Coming Changes to the FAFSA

Over the next three years, the Federal Department of Education will phase in changes to the FAFSA, the Free Application for Federal Aid, which may increase out of pocket college costs for families, yet reduce the complexity of applying for need-based financial aid. The following are highlights of the changes, as well as recommendations for families to consider:  


In the current FAFSA evaluation, when two or more children are attending college in overlapping years, each student may qualify for more need-based aid, as the Expected Family Contribution (EFC) is split by the number of students simultaneously attending college

The EFC is “subtracted” from the published “Cost of Attendance” then the difference may be subsidized by some combination of grants (money that does not need to be repaid), loans—both for students and parents, or work-study (essentially a job). The greater the difference, the more likelihood a student will be awarded need-based financial aid. 

Once the FAFSA evaluation changes in the 2023-24 school year, students will each be assigned a unique Student Aid Index (SAI) number, which will not be split amongst their siblings. Thus, families may not qualify for as much need-based aid as in previous years.


Starting in 2023-24, more of parent(s)’ income will be sheltered from consideration for need-based financial aid, increasing by 20%. Thus, the Income Protection Allowance will increase by $4000-$8000 for most families, potentially offsetting any losses when the SAI is no longer split amongst multiple kids in college.

A student’s Income Protection Allowance, even for dependent students, will increase by 35% or roughly $5000, sheltering more wages from paid internships or part-time jobs from consideration in need-based aid calculations.


Starting in the 2022-23 school year, male students will not need to apply for the Selective Service in order to qualify for Federal need-based student aid—a change affecting boys in the Classes of 2022 and beyond


Additional changes will include how cash gifts or payments made directly to a university by a person other than a parent, like a grandparent, what’s called, “Untaxed Income” may affect a student’s eligibility for need-based aid. Also, students whose parents who are divorced or separated will be subject to different rules about who can file the FAFSA and how their income will be assessed. 


In anticipation of need-based aid changes, families should study the upcoming changes and consult trusted advisors, like educational consultants, tax accountants or financial planners, as well as a variety of online tools, like university “net cost calculators” to determine how current assets and income may be assessed in financial aid calculations. 

Most importantly, continue to discuss the value of a college education as a family, for which price is only one measurement of value. The more students understand why they’re attending college, as well as gain the financial literacy to understand the value of the dollars paid for their education, they can partner with their families to enroll in the most “affordable” and valuable university.

As the price of college annually increases, we help families find value in higher education for their children’s prosperity. Contact us at Creative Marbles Consultancy for more details.

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About Jill Yoshikawa, Ed M, Partner of Creative Marbles Consultancy

Jill Yoshikawa, EdM, Harvard ’99, a seasoned, 25 year educator and consultant, is meticulous in helping clients navigate all aspects of the educational experience, no matter the level of complexity. She combines educational theory with experience to advise families, schools and educators. A UCSD and Harvard graduate, as well as a former high school teacher, Jill works tirelessly to help her clients succeed.
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