The New Free Application for Federal Student Aid (FAFSA) “soft launched” on Dec. 30, 2023 after a three-month delay and the most significant redesign since the Reagan administration.
Despite its rocky roll-out, it’s essential to submit the new FAFSA if you or your child could be in college next fall. It unlocks federal, state and school-based financial aid, including student loans, need-based grants, work-study and even some scholarships. Some state and institutional aid is limited, so submitting the FAFSA soon can expand your chances for financial aid.
Those who filled out the FAFSA in recent years will find the 2025-26 edition looks much different. As a result of the FAFSA Simplification Act, signed into law in late 2020, the form now contains far fewer questions, a direct data exchange with the IRS and a new formula that could impact student’s financial aid packages.
Reach out to your college’s financial aid office if you need additional help completing the FAFSA. If you’re a prospective college student, contact your high school college counselor or the financial aid offices of the schools to which you’re applying. Keep in mind that this is also new territory for financial aid administrators, so you might have to wait for an answer.
Here Are the 10 Key Take-aways about the New FAFSA
1. All contributors need FSA IDs
On the new FAFSA, each person who submits information is called a “contributor.” This could include the student, the student’s spouse, one or both biological or adoptive parents or the parent’s spouse. Each contributor needs a unique FSA ID (which is their StudentAid.gov username and password) to log in and complete their portion of the form.
Request your FSA ID on studentaid.gov. Expect a three-day turnaround time after you request it. Students won’t be able to submit the FAFSA until every contributor has their FSA ID.
2. Different parent may need to fill out FAFSA
The FAFSA has new rules for divorced parents of dependent students.
Starting with the new form, the parent who provided the most financial support for the student over the last 12 months will be the FAFSA contributor. If this parent is remarried and didn’t file their taxes jointly, their spouse will also be a contributor.
In past years, the FAFSA used the financial information of the parent whom the student lived with the majority of the time, regardless of whether they provided the most financial support.
3. IRS imports tax information
All contributors must agree to allow the IRS to directly import their federal tax information to the FAFSA. The “direct data exchange” is intended to make it easier for families to fill out the form, since they won’t need to dig up their tax returns and manually enter the information.
While a student can still submit their FAFSA if any contributor doesn’t consent to this process, they won’t be eligible for federal student aid.
4. Delay impacts some state financial aid forms
Some states have their own financial aid forms, separate from the federal one. In seven states — Iowa, Minnesota, Mississippi, New Jersey, New York, Pennsylvania and Vermont — these state aid forms pull some information directly from a student’s FAFSA to streamline the process. However, due to the FAFSA changes and delay, students can’t auto-populate their financial aid forms in these states for 2025-26.
Be sure to keep track of your financial aid deadlines for your state and university (or target universities, if you’re a prospective student).
5. Student Aid Index (SAI) replaces EFC
The Student Aid Index (SAI) has replaced Expected Family Contribution (EFC) to determine a student’s ability to pay for college and the amount of financial aid they can receive.
The information you include on the FAFSA determines your SAI, which is an index number used by college financial aid offices to calculate need-based financial aid. Your need will be calculated by subtracting your SAI from the school’s cost of attendance.
6. Pell Grant award expands
The need-based Pell Grant gives students free college aid that doesn’t need to be repaid. With the new FAFSA formula, 610,000 additional students from low-income backgrounds will be eligible for Pell Grants who wouldn’t have been under the previous form, according to the U.S. Education Department.
Additionally, 1.5 million students will be newly eligible for the maximum Pell award: $7,395 per year.
Here are some key changes to know about how the new FAFSA treats Pell calculations:
Maximum annual grants will be awarded based on family size, adjusted gross income (AGI) and poverty guidelines.
Students who don’t qualify for the maximum Pell Grant could still receive funds if their SAI is less than the Pell Grant maximum.
If a student’s SAI is greater than the maximum Pell Grant award, they could receive a minimum grant award if they qualify based on family size, AGI and poverty guidelines.
The redesigned FAFSA will make it easier for college students from low-income backgrounds to qualify for federal Pell Grants, an award of up to $7,395 per year that doesn’t need to be repaid
7. Application available in more languages
In recent years, the FAFSA was available in English and Spanish only. The new FAFSA is available in the 11 most common languages spoken in the U.S., making it accessible to a greater number of students and their families.
8. Fewer questions
The new FAFSA contains significantly fewer questions. Some students will only have to answer 18 questions on the new form, depending on their circumstances; Previously, the FAFSA included up to 103 questions.
Two controversial questions were axed. Students no longer must register for the Selective Service in order to complete the FAFSA, and the question was removed from the application. Additionally, drug-related convictions alone no longer disqualify applicants, and the question isn’t included on the FAFSA.
9. You can list more colleges
Prospective students can list up to 20 colleges on the new FAFSA, up from 10 in previous years.
The schools you list will automatically receive a copy of the information you submit in the FAFSA, which they can use to calculate your financial aid package.
10. Sibling discount removed
Parents no longer get a break for having multiple children in college at the same time.
The new FAFSA still asks a question about other people in a student’s household attending college, but it won’t be figured into federal financial aid calculations. Some colleges may consider this factor when determining institutional aid, though.
Source: adapted from Eliza Haverstock for nerdwallet.com
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