The 2021-2022 Free Application for Federal Student Aid, called the FAFSA, looks similar to last year’s form, with some small tweaks. But the world around this crucial piece of the financial aid process has greatly changed as colleges and families seek to adapt to the coronavirus pandemic.
“FAFSA kept doing business as usual this year,” says Amira Yahyaoui, CEO and founder of Mos, a company that created a single application for all federal and state financial aid but is not affiliated with the U.S. Department of Education. “We expected that because of the global pandemic, they would cater to that issue, but it has been completely ignored.”
The new FAFSA opened for applicants on Oct. 1. The form is required for students who wish to be considered for federal financial aid and is used by colleges and states to determine eligibility for many grants and scholarships. Students must complete the form for each year they wish to receive aid.
The 2021-2022 FAFSA relies on 2019 tax information, which may raise questions and cause problems for families in the wake of the pandemic and its economic consequences that occurred between the filing of those taxes and now.
“One of the keys to successful 2021-22 FAFSA completion is timely completion of the 2019 federal tax return (for families that were required to file),” Dean Bentley, executive director of financial aid engagement at the College Board, wrote in an email. “While the deadline for filing federal 2019 tax returns was extended from April 15th to July 15th due to Covid-19, this deadline did not impact the type of questions families are expected to complete on the FAFSA.”
And families who experienced a job loss or medical bills related to a COVID-19 diagnosis, for example, may need to turn to financial aid appeals to receive more aid.
“Sometimes there are years where you need to give a fuller picture — the numbers don’t tell enough of the story,” says Hali Browne London, a lead planner and certified financial planner at Maryland-based Facet Wealth. “The FAFSA uses the prior prior year, so it’s not just about what you’re earning now, but it’s about what you earned last year and the year before. This year is going to be very interesting because in 2020, people’s taxable incomes may have changed dramatically.”
[READ: How Financial Aid Appeals Work Due to Coronavirus.]
Students who file the paper version of the FAFSA should also be aware that due to the coronavirus, processing that PDF may take longer than usual, the Department of Education says.
Though the form did not change as a result of the COVID-19 pandemic, there are some other changes this year that students and families should note.
EFC Income Threshold Is Increased
The annual income threshold to receive an expected family contribution, or EFC, of zero increased from $26,000 to $27,000. The EFC is the number generated from information provided on the FAFSA and is used to estimate a family’s ability to pay for college, so an EFC of zero means the student will receive the maximum amount of aid possible.
[Read: What Kinds of Financial Aid Do Students Have to Pay Back?]
Yahyaoui says the increase of just $1,000 does not give adequate consideration for the students struggling in the wake of the pandemic.
“So many students have been impacted by COVID, and unfortunately the change doesn’t really cater to the needs that students have,” Yahyaoui says. “It’s ridiculous. If you think about all of the aid that has been given to small businesses, to a lot of other parts of the economy, and then here the students, as usual, pay the price.”
Changes to Schedule 1 Question and Data Retrieval Tool
A new question added last year underwent small adjustments this year to align with IRS tax form changes.
“The changes to the FAFSA questions are in response to the tax form changes made by the IRS, due to the Tax Cuts and Jobs Act of 2017,” Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com, wrote in an email.
The type of federal tax forms a family filed plays a role in determining how a student’s EFC is calculated. Exceptions to the way the IRS Schedule 1 tax form affects a family’s EFC were changed this year. A capital gains exception was removed and a virtual currency exception was added.
Kantrowitz says this means that “people who lost their jobs, are teachers, paid interest on federal and private student loans, and Alaska residents will still qualify for the Simplified Needs Test and Auto Zero EFC even though Schedule 1 is required, if the only reason they filed Schedule 1 was for one or more of those exceptions.”
[Read: How Expected Family Contribution for College is Calculated.]
Also new this year, individuals using the IRS Data Retrieval Tool — which populates an individual’s tax information from the IRS to the FAFSA — will see the question about whether he or she filed a Schedule 1 automatically completed by the tool. Adding the use of the Data Retrieval Tool to this question should eliminate confusion surrounding the Schedule 1 tax form for students able to use the tool, Yahyaoui says.
Tax Form Screenshots Provide More Help
New images were added to the 2021-2022 FAFSA help page that aim to help students locate the information needed to answer specific questions, the Department of Education says.
These images highlight which tax form holds the needed information and where on the form that information is located. Students worried about entering incorrect information can refer to the tax form screenshots for help.
Enhanced Phone App Is Coming
The FAFSA myStudentAid mobile app will receive some updates by the end of this year, the Department of Education says. These updates will include a redesign and a new dashboard that gives users a personalized homepage where they can get an overview of their financial aid, view upcoming student loan payments and access relevant content and resources.
Students will also be able to view a summary of information like aid overpayments, which is when more aid is disbursed to a student than he or she is eligible for, and remaining federal student loan and Pell Grant eligibility.
The Department of Education also says a FAFSA simulator is coming this year. The new tool will allow the department to receive feedback from students and families on the FAFSA experience.
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