Students across the country are now beginning to receive their long-awaited financial aid offers, and for some families those offers are not what they hoped for or what they expected.
In previous years, students would have received financial aid offers much earlier in the year, but this year due to problems with the implementation of the 2024-25 FAFSA, many students are just now receiving those offers. The 2024-25 FAFSA is the first major revision under the new FAFSA Simplification rules, approved by Congress a few years ago, and some students and parents experienced errors – many of which have since been addressed – with the new form.
In addition to the problems with the form and the delay in financial aid offers, students and parents are now feeling some of the other impact of the legislation – finding out they didn’t qualify for need-based aid or, in the case of students who were already in college, no longer qualify for aid they would have received in the past.
The new formula does overall increase the number of students who could receive need-based aid, such as a Pell Grant, by increasing the increasing the amount of the income protection allowance and implementing automatic Pell Grants based on family size and income. However, other students may see their financial aid eligibility impacted by two changes in how need is calculated on the FAFSA.
Middle income (and in some cases, high-income) families may be expected to contribute more to their student’s education due these two changes in the FAFSA calculation:
- Number in college: In the past, the FAFSA calculation took into consideration the number of siblings in college at the same time. So, a family with two children, for example, saw the amount they were expected to contribute divided in half. With the new FAFSA, the amount the family is expected to contribute is no longer divided and is the total amount for each child. In the past if a family was expected to contribute $10,000 toward education and had two children in college, the amount would be $5,000 for each child. Under the new FAFSA, the amount stays $10,000 for each child – no matter how many are in college. This impacts financial aid offers because the less a family can contribute to an education, the more likely the student will receive need-based aid. The calculation used to award aid is Cost of Attendance minus the Student Aid Index from the FAFSA (which is a measure of financial aid eligibility) to determine whether the student has financial need.
- Assets: Under the new FAFSA, there may be less families that have to report asset information due to the increase in the Income Protection Allowance and other changes. For those families reporting asset information, there are some new rules that require them to report businesses and farms that they might not have had to include in the past. In the past, families only had to report business or farm assets if they had more than 100 employees. Under the new FAFSA, anyone required to report assets will be required to report the value of the farm or business, no matter how many employees they have.
Students and families should carefully review financial aid offers, ensuring they understand what are grants and scholarships, which typically don’t have to be repaid, and what are loans that do have to be repaid.
Students and families can contact the school financial aid office if they have questions about the financial aid offer. Colleges and universities are required to follow federal regulations regarding the awarding of financial aid but may reconsider an offer if a student has special circumstances – such as high medical expenses or is facing other catastrophic expenses.
To learn more about financial aid offers, read: Financial aid offer changing with new FAFSA.
