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The FAFSA Simplification Act: What You and Your Organization Need to Know


The landscape of financial aid in higher education is undergoing a transformative shift with the introduction of the FAFSA Simplification Act, starting with the 2024-25 award year. For higher education institutions, compliance with these changes requires a comprehensive understanding of the key aspects of the act and significant adjustments to their financial aid modules. In this blog post, we will delve into what higher education institutions should know about the FAFSA Simplification Act and how they can navigate the necessary changes to remain compliant.

Understanding the FAFSA Simplification Act

The FAFSA Simplification Act, enacted in 2021, is a response to the longstanding complexities associated with the federal financial aid application process. Recognizing the need for a more user-friendly approach, the Act introduces significant changes that impact the way higher education institutions interact with students seeking financial assistance.

Key Changes Affecting Higher Education Organizations

  • Reduction in Application Complexity: With the removal of redundant and complex questions, the FAFSA application process becomes more straightforward. Higher education organizations should familiarize themselves with the revised form to better guide students through the application process.

  • Prior-Prior Year (PPY) Income Data: The shift to the PPY income data model allows students to use income information from two years prior when applying for aid. This change impacts financial aid calculations and requires organizations to adjust their procedures for assessing students' financial needs. Higher education institutions need to modify their financial aid modules to accommodate the switch to the PPY income data model. This includes adjusting algorithms and calculations to align with the new timeline for financial information.

  • Automatic Zero Expected Family Contribution (EFC) Expansion: The Act expands eligibility for automatic zero EFC, simplifying the process for low-income students. Higher education institutions need to update their financial aid strategies to accommodate these changes in determining aid packages. Financial aid modules must be updated to incorporate the expanded eligibility for automatic zero EFC. This requires a thorough review and adjustment of systems to accurately identify eligible students without the need for additional documentation.

  • Revised Aid Packaging Strategies: Institutions must adapt their financial aid packaging strategies to reflect the changes in the FAFSA criteria. This involves revising algorithms that determine aid packages, ensuring they align with the simplified application process and expanded automatic zero EFC.

Ensuring Compliance and Accuracy

  • Staff Training: To implement changes effectively, financial aid staff must undergo comprehensive training on the FAFSA Simplification Act. This includes understanding the new criteria, updated timelines, and changes in eligibility for automatic zero EFC.

  • System Testing and Validation: Before the changes take effect, higher education institutions should conduct thorough testing of their financial aid modules to ensure accuracy and compliance. Regular validation checks can help identify and address any discrepancies.

A Path to a More Accessible Future

While the changes introduced by the FAFSA Simplification Act may pose challenges, they also present an opportunity for higher education institutions to contribute to a more accessible and equitable educational landscape. By understanding the nuances of the act, making necessary adjustments to financial aid modules, and providing robust support systems, institutions can ensure a smooth transition and continue to fulfill their mission of facilitating educational opportunities for all. Embracing these changes is not just compliance; it is a commitment to fostering a more inclusive future for higher education.

BGSF has top financial aid experts on our team who can help you with this crucial transition. Contact us today!

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