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The FAFSA (Free Application for Federal Student Aid) is how students apply for need-based financial aid from the federal government to help pay for college, including low-interest federal loans. The FAFSA rules are changing beginning with the 2023-24 FAFSA, due to the FAFSA Simplification Act. All parents, but especially parents who are divorced, or in process of divorcing, should understand the new rules and guidelines.

Just like current FAFSA rules, the new FAFSA will still use information from the “prior, prior” year. This means if you are divorced or separated, you need to start planning two years prior, rather than one year prior to the FAFSA award year. For example, the 2023-24 FAFSA will use 2021 tax return information. The 2024-25 FAFSA will use 2022 tax return information.


· The definition of “custodial parent” will change to who provides the most financial support, regardless of with whom the child lives.

· Both parents may be required to provide financial information. If the custodial parent is remarried, the stepparent’s financial information must also be submitted.

· Family size matters. Parents must factor family size into decisions about which parent claims the children as dependents on their federal income tax return which may impact eligibility for need-based financial aid. (Family size will refer to student, parents and anyone claimed as a dependent on the filing parent’s federal income tax return, including qualifying children and qualifying relatives.)

· FAFSA currently ignores multiple support agreements (when both parents provide for their child equally or in alternating years). New FAFSA rules may consider such agreements.

· To be considered “dependent,” a student must NOT provide more than 50% of their own financial support and be under age 19 (or under age 24 as of the last day of the tax year if enrolled in school full-time).

· The 2023-24 FAFSA Student Income Protection Allowance allows a dependent child to have $7,600 in income before any $ must be used for college costs. But 50% of any income above $7,600 is then expected to be used for college. This allowance rises to $9,410 in 2024-25.

Other Changes to Impact All Families

· Parents with two or more children in college at the same time will not longer benefit by having this considered when the Expected Family Contribution (EFC) is calculated.

· The Expected Family Contribution (EFC) will now be called the Student Aid Index (SAI).

· If both parents (either married or divorced) are low income, the FAFSA Simplification Act will make it easier to qualify for Pell Grants (awards to undergraduate students who display exceptional financial need). https://www2.ed.gov/programs/fpg/index.html

These FAFSA changes may impact current college students – so the FAFSA should be completed every year the child is in college.

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Best regards,

Janet Rhodes Friedman, CFP®, CDFA®, MBA



Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

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