Posted January 25, 2021
In December, Congress passed a massive legislative package that included emergency pandemic relief measures, funding for the federal government, and a number of policy changes related to higher education.
Notably, the bill included provisions to overhaul the financial aid application process and expand Pell Grant eligibility.
Most of the bill’s provisions go into effect on July 1, 2023 (for financial aid award year 2023-24). The updated FAFSA will be available starting on October 1, 2022.
Key provisions include:
- The bill reduces the number of questions on the FAFSA from 108 to a maximum of 36.
- The bill replaces the current Expected Family Contribution (EFC) with a Student Aid Index (SAI). While the SAI is similar to the EFC, the name change is meant to more accurately reflect the meaning of the calculation as a determination of aid eligibility rather than an expectation of what a family can afford to pay for college. An applicant’s SAI can be as low as -$1,500 (compared to the lowest EFC, which is $0).
- Students will be able to look up whether they’ll be eligible for a Pell Grant based on their income and family size information even before they apply for financial aid. This will allow students to know earlier in their academic career whether they can expect to receive a grant when they apply for aid in the future.
- The bill makes changes to the “income protection allowance” for both students and parents. The income protection allowance is a calculation that shields a percentage of a student’s and/or parent’s income from being “counted” when the federal government determines how much a student and/or family may be able to put toward paying for college. The bill protects a greater percentage of earned income, which could result in more aid for working students and families.
- The bill restores Pell Grant eligibility to students who are incarcerated (these students were prohibited from accessing Pell Grants in the 1994 crime bill).
- The bill restores federal aid eligibility for students with drug-related convictions and removes the requirement that male applicants register for the Selective Service before age 26.
- The bill restores lifetime Pell Grant eligibility for students who were unable to complete their program of study due to their institution closing, who were falsely certified as eligible to receive federal financial aid, or whose loans are discharged through borrower defense due to illegal conduct by their colleges.
- The bill eases the financial aid application process for students formerly in foster care and students experiencing homelessness.
- The bill repeals the limitation on lifetime subsidized loan eligibility, known as the Subsidized Usage Limit Applies (SULA) requirement, which currently bars students from receiving subsidized Direct Loans for more than 150% of the published length of their program. The bill requires the Education Department to implement the repeal by July 1, 2023, but allows for early implementation.
- The bill requires colleges to disclose all cost of attendance elements on the institution’s website, wherever the college lists tuition and fees. Previously, colleges were required to disclose only a subset of the elements of the cost of attendance.
