Contributed by: Kali Hassinger, CFP®, CSRIC™
Just as parents and students are getting back into the groove of another school year, it's already time to start thinking ahead! The Free Application for Federal Student Aid, better known as the FAFSA, opened for the 2023-2024 school year on October 1. The form helps determine financial aid eligibility for both current and prospective students. Although this is a federal application, it may also be used to apply for many state loans, grants, and scholarship programs.
A New Format
This is the first year a new, shortened version of the FAFSA is being released. The number of questions has been reduced from 108 to 36! Applicants will also be asked to select their role when completing the application. The options are parent, student, or preparer. The Asset Protection Allowance (APA) amount has been effectively reduced to zero, meaning that parental or student assets will be considered more heavily when completing the FAFSA. However, this isn't a shock as the APA has steadily been reduced over time, drifting from $21,400 in 2009 for a single-parent home to $2,500 in 2021 and now officially hitting zero.
The sooner, the better!
A large portion of available funds is distributed on a first-come, first-served basis, so the earlier you file the FAFSA, the more money is available for loans and grants. While you have until June 30, 2023, to file the FAFSA for the 2023-2024 school year, most state and school deadlines differ. It doesn't matter whether a school has accepted a student at the time of filing. You'll need to elect at least one college to receive the application information, but you can add multiple schools in which you may be interested.
What information do I use?
For the 2023-2024 school year, the FAFSA will use 2021 tax return information. For dependent students, you will need financial information for at least one parent. If your parents are married and/or living together, income and assets for both will be considered. If the parents are divorced and living separately, the custodial parent's information will be reported (whomever the child lives with the majority of the time).
Regardless of the parent's marital status or the student's dependent or independent status, be prepared with W-2s, financial account information, and a 2021 tax return. Even if you don't think you'll qualify for aid, it's important to file the application. Some schools will only consider students for scholarships if they have filed the FAFSA.
Bigger Changes on the Horizon
This October's FAFSA changes were supposed to be more far-reaching than simply a shortened format. In June of 2022, however, it was announced that the rollout of several other changes would be delayed until the 2024-2025 school year (release date of October 2023) to allow more time for technology updates. These changes should provide increased access to Pell Grants (provided to those with exceptional financial need) and reduce the portion of parental or student income expected to pay for school costs.
Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kali Hassinger, CFP®, CSRIC® and not necessarily those of Raymond James.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.