FSA Outlines 2024-25 FAFSA Simplification Changes in New Dear Colleague Letter

By Maria Carrasco, NASFAA Staff Reporter

The Office of Federal Student Aid (FSA) on Friday released a Dear Colleague Letter (DCL) outlining multiple changes in the 2024-25 award year due to FAFSA simplification, such as implementation of the Student Aid Index (SAI), and calculation of the federal Pell Grant, among other changes. 

The DCL notes that these changes mark the final phase of implementing the FAFSA Simplification Act. One of the largest changes happening in the 2024-25 award year is the transition from Expected Family Contribution (EFC) to SAI, which will be the number used to determine a student’s eligibility for certain types of federal student aid. 

SAI is calculated using the formulas outlined in the FAFSA Simplification Act. Like the EFC, SAI is still determined by one of three formulas — dependent students, independent students without dependents other than a spouse, and Independent students with dependents other than a spouse. The DCL notes that each formula is described in detail in the 2024-25 Draft SAI and Pell Grant Eligibility Guide

The biggest changes to the need analysis formulas include the removal of the number of family members in college from the eligibility calculation. Many NASFAA members have expressed concerns and asked questions about this change, including how to conduct a professional judgment (PJ) review on the number of students a family has in college. In the DCL, FSA notes that institutions “may use professional judgment to adjust other data items related to COA or SAI that reflect costs associated with additional family members enrolled in college.”

Other big changes to need analysis formulas includes the possibility for an SAI to be a negative number, with a minimum SAI of -1,500 instead of zero, the elimination of alternate EFC (SAI) for enrollment for a period other than nine months, and the elimination of the Simplified Needs Test (SNT) and Auto-Zero EFC (SAI) calculations. 

FSA also addressed that under the new FAFSA, the net worth of a farm now includes the value of a family farm. Some financial aid administrators, lawmakers, and others have expressed concern over this change, saying students from families with farms could see less financial aid. 

FSA notes that the net worth of a farm may include the “fair market” value of land, buildings, livestock, unharvested crops, and machinery actively used in investment farms or agricultural or commercial activities, minus any debts held against those assets. FSA adds that financial aid administrators can use PJ to exclude any proceeds or losses from a sale of a farm from family income or assets. 

The DCL also touched on the calculation of the federal Pell Grant under FAFSA simplification. While Pell Grant formulas 1-5 that are used to determine a student’s Pell Grant were not changed, the enrollment status step within the Pell Grant Formulas will now use an enrollment intensity formula. 

That means a student’s scheduled Pell Grant award is now multiplied by the student’s enrollment intensity percentage to determine the annual Pell Grant award. However, FSA notes that while a student’s enrollment may exceed full-time enrollment as defined by the student’s institution, enrollment intensity cannot exceed 100% for Pell Grant adjustment purposes.

The DCL listed resources aid offices could use, including the 2024-25 Draft Student Aid Index (SAI) and Pell Grant Eligibility Guide, which FSA will continue to update, and the 2024-25 Draft FAFSA Specifications Guide. The Department of Education’s Office of Postsecondary Education also published updated questions and answers on its website. 

“We recognize that the Act changes foundational aspects of how institutions calculate, award, and disburse federal student aid,” the letter said. “We commit to providing resources needed to update institutional policies and procedures, train staff, and prepare students for the changes.”

Stay tuned to Today’s News for a follow-up policy deep dive on the DCL. 


Publication Date: 8/4/2023

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