FSA Issues Guidance on 2023-24 Implementation Items from FAFSA Simplification Act

By NASFAA Policy & Federal Relations Staff

Federal Student Aid (FSA) on Friday issued guidance on how it will implement several items from the FAFSA Simplification Act for the 2023-24 award year. The document provides information financial aid offices can use to implement the changes to cost of attendance (COA), professional judgment (PJ), provisional independent student status, and Pell Grant Lifetime Eligibility Used (LEU) restoration on their campuses. FSA announced earlier in the week in the Federal Register it would implement these changes for the 2023-24 award year using authority granted by Congress in the Consolidated Appropriations Act of 2022. 

Friday's guidance marks the next step in FSA's phased implementation of the FAFSA Simplification Act, which began in 2021 with the repeal of the Subsidized Usage Limit Applies (SULA) and changes to extend Title IV student aid eligibility to students who failed to register with the Selective Service System or had prior drug convictions. Award year 2024-25 will see full implementation, with changes to how Pell Grant awards are calculated, changes to the Federal Methodology formula, the new Student Aid Index (SAI), and more. 

Cost of Attendance Components and Required Disclosures

ED provides updated definitions and notable changes to COA components per amendments to Section 472 of the Higher Education Act (HEA), such as the fact that nonfederal loan fees may no longer be included in the COA, on-campus housing allowances must be calculated based on the higher of the average or median charge assessed, and the cost of obtaining a license, certification, or first professional credential is no longer a one-time allowance and is a mandatory COA component. 

The guidance clarifies that institutions are not expected to immediately update the new COA terms, such as "housing" in place of "room" and "food" in place of "board." Rather, FSA asks institutions to make the changes "as soon as it is feasible within their normal consumer information update process."

With respect to on-campus average or median costs, FSA notes institutions' broad flexibility in developing those costs, and notes that they do not need to be calculated based on a specific year so long as the methodology is documented and consistently applied.

The requirement for the food component of the COA to cover three meals per day for students who choose institutionally owned or operated food services includes institutionally contracted food services from a third party. 

For the cost of licensure, certification, or first professional credential, FSA indicates that institutions may use actual or average costs and clarifies that institutions may set a "reasonable limit" on the number of times this component can be included in the COA.

For the 2023-24 award year, institutions must also update all websites referencing tuition and fees with a list of all of its COA components. FSA declines to clarify where and how institutions must meet this requirement other than to note that institutions should be able to document a "reasonable approach" to complying with this requirement.

Because FSA's authority to regulate COA items will not be effective until 2024-25, the guidance largely mirrors legislative language without specifics on how institutions should go about calculating COA components, leaving institutions free to develop their own methodologies in accordance with the law. The guidance does indicate FSA may choose to regulate COA components to "provide clarity in this area."

Professional Judgment

FSA notes the distinction between special circumstances — those related to financial situations that might result in adjustments to data elements in the expected family contribution (EFC) formula or the COA, and unusual circumstances — those related to dependency overrides— for PJ purposes in the FAFSA Simplification Act.

Institutions are reminded that they may no longer maintain a policy of denying all PJ requests, that they must publicize the availability of PJ, and that they may use a dependency override determination by a financial aid administrator at another institution from a prior year. FSA clarifies that institutions are also prohibited from only processing certain types of PJ requests as well, such as permitting adjustments to data elements in the EFC calculation, but not to COA components. 

Institutions continue to have authority to set income earned from work to zero during times of national emergency with documentation of unemployment benefits. This is in current ED guidance and is also codified permanently in statute with the FAFSA Simplification Act.

For the 2023-24 award year, schools must presume that any student who has obtained a dependency override to be independent for each subsequent award year at the same institution unless the student informs the school that their circumstances have changed or the school has conflicting information about the student's independence.

In accordance with the FAFSA Simplification Act, for the 2023-24 award year ED is updating and expanding the types of adequate documentation that a school may request from a student when determining special or unusual circumstances, or verifying homeless or foster youth status.

Provisional Independent Student Status

The FAFSA Simplification Act specifies FSA  must calculate an estimated SAI and estimated Pell Grant when students indicate on the FAFSA they have unusual circumstances that could lead to a dependency override. FSA indicated it will not implement the systems changes needed on their end to accommodate this provisional independent student status other than providing improved help text on the FAFSA, but clarifies institutions will still be required to comply with the institutional requirements under the law. Specifically, institutions must follow up with students who indicate unusual circumstances on the FAFSA, notifying them of the procedures for requesting a dependency override. 

Dependency Status for Unaccompanied Homeless Youth and Foster Care Youth

Effective for the 2023-24 award year, institutions have 60 days from the student's enrollment to make a determination of independence for unaccompanied homeless youth and foster care youth. However, the 60 day deadline does not prohibit financial aid administrators from making such determinations later in an award year. In a Q&A in the Dear Colleague Letter, ED encourages schools to act on a request for a determination of independence within 60 days of the student making such a request.

ED confirms that renewal applicants with an eligible homeless youth, foster care youth, orphan, ward of the court, emancipated minor, or legal guardianship flag on their 2022-23 FAFSA form will have their answers to these questions carried over and pre-populated into their 2023-24 FAFSA form. While completing their renewal FAFSA, such applicants will be required to reaffirm their answers to the dependency status questions.

Pell Grant Lifetime Eligibility Used (LEU) Restoration

ED clarifies LEU adjustments will be automatic for students whose Pell LEU is adjusted for periods of enrollment for which the student received a loan discharge for closed school, false certification, identity theft, or borrower defense to repayment. The guidance implies that the LEU adjustments are ongoing and indicates that FSA will notify the community as it restores Pell Grant eligibility for this population.

Pell Grant Eligibility for Incarcerated Students

The 2023-24 award year will also see implementation of Pell Grants for Prison Education Programs. ED indicated in Friday's Dear Colleague Letter that guidance is forthcoming on this topic, and final regulations on this program were published on October 28.

Changes to the 2023-24 FAFSA

The bulk of changes to the FAFSA required by the FAFSA Simplification Act will be implemented for the 2024-25 award year. The 2023-24 FAFSA includes the following changes:

  • The Selective Service registration and drug conviction questions are removed

  • For students with a previous determination of independence due to homelessness, their answers to the three existing homeless questions on the FAFSA form are eligible for renewal

  • Questions related to sex/gender and race/ethnicity are added as part of a voluntary, post-application survey 

The DCL also includes several Q&As related to items that will be implemented in the 2023-24 year. ED will provide guidance on other FAFSA Simplification Act topics being implemented in 2024-25 at a future date. 


Publication Date: 11/8/2022

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