FAFSA Changes

FAFSA 21-22 ChangesStudents and Parents will be completing the FAFSA 2021-2022 form and the application will be available on October 1, 2020.  Families will be using the tax information from the tax year 2019 due to the rule called Prior Prior.   This year there are a few FAFSA changes that people need to review before they begin to complete this form.

In addition to the FAFSA changes, the family’s financial changes resulting from the COVID virus could have a more significant impact on a family’s financial aid position this upcoming year.  This is due to the timing of the income information used in the FAFSA submission as stated above.  The bigger problem is many families will need to appeal to each college that the student applies to. The timing of the appeal is explained below.

Most of the FAFSA form changes for this year were wordsmithing of the existing questions to improve clarity. This will be the second year using the new tax form which changed last year, so it will be easier for most people to find the required information to complete the form.

Parent Asset Allowance Reduction

Each year the FAFSA calculation has adjustments to the allowance tables.  This year’s parents’ asset protection allowance table reduced these allowances for both parents and independent students.  As a result, the EFC number will go up and more parent assets will be included in the calculation.  The reductions were minimal.

Simplified and Zero EFC Change

To qualify for a simplified or zero EFC, the person or parent must have used the 1040 form without the submission of a Schedule 1.  The 2021-22 FAFSA income limit is $27,000.  There are other requirements to qualify for a simplified or zero EFC.  The major advantage is a parent’s assets are not counted when a Zero EFC is used.

FAFSA Simplification

Both the desktop and mobile application versions have improved the user experience.  Over the past few years, an effort by the Department of Education for FAFSA simplification has been ongoing.  The mobile app has seen the biggest upgrades with some new features added such as myChecklist, and improved notification.

It is our opinion that using the desktop version will provide a more secure internet connection.  The desktop version also allows for a single user sign-on with both student and parent to sign the FAFSA form.

Increase Use of Data Retrieval Tool or DRT

As part of this simplification, the Department of Education is utilizing the DRT function more.  It is expected in the next few years that a FAFSA submission will no longer require any income input and it will come directly into the FAFSA based on the FSA ID used.

We saw the start of this progression last year, if the DRT was used, a FAFSA filer was unable to see their income numbers and only a college financial administrator could make changes.  It is our recommendation for first-time filers to manually input their income numbers so that they can see the Expected Family Contribution or EFC number that the FAFSA generates.    The family will still need to submit the FAFSA using DRT but by using the initial manual process, a family will be able to compare submissions and see if there are any possible issues.


With the actual FAFSA changes being minimal, the biggest issue for both the colleges and families will be the financial impact of COVID.  For those families who have been financially impacted, they will need to do more work to properly reflect their financial aid positioning change.

Depending on the change, each student’s FAFSA submission will need to submit a financial appeal.  You need to contact the financial aid office or visit their website since more colleges have a formalized process that needs to be followed.

As COVID has been a burden for many families, this could be a major resource issue for the college’s financial aid staff.  PayForED developed a methodology to assist you in your financial aid appeal that is a good guide.

The other issue facing families is the difference between returning students and an entering freshman.  The timing and process of the appeal are important.   Contacting the college is a good idea.

COVID Impact on FAFSA for Returning Students

For returning student college students, the appeal should be done in February after the FAFSA is submitted.  In many cases, you may want to wait until after you have your 2020 taxes completed since this will allow you to show the college the full-year change.

This will require families in this situation to be organized and get their 2020 taxes completed as soon as possible as part of their appeal.  These additional adjustments could be on a first-come, first-serve basis.

COVID Impact on FAFSA for Entering Freshman

For entering freshman families, the strategies are different.  A family’s ability to pay is part of the admission process.  What most families do not understand is a process called enrollment management.  This is where the admission office and financial offices come together in the acceptance process.

It is our recommendation, that if your income has been impacted by COVID not to make this known to the college until after the initial acceptance and award letter is received.  By taking this approach, it will increase the child’s chances of being accepted to each of the colleges that they apply to.

By using this application method, you are improving the chances of seeing what the colleges may offer in financial aid.  If you offer this income changes during the admission process, it may limit your child’s acceptance chances.

During this time frame, the family should be investigating the appeal process at each college and preparing their financial appeal.  As stated above, anticipate that the colleges will have a significant increase in these appeals for the upcoming students for both the entering freshmen and returning students.

I would also recommend that you have this financial discussion with your child.  Our College Cost Analyzer creates an environment that allows you to have this financial discussion and show them a customized financial outcome by the college based on their financial awards and your financial position.

FAFSA Changes for 2021-22 Summary

These changes will help the students and parents better navigate the FAFSA submission process.  The entire admission approach is changing for both families and colleges due to COVID.  If you are seeking additional insight on how the EFC will impact your financial aid and the net cost of each college, visit our College Cost Analyzer and In College Payer.

To help families navigate the FAFSA submission and college funding decision, we are hosting a series of Virtual Financial Aid Nights.  These are four separate events covering financial aid positioning, college saving plans, student loans and understanding the award letter.


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