Part 2: The Whole Family

Family members beside the student can have an impact on EFC or SAI, and how they impact the student will change with FAFSA Simplification. Here are two key areas where your family’s impact on your FAFSA will change.

Multiple Students

Up until this year, the FAFSA has divided the student’s Expected Family Contribution by the number of college students in the household. Going forward, however, the renamed Student Aid Index will not do so. That means that a student with a sibling in college will see their SAI nearly double relative to their previous EFC. (The EFC had a slight adjustment to the Income Protection Allowance which resulted in each sibling’s EFC being slightly more than half of the EFC for a single student from the household.)

Students who will see the largest impact from this are those who receive federal aid– Pell grants, subsidized student loans or work-study– and other financial aid from colleges that only use the FAFSA. That’s because the FAFSA allocates federal dollars based on EFC or SAI. Unfortunately for Pell-eligible students from large families, who are likely to lose their Pell grant due to the formula change, many additional institutional or outside scholarships are allocated based on eligibility for the Pell grant.

Many colleges that use the FAFSA only have supplemental questions used for allocating their own financial aid; number of siblings in college has been added to many of these supplemental question lists. The CSS Profile will continue asking about siblings in college; typically the Profile reduces each student’s EFC to about 60% of the household’s EFC.

If this change impacts you, reach out to your school’s financial aid office ASAP to confirm whether they will continue to consider siblings in college in assessing your eligibility for institutional financial aid.

Grandparent (or other non-custodial parent) Gifts or 529s

Among the questions being removed from the FAFSA is, “Money received, or paid on your behalf (e.g., bills), not reported elsewhere on this form. This includes money that you received from a parent or other person whose financial information is not reported on this form and that is not part of a legal child support agreement.” This question required students to report financial contributions including 529 distributions from anyone other than the parent(s) filing the FAFSA, including divorced parents who were not custodial parents on the FAFSA. These distributions were counted as student income and to the extent that the student’s total income exceeded $7,600 (for the 2023-24 school year), were assessed at 50% of their value. This often led to unexpected losses of financial aid, especially if funds were received in the student’s first or first half of second year of college.

Good news: If someone other than your parent set up a 529 for you or provides other financial assistance, it no longer needs to be reported on the FAFSA. However, as above, this applies to the FAFSA only. The CSS Profile asks students to report all 529s for which they are the beneficiary, and collects financial information from both parents in case of divorced parents.

More FAFSA Simplification information is available here.