There have been some changes made to the Free Application for Federal Student Aid (FAFSA), courtesy of the FAFSA Simplification Act.

As you may know, FAFSA is the form that college students must complete to apply for federal financial aid and, in the past, has been known for being extremely convoluted. The FAFSA Simplification Act was passed in 2020, but several of the changes are being rolled out with aid applications for the 2024-25 school year.

They include:

• Simplification of FAFSA process – The number of questions on the FAFSA form is being reduced from 108 to around 40 questions max, aiming to streamline the application and make it less time-consuming for applicants. Additionally, the new system will facilitate the submission of tax information through IRS Direct Data Exchange, making it easier for applicants to provide the required financial details without having to dig up tax returns.
• Changes to Pell Grant eligibility – The Pell Grant Program is geared toward students who have exceptional financial needs and the FSA amendments have changed how eligibility and award amounts are calculated. Additional amendments reduce award amounts for students who are not enrolled full-time.
• Elimination of discounts for multiple children in college – In the past, families with multiple children enrolled in college at the same time were eligible for additional financial aid. This change eliminates this discount and reduces financial eligibility for these families moving forward.
• Discontinued Selective Service requirement for males – While men between the ages of 18 and 25 in the U.S. are still required to register for Selective Service, regardless of their college plans, it is no longer a requirement to receive financial aid.
• Drug conviction changes – Previously, students with drug convictions could face disqualification from financial aid. The question about drug convictions will no longer be included in the FAFSA, allowing convicted but not currently incarcerated students to be eligible for all financial aid.
• Changes for incarcerated students – The FAFSA Simplification Act allows incarcerated students enrolled in prison education programs to be eligible for Pell Grants, provided certain eligibility criteria are met. However, incarcerated individuals are not eligible for federal student loans.
• Changes for divorced or separated families – Previously, when parents were divorced or separated, either parent could complete the FAFSA. For parents who are still living together, divorced or not, this remains true. For parents who are divorced or separated and not living together, a recent change now requires the “custodial parent” to be the one filling out the FAFSA. The custodial parent is determined as the parent that the child lived with most often over the last 12 months or the one who provided the most financial support over the last 12 months.
• Changes to reporting grandparent contributions – Grandparent-owned 529 plans used to count against financial aid eligibility, but new rules mean they no longer do.

Due to the number of changes made to the process, the FAFSA availability date is postponed to December 2023. Students and caregivers can access the FAFSA, look up the deadline, and check the status of their application for free on the Federal Student Aid website.

That said, I’m here to assist you in planning for your financial future and that of your loved ones. If you would like to review your current planning strategy or are getting ready to start saving for future college students in your life, feel free to give me a call. I’m here to help.

Sincerely,

Joe Ezernack

This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.