility. Following submission, you’ll receive a Student Aid Report (SAR).
  4. Evaluate Your Financial Aid Offers: Colleges will leverage your FAFSA details to create tailored financial aid packages. Compare these options to decide what college makes sense for your budget.

What Has Changed for FAFSA in 2024-2025?

FAFSA has remained largely unchanged for years, but the form includes unprecedented changes for the 2024–2025 school year. Here are some of the most notable changes according to the California Student Aid Commission:2

  • The form itself has been simplified from 108 questions to about 36 questions. The goal is to have more questions aligned with your federal income tax returns.
  • Applicants can now automatically transfer IRS data to FAFSA.
  • The algorithm that determines financial aid has changed. Some students may benefit from increased funding, while others may see a decrease in aid eligibility. The calculation is designed to shift the focus away from cash flow and to focus more on overall wealth. There is also a new Pell Grant formula.
  • There may be an increase in financial aid for single parents.
  • There may be a decrease in aid for families with multiple children in college.
  • There are some changes in reportable income and reportable assets.
  • There are changes in phrasing and definitions (e.g., definitions of family size, custodial parent, and dependent).

In addition to the above changes, there are also important changes to deadlines. According to College Board, “If you are planning on attending college in the next academic year, you should complete the FAFSA in the fall of your senior year. Students in the class of 2024 attending college in the fall of 2024 and other students completing the FAFSA will not be able to complete it until December 2023 instead of October when it usually opens.”1 The 2024–2025 FAFSA will be available in December 2023, and June 30 is the last day you can apply for federal aid for the following academic year.3

FAFSA is a major component of a comprehensive college savings plan. It’s important to understand how the form works and how these recent changes may impact your financial aid eligibility. Working with a financial professional is a good way to ensure that you apply for FAFSA correctly and in a timely manner.

  1. https://blog.collegeboard.org/what-is-the-fafsa
  2. https://www.csac.ca.gov/sites/main/files/file-attachments/summary_of_changes_for_the_2024-25_fafasa.pdf
  3. https://fsapartners.ed.gov/knowledge-center/topics/fafsa-simplification-information/2024-25-fafsa-roadmap

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.