By Jill Desjean, Senior Policy Analyst

In February 2023, NASFAA distributed a survey to NASFAA member institutions to assess their institution’s knowledge about and readiness for FAFSA Simplification Act implementation. The survey — which asked participants to rate their institution’s level of preparedness for individual provisions of the FAFSA Simplification Act, the barriers they anticipate in implementing the changes on campus, and their reliance on various resources on FAFSA simplification, among other things — received 374 responses for an 11% response rate.

Usefulness of FAFSA Simplification Resources 

Institutions rated NASFAA’s resources highest in their effectiveness at helping them prepare for the changes already in place and for the upcoming changes from the FAFSA Simplification Act. Highest rated (excellent or good) were NASFAA’s Today’s News coverage (92%), AskRegs service (87%), timelines of effective dates document (84%), and webinars (83%). Notably, no NASFAA resources were rated as poor by more than 3% of respondents. 

Department of Education (ED) and state/regional association resources received similar marks, with ED’s guidance and Federal Student Aid (FSA) Training Conference rated as “excellent” or “good” by 44% of participants, respectively, and state and regional association resources rated “excellent” or “good” by 41% of respondents. 

Twenty-nine percent of respondents reported using resources developed by other organizations. However, only 16% rated those resources as “excellent” or “good.” 

Individual FAFSA Simplification Act Provisions

Respondents’ top three FAFSA simplification items they believe will place more burden on financial aid offices were the requirement to report Federal Work-Study (FWS) earnings to ED (56%), the change to treatment of multiple family members in college in the Federal Methodology (FM) formula (48%), and ED authority to regulate cost of attendance (COA) (42%).

Outside of the top three, more than one-third of respondents indicated the following FAFSA simplification provisions would place more burden on financial aid offices: the addition of small businesses/family farms to reported assets (39%), the requirement to calculate a separate on-campus housing allowance in the COA for students with and without dependents (39%), the requirement that the cost of a first professional credential be included in COA (39%), the requirement to publicize all COA elements on websites where tuition and fees are described (39%), the new Pell Grant proration formula for less-than-full-time enrollment (38%), provisional independent student status (37%), and negative Student Aid Index (SAI) (36%).

Two-thirds or more of respondents indicated their institution was on track to implement the expected family contribution (EFC) name change to SAI (72%), the requirement to carry forward dependency overrides to subsequent years (69%), the requirement to have an FSA ID to access the FAFSA (67%), the provision that the housing allowance of the COA cannot be zero for students living with parents (68%), and the provision that the food component of the COA must provide the equivalent of three meals per day (67%). 

The percentage of respondents indicating they are on track to implement professional judgment (PJ) and COA changes from the FAFSA Simplification Act were relatively low considering those provisions are effective for the 2023-24 award year. For instance, fewer than half of respondents indicated they were on track to implement the new examples of unusual or special circumstances for PJ (49%) or for the distinction between special circumstances and unusual circumstances (43%). Only 28% of respondents indicated they were on track to implement provisional independent student status. 

While numbers were also low for respondents indicating they were on track to implement on-campus housing allowances changes (30% for calculating separate allowances for students with or without dependents and 44% for using the greater of the average or median on-campus housing cost in the COA), nearly a quarter of respondents (24% and 22%, respectively) indicated these changes do not apply to their institution, presumably because they do not offer on-campus housing, so those numbers may not be as troubling as they appear at first glance. 

With respect to specific areas institutions were least likely to report feeling prepared, the top three were the new Pell Grant proration formula for less-than-full-time enrollment (23%), the new requirement to report FWS earnings to COD (20%), and Pell Grant eligibility restoration for incarcerated students (19%). It should be noted that not all institutions will offer Pell Grants for incarcerated students and, in fact, 56% of respondents indicated Pell Grants for incarcerated students did not apply to their institution, in which case there is no need to prepare.

The provisions respondents reported their institution was not on track to implement included the requirement to report FWS earnings to ED (15%), negative SAI (14%), the distinction between special circumstances (for PJ for Pell eligibility) and unusual circumstances (for PJ for SAI and COA adjustments) (11%), provisional independent student status (11%), and the addition of small business/family farms to assets (10%).

Encouragingly, relatively low percentages of respondents indicated they were not aware of individual provisions of the FAFSA Simplification Act. Of the provisions the most respondents indicated they were not aware of, 23% said they were not aware of the removal of the requirement to prorate SAI for periods of enrollment other than nine months, and the same percentage were not aware of the removal of the requirement for at least half-time enrollment for students to receive an additional 50% Pell Grant (23%), commonly referred to as year-round Pell. Seventeen percent of respondents were not aware of the change to a roles-based process for FAFSA completion. 

Also encouraging, 1% or fewer of respondents were unaware of the following changes:

• Direct data exchange with the IRS (1%)

• Income items included in SAI limited to those on the tax return (1%)

• Student contribution from available income allowed to be as low as -1500 (1%)

• EFC name change to SAI (1%)

• Pell Grant eligibility restored to incarcerated students (0%)

• Lifting of eligibility ban for students with drug convictions (0%)

• Lifting of eligibility ban for students not registered with Selective Service (1%)

• Repeal of Subsidized Usage Limit Applies (SULA) (0%)

• Automatic maximum/minimum Pell Grant based on federal poverty guidelines (1%)

• Negative SAI (0%)

• Prohibition on denying all PJ requests (0%)

• Food COA component must provide equivalent of three meals/day (1%)

• Requirement to publicize all COA elements on websites where tuition and fees are described (1%)

Despite those low percentages, other provisions respondents were not aware of included the removal of state/other tax allowance (12%), the new Pell Grant proration formula for less-than-full-time enrollment (15%), removal of aid administrators’ ability to submit an application on the student’s behalf on FAA Access to CPS Online (10%), cost of a computer allowed in COA for less-than-half-time enrollment (11%), and exclusion of foster care payments and certain emergency aid from treatment as estimated financial aid (EFA) (12%).

Less concerning was respondents’ lack of awareness of several FAFSA simplification provisions that place requirements on ED rather than on schools, including the requirement for ED to consider verification burden on low-income students (13%), the requirement for ED to review the effectiveness of verification in preventing overpayments (14%), and ED’s authority to enter data-sharing agreements with other agencies to conduct outreach on means-tested benefits with applicant authorization (16%). 

Respondents also indicated a desire for more guidance in these areas, reinforcing the lack of awareness around these provisions. While it would be better if schools were familiar with all of the provisions of FAFSA simplification, at this time it is more important that they focus on what needs to happen on their campuses. While guidance is unnecessary considering these provisions do not require school action, this is an area where ED could share some of its plans so institutions fully understand that these provisions are exclusively ED’s responsibility.

The areas respondents indicated as most in need of more guidance were negative SAI (49%), roles-based FAFSA completion (46%), student contribution from available income allowed to be as low as -1500 (42%), provisional independent student status (41%), and the change to who qualifies to not report assets on FAFSA (40%). 

Overall Preparedness for FAFSA Simplification

Twenty-eight percent of respondents indicated they were mostly or completely on track with respect to their institution’s overall level of preparedness for FAFSA simplification, while 59% said they were somewhat on track and 10% said they were not at all on track. 

While more than half (53%) of respondents indicated their institution’s senior leadership was somewhat or not at all engaged with the financial aid office’s implementation of the FAFSA simplification changes, respondents did not include lack of buy-in from senior leadership in their top three barriers to successful implementation of the upcoming changes on their campuses. Instead, the most common barriers identified were lack of time (59%), lack of guidance from ED (58%), lack of confidence that Student Information System (SIS) providers will be ready for changes (56%), and staffing shortages (55%).

Respondents indicated that just over half (51%) of their student population (and parents, if applicable) were not at all aware of the upcoming changes to the FAFSA and to eligibility. While understandable given that there is still one more aid year before these changes become effective, they will be completing the FAFSA for that aid year later in 2023. 

More than two-thirds of respondents had low confidence (slightly confident to not at all confident) in ED’s ability to release timely training opportunities (66%), to release timely, helpful technical specifications (74%), or to release the 2024-25 FAFSA by Oct 1, 2023 (78%). 

Implications for Future Efforts

NASFAA’s FAFSA Simplification Implementation Working Group continues to meet regularly to advise ED on their implementation efforts and to provide FAFSA simplification resources for NASFAA’s members. The group will focus its future efforts on the areas respondents indicated they are least prepared as well as those where respondents indicated they were not aware of upcoming changes, especially with respect to FAFSA simplification provisions that become effective in 2023-24, like PJ and COA changes.

As for ED, survey results indicate it should focus its efforts on providing information about its progress toward implementation, developing guidance on upcoming changes, updating institutions on how the department is engaging with SIS providers, and sharing how it plans to implement the verification requirements Congress created and the impact they will have on verification selection rates and requirements. Finally, ED should develop a robust information campaign to get the word out to students and families about the upcoming changes. 

Publication Date: 2/27/2023

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