Simplified FAFSA Launches Amid Concerns Over Outdated Figures

The eagerly anticipated rollout of a simplified FAFSA (Free Application for Federal Student Aid) is nearing its end-of-the-month deadline. However, concerns arise as the new FAFSA may debut with outdated inflation data, potentially resulting in many students receiving less financial aid than they merit, warns higher education expert Mark Kantrowitz.

The crux of the issue lies in the FAFSA’s affordability calculation, which utilizes a metric known as the “Student Aid Index” to gauge a family’s ability to pay for college. Unfortunately, the forthcoming FAFSA relies on consumer price index figures from 2020, failing to reflect the recent surge in inflation.

While federal legislation mandates annual updates to the SAI tables based on the latest CPI data, this year, the Secretary of Education did not implement these updates promptly. Consequently, the Department of Education has confirmed its intention to postpone updating the tables until the 2025-26 aid cycle.

This delay poses significant challenges for families, particularly middle- and higher-income households, who may see a substantial reduction in their expected financial aid. For example, a typical family in New York with an adjusted available income of $100,000 might now be expected to contribute $12,943 instead of the previously estimated $9,162, resulting in nearly a $4,000 difference in aid.

Kantrowitz emphasizes that the FAFSA’s simplification was intended to broaden eligibility. However, complications like the failure to adjust for inflation and the elimination of the “sibling discount” for families with multiple children in college simultaneously may hinder this goal, especially for middle-income families.

With the imminent launch of the simplified FAFSA, experts anticipate a tumultuous process, characterized by confusion and frustration. Despite efforts to streamline the application, the presence of unresolved issues suggests that the transition may be far from seamless.