What is the FAFSA®?
The FAFSA® is the Free Application for Federal Student Aid and is required as part of the process for applying for student loans, grants, and work study.
Many schools hand out aid or grants as they receive FAFSA® applications, so it is important to fill it out as early as possible. The applications become available on October 1st of each year and will need to be filled out each year. It’s also important to determine what is a reportable vs nonreportable asset. Nonreportable assets include home equity, family-owned businesses, retirement accounts, and vehicles. Reportable assets are bank savings, brokerage accounts, and investment real estate that is not your primary residence. If you’re looking to reduce your reportable assets, you may want to consider utilizing banks savings or brokerage accounts to maximize your retirement account contributions or accelerate your mortgage payments to increase your home equity. Possible financial aid offered as a result of completing the FAFSA® can include grants, work study, and loans.
There were some exciting changes made to the FAFSA® that affect those going to school in the 2023-2024 school year – which means you’ll be completing the FAFSA® for that school year beginning this October 1st. Here is a quick overview of these changes:
- Instead of a grueling 108-question application, the 2023-2024 FAFSA® application cannot have more than 36 questions.
- The Expected Family Contribution (EFC) is now the Student Aid Index (SAI).
- The “income protection allowance” excludes a portion of parent and student income from the calculation to increase the changes of receiving aid.
- Male students no longer have to register for Selective Service to receive federal aid.
- Institutions must provide a breakdown of the entire cost of attendance on their websites.
- There is no longer a limitation on subsidized loan eligibility.
And a big change coming for the 2024-2025 school year: students will no longer have to disclose cash support. That means that grandparent-owned 529 plans will no longer impact a student’s eligibility to receive needs-based financial aid. If you have a grandparent contributing to a 529 plan, it may benefit you to have them open a 529 plan where they are owner and your child remains the beneficiary. Feel free to reach out and discuss with your team at Stonegate!
Don’t we make too much money to receive aid? Why should I complete the FAFSA®?
You may think that it is unlikely that your student will be eligible to receive any financial aid. However, there truly is not income limit to the FAFSA®. Eligibility is determined by how much the school costs and what your family should reasonably contribute. Also, even if you’re ineligible for need-based aid, if you ever need to apply for financial aid it is helpful for the school to already have your information on file each year.
If you have any questions about completing the FAFSA® or paying for education, please reach out to our Stonegate team at any time. Remember, theFAFSA® becomes available October 1st!