New Report Details FAFSA Simplification’s Impact on Student Financial Aid

By Hugh T. Ferguson, NASFAA Managing Editor

The rollout of FAFSA simplification is slated to be one of Federal Student Aid’s (FSA) biggest priorities for the upcoming year that will have profound effects on student aid.

In a new report published Monday, Phillip Levine, a nonresident fellow at the Brookings Institution’s Center on Children and Families, and Jill Desjean, NASFAA senior policy analyst, seek to highlight the impact that FAFSA simplification will have on financial aid eligibility for various students, and in turn, the price that they will pay for college.

Throughout the report, the authors detail estimated changes that FAFSA simplification will have on students’ eligibility for Pell Grants and institutional need-based financial aid. An interactive feature also simulates changes in financial aid eligibility based on changes in family income and the number of siblings in college.

Overall, the students who would see the biggest benefit from the changes would be those from families with an annual income of around $70,000 who have no other siblings in college.

The results indicated that FAFSA simplification will have very different effects on different types of students and institutions. While some students will see no change in Pell Grant eligibility, others may see an increase, and still others may lose their eligibility.

Less clear, though, is the impact these changes in how eligibility is calculated will have on institutional need-based aid.

“If their students’ eligibility for aid changes, their policies may change as well to coincide with their budgetary needs,” the report said. “For instance, if aid eligibility increases, it is unclear whether the institution would have the ability to increase financial aid. They may need to adjust the method of determining how much aid to award to a student with a particular level of remaining need.”

Eligibility for institutional aid will fall by $1.2 billion, the paper estimated, due to increases in Pell Grant eligibility, the removal of favorable treatment for multiple family members in college, and other factors. Should institutions keep their current awarding policies in place, the result would be an overall reduction in institutional costs. This does not account for changes to state financial aid.

“The open question in all of this is the strategic decisions that colleges and universities will make in response to the altered financial aid landscape,” the report said. “Ultimately, those decisions will determine the specific impact of FAFSA simplification on college affordability.”


Publication Date: 4/18/2023

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