October 25, 2023
State financial aid programs may need to adapt to the new Free Application for Federal Student Aid, which is expected to increase Pell Grant eligibility and provide additional aid to more students, according to a report released Monday from the State Higher Education Executive Officers Association.
States often rely on federal financial aid data when distributing need-based college funds and base eligibility standards on those used by Pell Grants, SHEEO said. Changes to how the FAFSA calculates a student’s expected out-of-pocket contribution will ripple out to the local levels.
A growing pool of students who qualify for aid may push local leaders to consider adjusting which students are grant-eligible and how much assistance they receive, the report said.
Congress passed legislation in late 2020 to simplify the FAFSA, an infamously difficult form for students and their families to complete. The updated version will debut in December, according to the U.S. Department of Education.
The new FAFSA will change how it calculates students’ out-of-pocket contributions, which determines Pell eligibility. The form is moving from a calculation called the Expected Family Contribution, or EFC, to one called the Student Aid Index, or SAI.