FAFSA Will Be Available By 12/31 With Some Caveats

Completing the FAFSA

On Wednesday, November 15th, the Department of Education (DOE) announced that the FAFSA will be available by 12/31/2023.  It finally gave us a firm date.  This FAFSA delay is due to the FAFSA Simplification upgrades.  It is typically available on October 1st of each year.  Due to the delay, this article describes the best practices for the FAFSA submission for this year.

In addition to the availability announcement, they made a surprising announcement that the colleges would not receive FAFSA information until late January.  This delay will push back students waiting for their acceptance letter with the financial award.

This year’s FAFSA timing is like the old process.  Before 2016, the FAFSA was available on January 1st, and families needed to use the recent year’s tax return.  At that time, the earliest people could only submit their FAFSA was by mid-February.  The process was revised and now uses the tax return in hand called prior-prior, which makes the FAFSA submission easier.

FAFSA Submission for School Year 2024-25

To clarify the process, your FAFSA submission is for the school year 2024-25.  It will use the 2022 tax information.  The New FAFSA submission requires you to opt-in to the IRS automation.  The DOE will not process the FAFSA unless you agree to the IRS integration.

Usually, FAFSA data is available to the schools within 3 – 5 days.  DOE will be sending data to the colleges in late January.  With this delay, we recommend waiting 5 – 10 days to submit the FAFSA.  This year’s FAFSA is a new system, and we are anticipating problems.  In addition, the system will launch over a holiday weekend.  Support will be minimal at best.  The myth of getting the FAFSA submitted first is often exaggerated.  There is no difference if you process it within the first few weeks.

Below are a few additional steps that may help you submit the FAFSA and avoid longer college responses.

Who Needs to Sign the FAFSA for 2024-25

One of the significant changes is the new signature process required for the FAFSA.  Due to its dependence on the IRS data, the approval of the FAFSA will need to follow how a family submits their tax return.  To sign a FAFSA, the person must have an FSA ID and Password.  Depending on the situation, this could mean both parents, one parent, or neither.

If the student is a dependent child and the parent submits their taxes married and joint, then both the submitting student and at least one of the parents will need an FSA ID.  If the student is classified as an independent student, then a parent is not required to sign the FAFSA.

If a student is dependent and the parents file their taxes, married and separate, then both parents must have an FSA ID and sign the FAFSA.  For divorced and separated parents, only one parent is required and should be the parent who provides the highest amount of financial support according to the new rules.  They also need to have different addresses.

For divorced and separated couples, we have always recommended that the FAFSA submitting parent claim the FAFSA submitting student on their taxes.  This strategy is not required but is best practice if possible.

For parents who cannot get an FSA ID since they do not have a social security number, you can submit the FAFSA via paper.  You should contact your high school guidance office for more instructions.

FAFSA’s New Relationship with IRS Data

The most significant change with the FAFSA Simplification is the requirement to import your tax data directly into the FAFSA.  For many, this does relieve FAFSA submission stress.  The tax section of the FAFSA can be confusing and overwhelming for some people.  This modification makes it easier to understand and reduces the number of questions.

In previous years, the FAFSA offered the option to import your tax information using a tool called the Data Retrieval Tool (DRT).  Under the new method, you are required to import the information via an opt-in feature.

Most families will still need to submit their asset numbers based on income.  The asset number reported is the asset value at the time of submission.  Unlike the taxes, it uses prior year income and tax data.  When submitting the asset number, do not include retirement account values and the asset value of your home.  These are common errors in the FAFSA submission.

One problem with the tax automation process is the blind submission aspect.  You cannot see or review the numbers.  For some, the resulting number could be much higher than you expect.  The resulting number from completing the FAFSA is called SAI or Student Aid Index.  SAI is a new term, and it was called the EFC or Expected Family Contribution.

Preparing for Award Letter Due to FAFSA Delay

Even though the FAFSA process is delayed, the college commitment or decision day is still May 1st.  This date has always been the same for colleges, yet they have become more lax over the years.  Some schools recruit past the May deadline, trying to reach their enrollment goals for their incoming freshman class with better offers.

In preparation for this shortened schedule, understand the appeal process at each school the student is applying to.  Many of the schools have a specific process, and many are electronic.  Consider drafting your appeal letter.  Review our method of writing the appeal letter.  This process will be essential for families that had a change in their financial position in 2023 since FAFSA uses 2022 income.

If your income did change, only the financial aid office can adjust the FAFSA.  You must contact each school’s financial aid office and submit your documentation based on their process.  Each school can make their own adjustment, and it may not be the same number.

The timing of the appeal can be tricky due to this shortened schedule since the appeal can impact your admission.  Your ability to pay is a factor in admission.  You could appeal now, and your award letter should reflect the financial award.  You could wait until after the initial award letter is received and then appeal.  This strategy is a personal decision.

The last step is to get your 2023 taxes organized and be ready to submit them as soon as possible if you are going to appeal.  This strategy could complement your appeal process and improve your chance of success if you are submitting an appeal.

FAFSA Submission for Returning Students

With the FAFSA delay and the colleges needing to focus on the entering class, most returning students should not submit their FAFSA until mid-February.  This way, most of the bugs should be resolved.  Check with your school since many have preferred submission dates and deadlines for returning students.

If you have an appeal, the process is the same.  There is a significant FAFSA change that may impact returning students.  It is called the loss of the multi-child discount.  If a returning student received need-based aid due to having another sibling in college simultaneously, their financial aid could be reduced.  I recommend contacting the school soon if you are in this situation.

 FAFSA Delay Conclusion

With the delay in the FAFSA process, people need to do better planning.  The schedule will be shorter for both the colleges and families.  Plan now before submitting the FAFSA.  Get organized to be able to react to the What-if scenarios.  This planning is especially true for people who had a change in their financial position during 2023.

For entering freshman families, the focus is admission.   The current system focuses on access rather than affordability.  When making your college decision, understand the outcome from the amount of education needed for the career you are pursuing to how much debt, how the debt is going to be structured, and the income that that career will generate.

To help you get prepared for this change, PayForED is hosting a second FAFSA Submission Webinar.  This Webinar will be held on Wednesday, December 6th @ 8:00 PM.  We will have the most up-to-date information on this year’s FAFSA Submission.

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