Gateway Financial Partners

I Survived the New FAFSA

For the past 34 years, the primary process to apply for federal financial aid for college has been by completing the Free Application for Federal Student Aid (FAFSA).  And for 34 years, filling out the FAFSA has been about as much fun as a trip to the dentist.  But hope springs eternal – the Department of Education has rolled out a new FAFSA form for the 2024-25 school year which promises to streamline the process.  Tonight, I completed the form for my two daughters, and I survived (no cavities)!  And here is what I learned.

First, the rollout of the new form has been bumpy to say the least.  The form is normally available on October 1st of each year but due to delays, the new form was not available until December 30th.  Once it was available, the first people to use the new form in January ran into many glitches and issues.  Even now on February 21st, there is a delay in sending out the data to the colleges for several weeks.  This has placed students and colleges in a very difficult position as both try to make their financial decisions.

That said, it did not take me long to complete the forms.  The website estimates that the form will take an hour to complete, and I was able to finish two forms in less than 90 minutes.  It could have been even shorter if there was a carryforward of demographic information from prior year forms or from one child to the next.  I found myself typing in basic personal information multiple times.  However, the financial data was surprisingly quick and straightforward.  The asset information consists only of i) cash, ii) investments (excluding retirements accounts and primary residence), and iii) business values.  And income info is now pulled automatically from the prior year tax return without having to connect to the IRS Data Retrieval Tool as was required in the past.

While the process to complete was fairly straightforward, the results presented were less than satisfying.  The primary FAFSA output metric used to be the Expected Family Contribution (EFC), but this has been replaced with a new metric called the Student Aid Index (SAI).  While it is made clear that the SAI does not represent how much financial aid you should expect, nor does it represent how much you should expect to pay for college, it is not made clear what SAI actually does represent.  Directionally, it appears that a higher SAI may result in less financial aid and a lower SAI may result in more financial aid, but it is hard to know much more since I cannot find any publication of the underlying formula.  The one thing that has been made unfortunately clear is that families with multiple children in college are out of luck with the new process because the sibling discount has been removed.  While the new FAFSA asks a question about other people in a student’s household also attending college, this info apparently no longer gets figured into the financial aid calculations.

So, to wrap this review up on a scale of 1-5 stars (a la John Green’s Anthropocene Reviewed), I give the new FAFSA 1.5 stars.   

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About the Author

Neil Manning
Neil Manning CFP, AIF, CDFA, FSA - LPL Financial Advisor
I am a reformed actuary turned financial advisor, helping my clients with everything from investments to retirement projections to LTC insurance since 2014.  Unlike most normal people, I love numbers and finance – I’m currently reading a book about game theory which my wife and two teenage daughters think is unbelievably boring (they are wrong).  For more details about my background, check out my website below.
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