Today, Congress included a bipartisan agreement on higher education in the fiscal year 2021 omnibus spending/COVID stimulus combination bill.
Sen. Lamar Alexander (R-TN), retiring chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Rep. Bobby Scott (D-VA), chair of the House Education and Labor Committee, negotiated this agreement with input from the minority leaders
on their committees – Sen. Patty Murray (D-WA) and Rep. Virginia Foxx (R-NC) – to include Free Application for Federal Student Aid (FAFSA) simplification and expanded Pell Grant eligibility.
This simplified FAFSA is the culmination of years of work among Congress, the college access and financial aid fields, and student advocates. NCAN applauds this agreement as the big win we have been pursuing in FAFSA simplification for several years.
“Each year, students leave $2.5-3 billion on the table by not completing the FAFSA. These changes, building upon last year’s FUTURE Act, will make it easier for students to complete the complicated federal aid application and qualify for the aid for which
they are eligible,” says NCAN executive director Kim Cook. “Easing access to federal student aid is a step toward a more equitable higher education system, especially for students of color and students from low-income backgrounds.”
The new approach to applying for financial aid outlined in the legislation achieves two of NCAN’s primary goals for FAFSA simplification, it 1) significantly reduces the number of questions on the form (from 108 to a maximum of 36, according to Congressional
talking points) and 2) uses a new measure for Pell Grant eligibility to provide better early awareness of the need-based aid for which students qualify. Additionally, these changes will result in expansion of Pell Grant eligibility, increasing the
number of students qualifying for the maximum Pell Grant and restoring eligibility to students with drug convictions and incarcerated individuals.
To give students and families earlier awareness of the need-based financial aid for which they will qualify, federal aid calculations will use a simple measure to determine which FAFSA filers will receive a guaranteed maximum or minimum Pell Grant. This
measure is based on a family’s adjusted gross income as compared to the federal poverty level for their family size. It will give college access advisers, school counselors, and even means-tested benefits administrators (such as SNAP) the ability
to tell families if they are likely eligible for a maximum Pell Grant or a minimum Pell Grant (or more) in advance of filing the FAFSA.
A new Student Aid Index will determine the exact Pell Grant amount for students who qualify for more than a minimum Pell Grant but do not automatically qualify for the maximum award.
These changes will improve early awareness of financial aid for families planning for the cost of college because of the new maximum and minimum Pell Grant award determinations. The qualifications, in detail below, are determined by family size and adjusted
gross income as compared to the poverty level. This two-factor determination will allow for the creation of consumer tools such as a lookup table. This knowledge can help parents plan in advance, equip adult learners considering postsecondary education
with the knowledge that aid will be available, and help all filers know whether they will qualify for state and institutional programs that require Pell eligibility.
Students who qualify for a maximum Pell award based on these factors will receive the maximum award. Students who qualify for the minimum award could receive a higher award, but will not know the size of their award until after filing the FAFSA.
Coupling this early awareness with a faster pathway to completing the FAFSA will also improve college access advisers’ ability to assist students.
“Achieve Atlanta helps nearly 2,000 high school students file the FAFSA each year,” says Tina Fernandez, an NCAN board member and executive director of Achieve Atlanta. “A simpler, faster FAFSA will free up our
partner advisers and counselors to spend more time discussing students’ college-going plans, and a more easily predicted Pell Grant award will allow families to set their intentions on college, knowing they will receive financial aid. I cannot emphasize
how much of a game changer this will be for students.”
However, NCAN members should note that it takes Federal Student Aid (FSA) well over a year to build each FAFSA. In response to this, Congress has set an effective date for these changes of July 1, 2023 (for the 2023-24 academic award year). For FAFSA
filers, that means the form that opens on Oct. 1, 2022, will be the first to include these changes. However, the legislation grants FSA the authority to enact certain provisions earlier than that, including Pell Grant eligibility for incarcerated
students and removing the drug conviction ban and selective service questions.
Details of the Legislation
The negotiated FAFSA simplification agreement includes the following elements that FSA would implement for the FAFSA released on Oct. 1, 2022:
Eliminates several questions that fewer than 1% of FAFSA filers answer with a non-zero response.
Eliminates questions that create barriers, such as the prohibition on students with drug convictions from receiving aid and selective service registration.
Changes a maximum Pell award designation (similar to the auto-zero Expected Family Contribution (EFC)) to be calculated based on family size and adjusted gross income as compared to the federal poverty level, allowing for early awareness for maximum
Pell eligibility before completing the FAFSA form.
Dependent student with married parents: 175% of federal poverty level
Dependent student with a single parent, or an independent student: 225% of federal poverty level
Separating married and single parents adjusts for the elimination of the “number in college” question so that a single parent with two children is considered differently than married parents with one child.
Creates for the first time ever a minimum Pell award designation to be calculated the same as the maximum Pell award but using a higher set of thresholds.
Dependent student with married parents or independent, married student without dependents: 275% of federal poverty level
Dependent student with a single parent or independent, single student without dependents: 325% of federal poverty level
Independent, married student with dependents: 350% of federal poverty level
Independent, single student with dependents: 400% of federal poverty level
Transitions from the “Expected Family Contribution” (EFC) to “Student Aid Index” (SAI) to better communicate to students the role of the FAFSA calculation on their aid eligibility.
Provides a negative SAI of up to -$1,500 for non-tax-filers and those FAFSA filers that the new Student Aid Index formula calculates as most in need of support to convey to financial aid administrators a greater degree of need.
Negative SAI students will remain eligible for the same maximum Pell Grant award as students with a $0 SAI.
Increases the Income Protection Allowance to adjust for no longer considering the number of family members enrolled in college, preventing any lost benefits.
Eliminates the prohibition on incarcerated students applying for federal financial aid, also known as Pell restoration or Second Chance Pell.
Eliminates the 150% program limit on eligibility for subsidized Stafford Loans.
Increases the Simplified Needs Test (SNT) threshold to $60,000 adjusted gross income for tax filers who do not file the following schedules: Schedule A, B, D, E, F, or H and additionally do not file Schedule C for more than $10,000 earnings. FAFSA
filers who qualify for the SNT do not need to report assets.
Requires institutions to have a professional judgment process, prohibiting institutions from refusing to consider PJ requests.
Allows institutions to consider FAFSA filers with unemployment benefits as part of a class action and have their income earned from work reduced to $0. (This puts GEN 09-05 guidance from the Great Recession into law.)
This FAFSA simplification plan is the culmination of years of bipartisan work on Capitol Hill. Simplifying the FAFSA is the higher education issue about which Sen. Alexander is most passionate, making it a poignant win at the end of his long Senate career.
Sen. Alexander has been a longtime FAFSA simplification champion, introducing several proposals over the years, from the two-question FAFSA on a postcard to the bipartisan FAFSA Simplification Act of 2019 (with Sen. Doug Jones (D-AL)).
Rep. Scott has also supported FAFSA simplification over the years, including language based on NCAN’s Streamlined FAFSA proposal in the 2019 College Affordability Act.
This final FAFSA agreement, and its inclusion by congressional leadership in a must-pass bill, is a testament to the commitment of these education champions in the Senate and the House as well as the years of drumbeat effort from the NCAN community and
our partners at the National Association of Student Financial Aid Administrators (NASFAA).
Beyond the FAFSA simplification proposal and the Pell eligibility expansions, this higher education agreement made two other significant investments. First, students who receive subsidized Stafford loans will no longer have a lifetime eligibility limit
on those loans if they require more than 150% of their program length to complete their degree. Additionally, a portion of debt will be forgiven for Historically Black Colleges and Universities (HBCUs) with loans under the Capital Financing Loan Program.
This agreement is part of the joint FY2021 omnibus package that is combined with a pandemic relief package. To learn more about how the other portions of this legislation affect students and the college access and success field, please see my colleague Raymond AlQaisi’s blog here.
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