Big Changes and Pro Tips for Parents Filling out the new FAFSA Form

Big Changes and Pro Tips for Parents Filling out the new FAFSA Form

The U.S. Department of Education recently rolled out a new Free Application for Federal Student Aid (also known as FAFSA) form.

Filling out the FAFSA has probably never been on anyone's weekend fun list, but the 2023/2024 relaunch threw the entire process into chaos and raised questions from many families.

The good news? The new and (mostly) improved FAFSA form is said to be less confusing and more intuitive.

"The form is much less challenging to interpret because it's an adaptive form," said Cozy Wittman, an expert at College Inside Track. "As you fill it out, if these next ten questions don't apply to you because you answered X over here, you never see those questions."

College Inside Track is a company that specializes in helping families navigate the college application process and find the right fit for their child. Wittman recently sat down with Florida Prepaid to explain the big changes in the new FAFSA form that parents should be aware of, as well as a few pro tips for first-time FAFSA applicants:

5 Big Changes

• Income Tax Information. The new FAFSA form has a data retrieval tool, which automatically imports income tax information from the IRS, which means parents no longer need to physically gather their tax documents before starting the application.
• 529 Plan Recipients. Parents only have to include the value of the 529 Savings / Investment Plan of the child who is seeking aid through the FAFSA. "On the previous form, if I had three kids and three 529 plans, I was supposed to include all of those," Wittman said.
• Third-Party Contributions. The new FAFSA formula is making it easier for friends and family to help a student cover the costs of college. Funds from others used to penalize the student because it was counted as income at the student rate of 50%. Today grandparents and others can help, and it has no impact on the determination of need.
• Divorced Parents. This new rule requires the parent contributing the most financial support to a child to be the parent who fills out the FAFSA. Wittman said the federal government did not define what financial support means, so people are going to have to define that the best they can.
• Small Businesses and Farms. Families who own small businesses and farms are no longer exempt from reporting their assets. In the case of Florida, maybe this is the potential market value of the land your orange groves are on, Wittman said. If you're a small manufacturer, it would include unsold merchandise, inventory that's sitting in your warehouse, or the equipment you own that's part of this business.

A Few Pro Tips

• Don't Assume Your Student Won't Qualify for Aid. No matter your financial status, or whether you have a Florida Prepaid College Plan or Florida 529 Savings Plan, fill out the FAFSA. It serves multiple purposes. First, it determines need-based aid at the federal government level. Even if students do not qualify for federal aid in the form of grants, the FAFSA is the application for all federal student loans. "Some parents might want their students to take out federal loans, which are low interest and no shenanigans Wittman said, and can help students build credit or put some skin in the game. These "federal direct loans," formerly called Stafford loans, do not need to be need based. Also, colleges and universities will use FAFSA results to determine their own financial aid offerings. Some institutions may even add money to students' merit-based financial packages, but only if they have filled out the FAFSA.

• Don't Delay. Wittman said the best time to fill out the FAFSA is early to mid-October of your child's senior year of high school. Although you'll fill out the FAFSA every year they are in college, the first time is the hardest. "In the first year, it's important to submit early because need and merit aid typically are awarded on a first-come, first-served basis," she said. "If you hold off till March, it's possible their need bucket is now empty."

  Fun fact: If your child plans to go to graduate school, you - or they - will fill out the FAFSA again. But this time, the formula will no longer include family information.

  Wittman also recommends parents use the FAFSA's Student Aid Estimator tool. It will forecast for them what the outcome of the FAFSA will actually be.

• Set Aside 45 to 90 Minutes Per Child. Head to FAFSA.gov and create an account if you haven't already. While you shouldn't need tax documents because of the data retrieval tool, you will need details about any 529 Plans you have, as they are considered a parent asset. Checking and savings account information will also be required. If a family has an UGMA or UTMA, that information will be required and considered a student asset.

  What's not assessed? Retirement - at least the bulk of it. You are not required to include total 401k or Roth IRA savings on the FAFSA, although you will be asked how much you contributed to a retirement-based program in the previous year. The formula will take your retirement contributions for that single year and add it back to your AGI, to form a new "income" number.

• Be Patient. Much like doing your taxes, even with software, the FAFSA application process can be tedious. Take a deep breath and remember why you're investing the time! Be sure to keep all your sign-in information like login and PIN close by and secure.
• Don't Drop the FAFSA in Your Student's Lap. Take responsibility for filling out the FAFSA for your child. "A lot of families want their student to do this, but it is not really a form that you should ask your student to fill out on their own," Wittman said. "It's too complex and the stakes are too high."

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