A great deal of attention has gone to the renaming of the FAFSA’s Expected Family Contribution to Student Aid Index. The change is a good one, even if it is primarily cosmetic. The formula and inputs remain largely the same, and the end result is still what it has been: a tool with which colleges and universities can assess all students’ financial health on a consistent set of metrics. What’s different is mostly that it’s finally being called that. If you’ve read this blog for more than a minute, you’ve probably seen that the EFC is a late-teenage years version of What to Expect When You’re Expecting– and just as you should expect pregnancy to feel like aliens have taken over your body, you should expect your Expected Family Contribution will not be your actual cost to attend college.
A couple of key differences are worth highlighting. Remember, too, that these changes go into effect for the 2023-2024 school year, meaning the FAFSA that will become available on Oct. 1, 2022.
- Divorced parents: Currently, the custodial parent for the FAFSA is the parent with whom the student spends the most time. In the new version, the custodial parent is the parent providing the most financial support. There may still be planning opportunities here, especially in the case of students whose higher-income parent funds a 529 such that they are providing more limited cash support during the FAFSA years.
- Pell Grant eligibility: Eligibility for Pell Grants will no longer be determined by EFC. Instead, it will be based on family size and adjusted gross income, with families whose adjusted gross income is within a multiple of the federal poverty level for a family their size being eligible. Maximum Pell Grants will go to students within either 175% or 225% of the federal poverty level, depending on household demographics.
- The Income Protection Allowance has been increased but only reflects family size, not number of college students.
- Cost of Attendance now has some guardrails around it, including that the food allowance must be the equivalent of three meals per day, whether on campus or off. This is a big deal for a variety of reasons; one that applies broadly is that families attempting to compare actual costs of colleges will have a somewhat more level playing field because quoted meal plan costs should be more similar. (Many schools use their lowest-level meal plan in their COA figures, which makes the school appear less expensive than it might be.)
There are 9 comments
Hello,
I wanted to ask you a quick question about income. I’m a sophomore in college and my senior year will be from 2022-2023.
Since the FAFSA bases income from 2 years prior, my senior year’s financial aid should be based on my 2020 tax return, is that correct?
That means I can make as much money I want this year (since it’s 2021 now) to help save for my senior year of college, and it shouldn’t impact my FAFSA’s for the rest of my college career – Am I understanding that correctly?
Yes, that’s correct!
Thank you for the quick response!
I own some stocks as well. Should I liquidate these stocks prior to filing the FAFSA for my senior year? I can then gift that money to a friend so that it doesn’t affect my eligibility.
It sounds kind of suspicious, but I did some research and I read that it was perfectly legal. Can that be done to increase the aid i receive for college?
Thanks again!
You could do that. Since the income (capital gain) wouldn’t be reported that can definitely work. It’s not the most above-board way to do it but it’s not against the rules. You might also review your financial aid award for this year and see how much of a difference it might make. Remember that it needs to be a gift, not a loan.
Ah I see. I kind of figured the friend could gift it back to me after the aid finalized. Is that the same thing as a loan? Would that affect me negatively? I didn’t think about it like that.
You can of course agree that you’ll be repaid but one risk of gifting is that the recipient chooses not to give it back. If there’s a formal agreement for them to repay you then it’s a loan, not a gift.
Help. I’m having much anxiety filling out the assets section because I can’t figure out what the asset protection ceiling is! My head is spinning looking at all of this form snd I
Just want to understand the simple
Number for asset protection for 2021-22.oldest spouse is 54. We’ve had a nightmare year during the first months of FAFSA submission and am trying to out it together just before final
Priority deadline! Help!!! I’m a subscriber.
The asset protection allowance gets calculated for you. When you fill out the FAFSA it will ask if you have more than $[your asset protection allowance] in assets. If you answer yes, it will ask the detailed questions about assets. So it’s not something you need to look up. If you want to look it up, go to my post on the FAFSA formula which links to the formula worksheet and you’ll find it there— there’s a table showing the number by parent age and marital status.
Thank you. That is what I meant. The info in the table that shows the amount that isn’t calculated I to my efa. It’s so low! 6900 for married couple of two age 54. Thank you for responding. In appreciate it!