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Financial Aid For College:  Changes For The Better, and The Worse

June 03, 2021

So we are always urging that our clients do their best to plan on how to pay for college.  But a good plan needs to be flexible, because change always comes.  And, once again, the ground rules surrounding the Department of Education’s financial aid filing process have changed again as a result of recent legislation. Here are some brief summaries of the major provisions.



The FAFSA Form Got Shorter


If you have filled out the FAFSA form, you have suffered through a 108 question exercise in previous years. This fall will be the last form of that length. Starting with the fall of 2022, the FAFSA form will be only 36 questions, and have more tie ins to your federal tax return.


Say Goodbye to the Term “Expected Family Contribution”


I won’t miss this term at all.  Often when talking to our clients, when we tell them what the estimated expected contribution is that the government computed they make for one year of college, that is often met with laughter or tears.


By changing the name of the result of the FAFSA data computation to the “Student Aid Index”, the US Department of Education is hopeful that there will be less frustration and anger from parents who think their computation is unrealistic.


Multiple Children in College at the Same Time?


This change is not going to be well received. Under current FAFSA regulations, when you have multiple students in college at the same time, your expected family contribution in total stays approximately the same as when there is just one in school. It is just divided between the students.


Starting in the fall of 22, that exception is going to be taken away. This will essentially double the expected family contribution for those people who have multiple students in college at the same time.  I know there is much discussion about attempting to reverse this change.


Own a Family Farm or Small Business?  Bad News!


Starting in the fall of 2022 you are going to have to report the value of your small business or family farm on the FAFSA. Previously those assets were exempted.



Divorced?  Which Parent Fills Out the FAFSA?

Up until the fall of 2021, the answer to that question is that the parent who has had majority custody of the child over the most recent 12 months would be the one filling out the FAFSA and including their assets and income on the filing.  The noncustodial spouse would not include any of their income and asset information in the computation of the expected family contribution.


Starting in 2022, this decision will follow what happens on the tax return. Whoever is claiming the child as an exemption for that most recent tax year will be the one filling out the FAFSA.


Grandparent Help Will No Longer Run The Risk of Reducing Need Based Aid


Multiple times our team has run into situations where well-meaning grandparents have supplied money to help with college, only to have that treated as income on the next financial aid form, which would often substantially reduce that aid package.  No more!  Effective essentially immediately, any grandparent help will no longer be considered on the FAFSA form as income.  It was already the case that the asset did not have to appear on the FAFSA.




If you want to read more about these changes, here is a link to the article that I used as my source. Please realize that our firm does not help people fill out FAFSA forms, but we are well-versed in how that system of need-based financial aid works.  Also recognize that the changes I have described do not have any impact on the other major financial aid form called the CSS profile.  Please reach out to us with any questions you have.


John F. Pearson CPA