A new guidebook from the State Higher Education Executive Officers Association (SHEEO) was published online today to provide insights for state higher education agencies to navigate and understand both the benefits and implications associated with the change to a new simplified Free Application for Federal Student Aid (FAFSA) in regard to state financial aid.
The 2024-25 Simplified FAFSA, rolled out by the U.S. Department of Education (ED) at the end of December, includes a new needs analysis formula. This change requires states to make alterations in how they administer their financial aid programs, such as updating their financial aid processing systems or altering their respective aid formulas to determine state aid eligibility.
While every state administers its financial aid programs in a different way, this new guidebook serves to highlight:
- changes to the new FAFSA and needs analysis formula,
- ways in which students and their families may be impacted,
- issues associated with the new FAFSA that state agencies and legislatures may want to consider,
- and examples on how the new needs analysis formula alters the eligibility distribution for state aid programs.
The new guidebook examines how state aid could be impacted by the new Student Aid Index. SHEEO examined the design of four different state aid programs: first dollar scholarships, last dollar scholarships, eligibility based on an EFC/SAI threshold or Pell Grant, and eligibility based on adjusted gross income.
The intent of the changes to the FAFSA is to lead to expanded Pell Grant eligibility and higher award amounts, which prior research has demonstrated will occur. However, certain students, especially those from families with multiple members in college or families with a farm or business, may experience a loss of federal and state aid eligibility.
“The updated FAFSA and new needs formula offer states an opportunity to really examine their financial aid programs,” said Rachel Burns, SHEEO senior policy analyst. “States may need to adapt their grant and scholarship programs to ensure they continue to maintain the goal of promoting college access and success.”
State higher education agencies are working to develop processes to award aid in a timely manner, but they are not anticipated to receive necessary FAFSA data elements from ED until mid-March. States will need to work with postsecondary institutions on communication strategies to inform students and their families that postponement in awards is due to the delayed release of the FAFSA.
The 2024-25 FAFSA delay and ongoing issues are causing frustration within the higher education community. SHEEO will continue to advocate for its members and share concerns with the U.S. Department of Education in pursuit of timely solutions to minimize confusion and hardship for students and families.
On a new webpage with frequently asked questions, SHEEO will update states on how to troubleshoot known issues on the form and ways peer states have moved forward.
Find the new FAFSA guidebook and a link to the FAQ webpage at https://sheeo.org/project/fafsa-simplification/.
