New FAFSA Changes in 2024: Your Comprehensive Guide

The Free Application for Federal Student Aid (FAFSA) is used to determine financial aid eligibility for current and prospective college students. The FAFSA must be completed each year for consideration for financial aid.

But before gathering the documents needed to complete the FAFSA this year, students and parents should be aware of the changes that will take effect for the 2024-2025 school year and beyond. The good news is these changes should result in a simplified FAFSA process for students and their families; the bad news is that students and financial aid officers will need to adjust to a new system for determining student aid eligibility.

In this guide, we explore the updates to the 2024-2025 FAFSA. You can also learn more about the changes to the FAFSA and how to file it in our recent webinar.

Overview of the Current FAFSA

In its current form, the FAFSA serves a few straightforward purposes. It determines:

Student aid eligibility based on parent, student, and family financial circumstances.
How much parents, students, and their families should expect to contribute toward a student’s tuition and fees.

The FAFSA is obviously a beneficial tool for students and families, and in most cases, the form has to be completed to qualify for financial aid, need-based scholarships, grants, and loans.

Once the 2024 changes take effect, the FAFSA will be an overall more useful, accessible tool for college-bound students seeking aid.

The New FAFSA Changes

The new FAFSA changes are a long time coming: while FAFSA changes were approved as part of the Consolidated Appropriations Act of 2021, delays pushed the release of the new and improved FAFSA application from June 2021 to December 2023.

Since the simplified FAFSA won’t be available until December, this could affect application timelines and deadlines for students and their families—make sure to stay up-to-date on deadlines for both federal and school deadlines to prevent late submission.

So what should families expect once the new FAFSA application is available? Let’s dive into the changes.

Simplification of the FAFSA Application Process

Most importantly, the new application promises a simplified FAFSA process for students and their families. Applicants should expect the process to be simpler in two key ways:

There are fewer questions – While the FAFSA formerly featured 108 questions, the new FAFSA features only 36. Some students may receive even fewer questions as a result of improved “skip” logic.
The questions align with federal income tax returns – The days of sifting through your income tax return with a fine-toothed comb to answer FAFSA questions are over. The new FAFSA questions more closely align with fields on the standard federal income tax return, simplifying the process. The FAFSA will also automatically pull some information from federal income tax returns into the application, offering even further simplification.

FAFSA Terminology Changes

Students and their families will encounter key terminology changes on the new FAFSA:

The Expected Family Contribution (EFC) has become the Student Aid Index (SAI)
The EFC was changed to more accurately identify what students and their families should expect to contribute to their student’s education: since many families (incorrectly) believed the “Expected Family Contribution” reflected their total bill, the new FAFSA language is more straightforward.

The Simplified Needs Test (SNT) has been eliminated, and form changes have produced a new applicant designation: Applicants Exempt from Asset Reporting (more on this below).
The FAFSA Submission Summary replaces the Student Aid Report (SAR)

Modifications to Financial Income and Assets Reporting

This year, FAFSA applicants will see two major changes in:

Income reporting – Untaxed income like cash support (e.g., gifts from grandparents), veterans’ education benefits, and workers’ compensation benefits will no longer be reported on the FAFSA. Additionally, qualified distributions from 529 savings plans owned by non-parent relatives will no longer impact student aid eligibility. Finally, child support will be reported as an asset instead of income.
Asset reporting – Certain exclusions for farming and small business owners have been eliminated from asset reporting on the new FAFSA. The Simplified Needs Test has also been eliminated—if applicants fall below certain income thresholds or receive some specific federal benefits, they’ll be identified as Applicants Exempt from Asset Reporting.

Auto-Zero and Asset Reporting Exemption

In order to qualify as an Applicant Exempt from Asset Reporting, students and their families must:

Fall under certain adjusted gross income (AGI) thresholds depending on their family size
Receive certain means-based federal benefits within two years of the application period:
- SSI
- Snap
- TANF
- WIC
- Medicaid
- Federal Housing Assistance

In addition, an applicant’s SAI (the contribution they’re expected to make out of pocket) will be automatically designated as negative $1,500 if:

A student qualifies for the maximum Federal Pell Grant
A dependent student’s parents (or an independent student) aren’t required to file a federal income tax return

Parent and Family Size Changes

The new FAFSA will also introduce changes to dependency status criteria and family size that can impact their aid eligibility and income reporting.

Less Aid for Multiple Children in College

When the 2024 FAFSA takes effect, the number of children a family has in college at the same time will no longer affect their eligibility for need-based financial aid:

The amount of shielded income will no longer be reduced based on the number of children in college simultaneously.
The parent contribution will no longer be divided by the number of children in college at the same time.
Families can appeal for more aid if they have multiple children in college at the same time, but there’s no guarantee for additional support.

Which Parent Must Complete the FAFSA?

To align the FAFSA more accurately with federal income tax returns, parent completion requirements have changed on the new FAFSA application.

The parent responsible for completing the FAFSA is the parent who provides the most financial support for the child—not the parent whom students live with (though these can be the same person).

Changes in Family Size

Family size definitions have also changed to align with the number of dependents listed on an applicant’s (either an independent student or a dependent student’s parents’) federal income tax return. This looks slightly different for legally separated parents and informally separated parents, respectively:

For informally separated parents, family size will include the student, the parent, other children whom the parent primarily financially supports, and other people who live in the household receiving their primary financial support from the parent.
For legally separated parents, family size will include the student, the parent, and other dependents listed on their federal income tax return (other qualifying children and relatives).

IRS Definition of Dependent

Instead of using its own definitions for qualifying dependents, the FAFSA will now defer to the IRS’s definitions of these parties when considering family size.

In order to qualify as dependents, children must:

Live with the parent for more than 50% of the year
Not provide more than 50% of their own financial support
Must be under the age of 19 (or 24, if they’re a full-time student)
Not file a joint income tax return with their spouse if they’re married

Relatives who qualify as dependents must:

Live with the parent more than 50% of the time
Receive more than half of their financial support from the parent

These dependent definitions apply to married and separated (legally or informally) parents.