What is the FAFSA?

The Free Application for Federal Student Aid (FAFSA) is a crucial requirement for qualifying for federal student aid. Most colleges and universities use the FAFSA to evaluate eligibility for institution-based scholarships. The FAFSA is completed annually and generates a summary report that includes an estimate of your family’s ability to contribute to your college expenses.

For years, the FAFSA used a special calculation to generate your Expected Family Contribution, a number that colleges and universities used to understand how much financial aid you need to successfully complete college. In 2021, Congress passed the FAFSA Simplification Act, a law that required the Department of Education to make changes to streamline and simplify the FAFSA process. The 2024 – 2025 academic year will be the first to use the new optimized FAFSA form and aid calculations.

What’s Changed?

In the 2024-2025 academic year, the FAFSA will begin to use new calculations, new terminology, and a new connection to the IRS to improve the ease of aid calculations. In addition, the overall length of the application will change, trimming down from over 100 questions to less than 50. Let’s take a closer look at the changes on the FAFSA.

Introducing Contributors

Before 2024, the FAFSA made determinations about what tax information to collect based on who was considered a dependent on tax filings. This made completing the FAFSA more challenging for students in unique family situations. To improve this, the 2024-2025 FAFSA form defines those that need to provide tax information as contributors.

Contributors are determined by your relationship, your tax filing, and your martial status and can include the student’s parent or stepparent, spouse, the student themselves, or other custodial caregivers. Being named a contributor does not mean that person is responsible for your educational expenses, only that their information is needed to provide a clear understanding of your financial needs. This new system allows for a more accurate calculation of family size than previous iterations. The video below by the Federal Student Aid Office explains this in more detail.

Direct Connection to IRS Submissions

In addition to the FAFSA Simplification Act, congress passed the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act) This act allowed for the Department of Education and the IRS to implement new data-sharing agreements and technologies. Thanks to this new tool, students will no longer need to navigate away from the FAFSA form to collect tax information. Instead, the Financial Aid Direct Data Exchange will transfer the tax information of your contributors directly to the FAFSA Form. Your contributors will still need to create their own login to complete and sign their portions of the FAFSA submission.

New Aid Calculation

In response to long standing criticism of the original aid calculation formula which generated an Expected Family Contribution (EFC) amount, a new formula has been created for the 2024-2025 FAFSA. Students will now receive a Student Aid Index (SAI) number with a new minimum value of -1500. The Education Department hopes that this new language and number will allow for better clarity when evaluating eligibility for aid.

In addition to the new name, factors contributing to the SAI have changed as well. In previous years, having a sibling in college at the same time as you was calculated into a family’s EFC. This will not be the case with the new SAI. Financial support from friends or non-custodial family will also be treated differently in the SAI calculation – no longer counting against a student as untaxed income. That means if a grandparent gives you a check for school, it cannot be used to raise your SAI and disqualify you from aid. Student income has a new, higher limit as well – students can make up to $9,410 before their income applies towards their SAI.

The biggest changes come from the calculation of parent’s income. The threshold for your family’s income (known as income protection allowance) has increased – meaning families have a larger portion of their income protected prior to being included in the SAI calculation. Additionally, parents who receive child support will no longer have that child support counted as income, rather it will be handled as an asset. For families who own farms or small businesses, there are new reporting requirements and calculations including reporting the adjusted net worth of those businesses on the FAFSA for the first time.

Where is My FAFSA Student Summary?

When your information has been submitted and is complete, you will receive a FAFSA Submission Summary form. This information can also be accessed by signing in to your FAFSA portal. This form outlines what you have submitted on your FAFSA, where your data is going (e.g. which college you’d like to receive the data), and some information about what federal aid programs you might be eligible for – including federal loans and the Pell grant. This form also outlines the procedure for what to do if you feel something is incorrect on your form.

How Do Scholarships Use my SAI?

Many scholarships, including the Balkhi Foundation Higher Education Scholarship, require you report your SAI when applying for programs. This is to protect your private financial information that would otherwise be reported on your tax returns while still giving the scholarship administrators an idea of your financial need.

How Do I Find My SAI?

To find your SAI amount, you should look at your FAFSA Submission Summary. Your SAI amount will be in the top right corner near your Data Release Number and the date of your application.

Image of a Submission Summary Top Box with a red arrow pointing to the SAI

Are More Changes Coming to FAFSA?

The FAFSA is a often evolving application and we should expect continued tweaks and fine tuning in the coming years. Of note, the bottom number of the SAI (currently -1500) is an idea that has been up for debate, with some calling for the Education Department to change the bottom back to zero like it was on the EFC.

About the Balkhi Foundation

The Balkhi Foundation is a non profit organization dedicated to leveling the playing field through education. Through student scholarships and partnerships, the Balkhi Foundation strives to make a difference in the lives of students and families.

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