FAFSA Simplification and Changes to the 2024-2025 FAFSA

The 2024-2025 Free Application for Federal Student Aid (FAFSA) will launch at studentaid.gov in December 2023. The specific date has not yet been determined as the 2024-25 FAFSA is undergoing a significant redesign of the processes and systems used to offer federal student aid thanks to the FAFSA Simplification Act. Here are some major changes to expect for the 2024-25 FAFSA cycle. 

IRS Data Retrieval Tool (DRT) ReplacedNew terminology includes the term FAFSA contributor. A contributor is anyone who is asked to provide information on an applicant’s FAFSA including:
-The student
-The student’s spouse (if applicable)
-A biological or adoptive parent; or
-The spouse of a remarried parent who is on the FAFSA – the stepparent

The new FAFSA is student driven, so that means the student’s answers on their section will determine who will be a contributor in addition to the student. Students will need the contributor’s name, date of birth, Social Security Number (SSN) and email address to invite them to complete the required portion of the FAFSA. Contributors will need to provide personal and financial information on their section of the FAFSA.

All contributors are required to have an FSA ID and to provide consent to have their Federal Tax Information transferred from the IRS, have their tax data used to determine a student’s eligibility for federal student aid and allow the US Department of Education to share their tax information with institutions and state higher education agencies for the administration of Title IV aid. Consent is provided once for the award year. This consent is necessary even if the contributor does not have an SSN, did not file taxes, or filed taxes in another country. 
If a dependent student’s parents are unmarried and living together, both parents will be contributors, will need to have separate FSA IDs and need to provide consent. Dependent students whose parents filed their US income tax return as Married Filing Jointly only require one parent contributor to complete the FAFSA. If the student’s parents filed separately, both parents will be considered contributors and therefore need separate FSA IDs and both must provide consent.

If an independent student is married and filed separately, both individuals are contributors, must have FSA IDs and must provide consent for the student to be eligible for Title IV aid. 
Parent of Record Starting 2024-25Effective the 2024-25 award year, parent of record on the FAFSA will be the parent who provides the most financial support. You will notice that the parent with whom the student lived with the most in the past 12 months prior to filing the FAFSA is not longer a criterion in cases of divorced or separated parents. For divorced or separated parents, income and assets are reported for the parent who provides the most financial support even if the student does not live with that parent or lives with the other parent.
Parental Income on FAFSAParents who live together
-Parental income and assets in the case of a student whose parents are married and not separated, or who are unmarried but live together, shall include the income and assets of both parents.
Divorced or separated parents
-Parental income and assets for a student whose parents are divorced or separated, but not remarried, is determined by including only the income and assets of the parent who provides the greater portion of the student’s financial support. 
Death of a parent
-Parental Income and assets in the case of the death of any parent is determined as follows:
(A) If either of the parents has died, the surviving parent shall be considered a single parent, until that parent has remarried.
(B) if both parents have died, the student shall not report any parental income or assets.
Remarried parents
-If a parent is the FAFSA contributor or Parent of record and has remarried, the income of that parent’s spouse shall be included in determining the parent’s assessment of adjusted available income if the student’s parent and the stepparent are married as of the date of application for the award year concerned. 
Single parent who is not divorced or separated
-Parental income and assets in the case of a student whose parent is a single parent who is not divorced, separated, or remarried shall include the income and assets of such single parent. 
IRS Data Retrieval Tool (DRT) ReplacedThe IRS DRT will be replaced with the Direct Data Exchange (DDX).
-EVERYONE -students, spouses (if applicable), and parents – will need to consent to have their Federal Tax Information (FTI) imported into the FTI module. 
-To provide consent, the individual will need to access the FAFSA with an FSA ID that has been matched with the Social Security Administration.
-Federal tax filers will have their tax information imported into the FTI module. No tax income will transfer into the FAFSA, but tax data will be sent to the colleges listed on the FAFSA.
-Non-tax filers must also check the box to consent. When IRS Date is accessed, the process will verify non-filing status. 
Student Aid Index Replaces Expected Family ContributionThe Student Aid Index (SAI) will replace the Expected Family Contribution (EFC) on the FAFSA form. Students and families will see a different measure of their ability to pay for college and experience a change in the methodology used to determine aid.

In addition to the SAI, the FAFSA Simplification Act is expected to expand the Federal Pell Grant to more students and link eligibility to family size and the federal poverty level.
Siblings in CollegeThere is no longer a benefit for having siblings in college. Previously, the FAFSA divided the EFC proportionally based on the number of household member in college. The SAI will not use the number in college as a factor in calculation of eligibility. As such, students with siblings in college may see a change in their aid eligibility.
Family Farms and Small BusinessFamily farms or small businesses are now included. When required, families will now report the value of their family farms or small businesses. While this inclusion continues to be debated in Congress, it will be required to be reported for appropriate families on the 2024-25 FAFSA and can influence the SAI.