FAFSA Simplification Act: Pell Grant Program Impacts

The COVID relief/Omnibus legislation passed in December 2020 included a long-standing goal of retiring Senator Lamar Alexander: the simplification of the FAFSA form from the current 108 questions to a maximum of 36.

Karen McCarthy from the National Association of Student Financial Aid Administrators (NASFAA) and Carrie Warick from the National College Attainment Network (NCAN) discussed the details of this legislation and the changes that this will bring to the FAFSA application process with William Gill, Director of Government Relations at AACRAO.

FAFSA Simplification Act - Impact

The FAFSA Simplification Act passed in December includes a variety of changes, though most will not go into effect until the 2023-2024 award year. Some of the larger changes included:

• Simplification of the FAFSA Form reducing questions from the current 108 questions to a maximum of 36

•  Fiscal Year 2021 appropriations

• $73.5 billion in discretionary funding appropriated for ED

• $150 increase to the maximum Pell Grant award 

• The new maximum for the 2021-22 award year will be $6,495

• $25 million increase for campus-based aid programs 

• Additional COVID-relief funds

• $23 billion for institutions of Higher Education

• FAFSA simplification and other student aid provisions

• “Mini HEA”

Additionally, a variety of changes were made in the calculation of Pell Grant Eligibility. The following changes are not intended for the front-end or “end-user” but rather are an illustration of the formula that will be used going forward.

• Expected Family Contribution (EFC) has been changed to the Student Aid Index (SAI)

• SAI can be as low as -$1500

• SAI determines eligibility for all Title IV aid except maximum and minimum Pell grant awards

• Student is considered for max Pell first

• Based on the number of parents in household and AGI vs. poverty

• If no qualification for maximum Pell

• Maximum Pell amount - SAI = Pell amount

• If no max Pell and no Pell award from the SAI calculation, student is considered for minimum Pell

• Based on the number of parents in household and AGI vs. poverty

Maximum Pell Grant Eligibility has been simplified/updated to include:

• Tax Nonfilers

• Children of certain deceased veterans and public safety officers

• Low-income students

Other changes include:

• Eliminated the suspension of Title IV aid eligibility for an applicant with drug-related convictions

• Removes the requirement that male students must register with Selective Service to be eligible for student aid

• Questions regarding drug convictions and Selective Service will be removed from FAFSA

• ED is required to implement the repeal by July 1st, 2023, but early implementation is allowed

• Subsidized Usage Limit Applies

• Repeals the maximum lifetime subsidized loan limit (SULA) of 150% of published program length

• ED is required to implement the repeal by July 1st, 2023, but early implementation is allowed

• Pell for Incarcerated Students

• Restored Pell Grant eligibility for incarcerated individuals currently prohibited from accessing Pell Grants

• Institutions must be approved to participate

• Optional

• Proprietary institutions will not be eligible

• ED is required to implement the repeal by July 1st, 2023, but early implementation is allowed

During the session, a chart was provided by NASFAA for “at a glance” Maximum/Minimum Pell Grant eligibility. Though this chart will unlikely be useful for early awareness, it is a great visual aid for registrar and admissions professionals.