(GEN-22-15) FAFSA® Simplification Act Changes for Implementation in 2023-24

Publication Date
November 04, 2022
DCL ID
GEN-22-15
Subject
FAFSA® Simplification Act Changes for Implementation in 2023-24
Summary
This letter provides information that supplements the FAFSA Simplification Act information provided in the Federal Register notice published on Nov. 4, 2022, regarding new policies that become effective for the 2023-24 Award Year. We will continue to address other aspects of the FAFSA Simplification Act implementation in the future.

Dear Colleague:

On Nov. 4, 2022, we published a Federal Register notice [87 FR 66683] announcing changes as authorized by the FAFSA Simplification Act (Act), which was enacted into law as part of the Consolidated Appropriations Act, 2021 and amended by the Consolidated Appropriations Act, 2022. The Act makes many important amendments to the Higher Education Act of 1965, as amended (HEA) and the Free Application for Federal Student Aid (FAFSA®), which are required to be implemented by July 1, 2024. 

As described in the June 11, 2021 Electronic Announcement, the Department of Education (Department) is implementing these changes via a phased approach that began with the 2021-22 Award Year, with full implementation planned for the 2024-25 Award Year.

This Dear Colleague Letter describes requirements that the Department is implementing for cost of attendance (COA), professional judgment, and independent student statuses for the 2023-24 Award Year. Where possible, the Department has made changes to the 2023-24 FAFSA form in anticipation of full implementation in 2024-25. The Department also notes that, while the Student Aid Index (SAI) will replace the Expected Family Contribution (EFC) on the 2024-25 FAFSA form, we will continue to reference the EFC in this publication and elsewhere until we implement the SAI.

The Department is also implementing new Federal Pell Grant (Pell Grant) eligibility for students incarcerated in Federal and State penal facilities and restoring Pell Grant eligibility to students who had Federal student loans discharged under specific criteria, including closed school, false certification, and borrower defense to repayment loan discharge, in the 2023-24 Award Year. Although we address these items briefly in this publication, we are developing additional guidance on these topics.

To further assist institutions in implementing some of these new policies for 2023-24, we are providing a Questions and Answers section at the end of this Dear Colleague Letter.

2023-24 Award Year: Changes to Be Implemented

Cost of Attendance (COA)

The FAFSA Simplification Act (116 Pub. L. 260, Division FF, Title VII) and the Consolidated Appropriations Act, 2022 (117 Pub. L. 103, Division R) jointly modify the COA components and consumer information pertaining to those components. The revisions provide more clarity and detail to individual COA components, and institutions must implement them for the 2023-24 Award Year.

What has changed?

  • Language regarding costs for rental or purchase of equipment, materials, or supplies has moved out of the definition of “tuition and fees” and into a broader definition of “books, course materials, supplies, and equipment.”

  • Transportation expenses may include transportation between campus, residences, and a student’s place of work.

  • “Room and board” are now known as “food and housing,” although the meaning of the terms remains the same. Food and housing are grouped as “living expenses.”

  • Living expense categories now break out costs associated with specific housing and food situations and require standard allowances within certain categories, such as on or off campus and with or without a meal plan.

  • Institutions may no longer include loan fees for non-Federal student loans borrowed by students.

  • The costs of obtaining a license, certification, or first professional credential are no longer restricted to a one-time allowance.

  • “Course materials” and “the cost of obtaining a license, certification, or a first professional credential” were added to the types of expenses that an institution may include in a confined or incarcerated individual’s COA.

  • The types of expenses that an institution may include in the COA for a student who is enrolled less than half time has been broadened to include components not otherwise prohibited by the law. For example, an allowance for students in work related to a cooperative education program is permissible because that COA element [HEA Sec. 472(a)(12)] does not exclude less-than-half-time students, while miscellaneous personal expenses [HEA Sec. 472(a)(4)] are not includable, as noted below.

What remains the same?

  • A student must be enrolled at least half time for miscellaneous personal expenses to count in the student’s COA.

  • There were no changes to the definitions of the following components: study abroad expenses, cooperative education expenses, dependent care expenses, and disability-related expenses.

  • There were no substantive changes to the COA components for students engaged in correspondence study or distance education under section 472(a)(6) and section 472(a)(11) of the HEA, respectively.

Definitions

Below we provide the updated definitions of commonly used COA terms based on the statutory changes in section 472 of the HEA, incorporating the changes described above for the 2023-24 award year:

Tuition and fees—An amount normally assessed a student carrying the same academic workload, as determined by the institution.

Books, course materials, supplies, and equipment—An allowance for books, course materials, and equipment, which must include all such costs required of all students in the same course of study, including a reasonable allowance for the rental or upfront purchase of a personal computer, as determined by the institution.

Transportation—An allowance, as determined by the institution, which may include transportation between campus, residences, and place of work.

Miscellaneous personal expenses—An allowance, as determined by the institution, for a student attending the institution on at least a half-time basis.

Living expenses—An allowance for food and housing costs, as determined by the institution, to be incurred by the student attending the institution on at least a half-time basis, including—

  • A standard food allowance that provides the equivalent of three meals each day, regardless of whether a student chooses institutionally owned or operated food services (i.e., board or meal plans). Institutions must provide an allowance for purchasing food off campus for a student that does not elect institutionally owned or operated food services.

  • Housing allowances for students residing in institutionally owned or operated housing with or without dependents must be based on the average or median amount assessed to such residents for housing charges, whichever is greater.

  • Housing allowances for students living off campus must include rent or other housing costs.

  • For dependent students living at home with parents, institutions must include a reasonable standard allowance for living expenses that is not zero.

  • For students living in housing on a military base or for which they receive a basic allowance under section 403(b) of title 37, United States Code, institutions must include a reasonable allowance for food on-campus or off-campus but cannot include housing costs.

  • For all other students, institutions must include a reasonable allowance based on expenses incurred by such students.

Review each living expense category above to ensure that you properly capture all required categories in your COA policy.

Study abroad expenses—An allowance for reasonable costs, as determined by the institution, for a student in a study abroad program approved for credit by the home institution.

Cooperative education costs—An allowance for reasonable costs, as determined by the institution, associated with such employment for a student engaged in a work experience under a cooperative education program.

Dependent care—An allowance based on the estimated actual expenses incurred for dependent care, based on the number and age of such dependents.

  • Such allowance must not exceed the reasonable cost in the community in which such student resides for the kind of care provided; and

  • The period for which dependent care is required includes, but is not limited to, class-time, study-time, field work, internships, and commuting time.

Disability-related expenses—An allowance, as determined by the institution, for expenses associated with a student’s disability, including special services, personal assistance, transportation, equipment, and supplies that are reasonably incurred and not provided for by other agencies.

Federal student loan fees—An allowance for the cost of any Federal student loan fee, origination fee, or insurance premium charged to the student or the parent of the student. The allowance—

  • May be actual or average costs, as appropriate; and

  • May not include the cost associated with non-Federal loans.

Professional licensure, certification, or a first professional credential—An allowance for the costs associated with obtaining a license, certification, or a first professional credential, for a student in a program that prepares them to enter a profession that requires such a qualification.

Special Populations

The following student populations have cost of attendance requirements based on their unique situations.

Cost of attendance for students engaged in a program of study by correspondence must include tuition and fees and, if required, books, course materials, supplies, and equipment. A school may also include an allowance for travel, housing, and food costs incurred specifically for a period of residential training.

The cost of attendance for confined or incarcerated students may only include:

  • Tuition and fees

  • Books, course materials, supplies, and equipment

  • The cost of obtaining a license, certification or a first professional credential

The cost of attendance for students enrolled less than half-time:

  • Must include any components (tuition and fees; books, course materials, supplies, and equipment; and transportation) normally applied to students who are enrolled less than half-time, along with any other components (disability expenses, etc.) that are not expressly prohibited for less than half-time students (e.g., miscellaneous personal expenses).

  • May also include an allowance for living expenses, including food and housing costs, for up to three semesters, or the equivalent, with no more than two semesters being consecutive.

For students receiving all or part of their instruction by means of distance education, no distinction may be made with respect to the mode of instruction in determining costs. For example, an institution may not eliminate the transportation cost component for a distance education student.

Other Changes

The Act expands existing consumer information requirements by explicitly stating that each institution must make COA information publicly available on its website. The disclosure must include a list of all COA elements and must appear on any portion of the website that describes tuition and fees.

Previously the Department was not permitted to establish regulations on cost of attendance. Under the Act, the Department may now regulate the cost of attendance, except for tuition and fees, and may choose to do so in the future to provide clarity in this area.

Professional Judgment

The FAFSA Simplification Act distinguishes between different categories of professional judgment by amending section 479A of the HEA.

  • Special Circumstances refer to the financial situations (loss of a job, etc.) that justify an aid administrator adjusting data elements in the COA or in the EFC calculation.

  • Unusual Circumstances refer to the conditions that justify an aid administrator making an adjustment to a student’s dependency status based on a unique situation (e.g., human trafficking, refugee or asylee status, parental abandonment, incarceration), more commonly referred to as a dependency override.

A student may have both a special circumstance and an unusual circumstance. Financial aid administrators (FAAs) may make adjustments that are appropriate to each student’s situation with appropriate documentation.

What has changed?

  • Institutions may not maintain a policy of denying all professional judgment requests but must consider all such requests. Therefore, institutions must develop policies and processes for reviewing those requests.

  • Institutions must disclose publicly that students may pursue an adjustment based on special or unusual circumstances.

  • Institutions may use a dependency override determination made by a financial aid administrator at another institution in the same or a prior award year.

What remains the same?

  • Institutions must make and document professional judgment determinations on a case-by-case basis without regard to how broadly an event may affect its student population.

  • In making case-by-case determinations, the FAA must substantiate the student’s circumstance with supporting documentation.

  • Previous reasons for exercising professional judgment (e.g., unemployment, dislocated worker, school tuition expenses) are still allowable.

  • A dependency override for unusual circumstances is considered unique from a determination of independence for homeless youth or at-risk homeless youth.

Additional Flexibility for Assisting Students with Unusual Circumstances

The FAFSA Simplification Act provides a clearer directive for FAAs to assist applicants with unusual circumstances to adjust dependency status on the FAFSA form to reflect students’ situations more accurately. Like other types of professional judgments, institutions must make students aware of their ability to request an adjustment for unusual circumstances by publicly posting the option on their website. For the 2023-24 Award Year, applicants must still indicate an unusual circumstance and request a determination of independence with their school to allow us to process their FAFSA form.

Starting with the 2024-25 Award Year, both initial and renewal applicants who indicate they have an unusual circumstance on their FAFSA form will submit their application under a provisional independent status. This will allow such applicants to receive a Student Aid Index (SAI) with an estimate of their Federal student aid eligibility, subject to a final determination by their school.

Additionally, the Act introduces new requirements for processing and communicating with students who request an adjustment for unusual circumstances. For aid applications for the 2023-24 Award Year and thereafter, schools and financial aid administrators must:

  • Notify students of the school’s process, requirements, and reasonable timeline to review adjustment requests after their FAFSA form is submitted;

  • Provide students with a final determination of their dependency status and financial aid award as soon as practicable after reviewing all requested documentation;

  • Retain all documentation, including documented interviews, related to the adjustment for at least 3 years after the student’s last term of enrollment; and

  • Presume that any student who has obtained an adjustment for unusual circumstances and a final determination of independence to be independent for each subsequent award year at the same institution unless the student informs the institution that their circumstances have changed or the institution has conflicting information about the student’s independence.

As previously provided by law, if a student pursues an adjustment for unusual circumstances and the financial aid administrator does not determine that the student should be considered independent, the student will only be eligible for dependent-level Direct Unsubsidized Loans unless they subsequently complete the FAFSA form as a dependent student by providing parental information.

Timing of Determinations of Independence

Institutions now have additional guidance on the timing of determinations of independence for certain student populations. These include unaccompanied homeless youth or at-risk homeless youth, foster care youth, orphans, wards of the court, and students with unusual circumstances.

  • Institutions must review all requests for a determination of independence as quickly as practicable, but no later than 60 days after the student enrolls.

  • Renewal applicants with an eligible homeless youth, foster care youth, orphan, ward of the court, emancipated minor, or legal guardianship flag on their 2022-23 FAFSA form will have their answers to these questions carried over and pre-populated into their 2023-24 FAFSA form. Other answers to dependency questions (e.g., age, dependent children, veteran status) continue to carry over to the 2023-24 FAFSA form.

  • Renewal applicants must still affirm that their previous answers to the dependency questions are correct and applicable prior to submitting their FAFSA form.

Acceptable Documentation

In general, when determining a student’s special or unusual circumstances, or in verifying homeless or foster youth statuses, schools must ensure that any supporting documentation they collect is adequate to substantiate the student’s— and, as applicable, the parent's or spouse’s— circumstances. The Act updates, but does not limit, the types of adequate documentation that a school may request from the student.

Special Circumstances

Acceptable documentation may include:

  • A documented interview between the student and the financial aid administrator; or

  • Supplementary information, as necessary, about the financial status or personal circumstances of eligible applicants as it relates to the special circumstances.

Unusual Circumstances

Acceptable documentation may include:

  • A documented interview between the student and the financial aid administrator;

  • Submission of a court order or official Federal or State documentation that the students’ parents or legal guardian are incarcerated;

  • A documented phone call or written statement from an attorney, a guardian ad litem, a court-appointed special advocate (or similar), or a representative of a TRIO or GEAR UP program that confirms the circumstances and the person’s relationship to the student;

  • A documented determination of independence made by a financial aid administrator at another institution in the same or a prior award year; or

  • Utility bills, health insurance, or other documents that demonstrate a separation from parents or legal guardians.

Acceptable documentation may also include a documented phone call or written statement, which confirms the unusual circumstances with:

  • A State, county, or Tribal welfare agency;

  • An independent living case worker who supports current and former foster youth with the transition to adulthood; or

  • A public or private agency, facility, or program servicing the victims of abuse, neglect, assault, or violence.

Unaccompanied Homeless Youth

In determining independence due to homelessness, FAAs must consider documentation from the following entities—provided through a documented phone call, written statement, or verifiable electronic data match—to be adequate:

  • A local educational agency homeless liaison, as designated by the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11432(g)(1)(J)(ii)), or a designee of the liaison;

  • The director of an emergency or transitional shelter, street outreach program, homeless youth drop-in center, or other program serving individuals who are experiencing homelessness, or a designee of the director;

  • The director of a Federal TRIO program or a Gaining Early Awareness and Readiness for Undergraduate program (GEAR UP) grant, or a designee of the director; or

  • A financial aid administrator at another institution who documented the student’s circumstance in the same or a prior award year.

In the absence of documentation from any of the individuals described above, FAAs must make a case-by-case determination:

  • Based upon a written statement from, or a documented interview with, the student that confirms that they are an unaccompanied homeless youth, or unaccompanied, at risk of homelessness, and self-supporting; and

  • Made without regard to the reasons that the student is unaccompanied and/or homeless.

Foster Care Youth

If an institution requires that a student provide documentation that they were in foster care at age 13 or older, FAAs must consider any of the following documentation to be adequate in the absence of conflicting information:

  • Submission of a court order or official State documentation that the student received Federal or State support in foster care;

  • A documented phone call or a written statement from an attorney, guardian ad litem, or Court Appointed Special Advocate;

  • Verification of the student’s eligibility for an education and training voucher under the John H. Chafee Foster Care Program under section 477 of the Social Security Act (42 U.S.C. 677); or

  • A documented phone call or written statement from a financial aid administrator who documented the student’s circumstance in the same or a prior award year.

FAAs must also consider a phone call, written statement, or verifiable electronic data match from one of the following sources to be adequate documentation:

  • A State, county, or Tribal agency administering a program under part B or E of title IV of the Social Security Act (42 U.S.C. 621 et seq. and 670 et seq.);

  • A State Medicaid agency; or

  • A public or private foster care placing agency or foster care facility or placement.

All supporting documentation, including documented interviews, used in the financial aid administrator’s final determination must be maintained in the student’s file for a minimum of 3 years after their last term of enrollment. This is in line with standard record keeping requirements outlined under 34 CFR 668.24.

Professional Judgment During a Disaster, Emergency, or Economic Downturn 

The Act codifies previous guidance from the Department (as issued in earlier Dear Colleague Letters) to use statutory authority to exercise professional judgment during a disaster, emergency, or economic downturn.

Financial aid administrators may, during a qualifying emergency:

  • Determine that the income earned from work for an applicant is zero, if the applicant can provide paper or electronic documentation of receipt of unemployment benefits or confirmation that an application for unemployment benefits was submitted; and 

  • Make additional appropriate adjustments to the income earned from work for a student, parent, or spouse, as applicable, based on the totality of the family's situation, including consideration of unemployment benefits. 

Acceptable documentation of unemployment should be submitted not more than 90 days from the date it was issued. However, institutions may use discretion to accept documentation older than 90 days under an institution’s general professional judgment authority if they do not have reason to believe there is conflicting information.

Further, the Department will adjust the program review selection model to account for an increase in the use of professional judgment by schools during the award years applicable to the qualifying emergency. 

Pell Grant LEU Restoration

Section 401(d)(5) of the HEA, as amended by the Act, restores Lifetime Eligibility Used (LEU) regarding loan discharges associated with closed schools, false certifications, identity theft, and successful borrower defense claims.

Institutions do not have to take any action related to Pell Grant LEU restoration for loan discharges; LEU restoration is an automated process within the Department’s systems. As we implement the changes within our systems to restore appropriate Pell Grant LEU percentages to impacted students meeting the new restoration criteria, we will notify the community.

Pell Grant Eligibility for Incarcerated Students

Section 484(t) of the HEA, as amended by the Act, establishes Pell Grant eligibility for confined or incarcerated students if they are enrolled in a prison education program as of July 1, 2023. The Department published regulations on October 28, 2022, to implement the statutory requirements.

While additional operational guidance will be posted closer to the effective date, please refer to the July 8, 2022, Dear Colleague Letter (GEN-22-09) for guidance on limited verification requirements for confined or incarcerated students during the 2023-24 Award Year.

Changes to the FAFSA Form

Due to changes in student eligibility for Title IV funding, the 2023-24 FAFSA form no longer contains selective service or drug conviction questions. In addition, students will no longer register for selective service through the FAFSA process.

For students with a previous determination of independence due to homelessness, their answers to the three existing homeless questions on the FAFSA form are eligible for renewal beginning with the 2023-24 application.

In preparation for the required sex/gender and race/ethnicity questions that will be part of the 2024-25 FAFSA form, the Department will collect student responses about these topics through FAFSA on the Web via a voluntary, post-application survey during the 2023-24 processing year.

Questions and Answers

Cost of Attendance (COA)

Not immediately. We understand that it may take some time for institutions to fully update their documentation, publications, policies, and practices with any new terms and phrasing outlined in the Act, such as “housing and food” versus “room and board.” However, we do expect institutions to begin planning for any revisions and to formally make changes as soon as it is feasible within their normal consumer information update process.

No. Nothing in the Act prohibits an institution from incorporating books, course materials, supplies, and equipment as part of their tuition and fees nor considering them to be institutional costs. Under the Act, many COA components are broken out into their own specific category. This restructuring of the COA components is simply an organizational reordering to help clarify what items must or may be included in the COA.

No. The language in the Act indicates that institutions “may” include costs associated with transportation between campus, residences, and places of work, but this should not be considered an exhaustive list. Nothing in the Act restricts or modifies previous Department guidance on including transportation costs associated with trips, conferences, or medical residency interviews, if the components are a required part of a student’s program of study. Institutions should develop reasonable costs for transportation based upon measured outcomes that can be demonstrated to the Department upon request. A school can also adjust COA components based upon individual circumstances under their professional judgment policy.

For a student enrolled in a program requiring professional licensure, certification, or a first professional credential, the institution must now include the cost of obtaining the license, certification, or a first professional credential in the student’s COA. An institution can use actual or average costs of obtaining a first professional credential and licensure/certification based on student needs and program structure. If an institution chooses to use average costs, the institution will need to develop a reasonable basis for the average figure using the actual costs of a first professional credential that they are aware of for the profession that the program prepares the student to enter. The Act removed the one-time cost restriction, allowing institutions to include costs for multiple license or credential test attempts, if appropriate. However, institutions may set a reasonable limit on the number of attempts allowed to be included in a student’s COA.

Under the HEA, institutions have broad latitude when developing median costs associated with residential housing. Institutions should develop and document any reasonable methods used to support median costs including the date they determined the median costs. Median costs could be based on prior year data, current year estimates, or some other reasonable methodology consistently applied to all appropriate students.

Yes. Contracted food and housing are considered institutional charges and typically make up a significant portion of institutional costs. Many institutions use food contractors and know the exact costs associated with these services. Appropriately including these costs in a student’s COA helps the student to obtain the maximum amount of financial aid permissible.

Aside from any specific requirements outlined in the HEA, institutions have very broad discretion when developing reasonable costs associated with COA elements. For this component, institutions should develop reasonable methods to determine a dollar amount greater than zero for living expenses of students living at home with their parents. This may include costs associated with food when taking in-person classes or participating in internships/externships. Institutions could use surveys or other methods to determine if there are any typical housing costs incurred by students while living at home, such as parents charging rent. Institutions must develop an amount greater than zero that is reasonable and supportable.

As noted, institutions must make publicly available on their website a list of their COA elements and on any webpage discussing tuition and fees. Under the HEA, institutions otherwise have flexibility in determining specifically how and where to best provide the information. Institutions should be able to demonstrate to the Department a reasonable approach to providing the required information in all the appropriate places.

Professional Judgment (PJ)

Institutions must disclose publicly that students may request an adjustment based on special or unusual circumstances. Institutions have flexibility to determine how and where to best provide the information. For example, institutions may post information about what they consider a special or unusual circumstance on their website, include such information in mailings to students, or add language to award notifications.

No, institutions may not have a blanket policy to deny all special circumstance considerations in one area or category. Institutions must have a reasonable approach for reviewing all special circumstance requests on a case-by-case basis. Institutions may put parameters and limits on special circumstance considerations, but those limits may not result in denial of all special circumstance adjustments in one category or area.

Independent Student Statuses (ISS)

If an applicant affirms for the first time that they are unable to provide parent information due to unusual circumstances, they will see improved help text on the FAFSA form regarding next steps. The text will indicate that the applicant can submit a 2023-24 FAFSA form but will not receive an EFC or aid estimate. The applicant will also be instructed to contact the financial aid office at the school they plan to attend to request an adjustment due to an unusual circumstance. Additional language on the confirmation page advises them that they may be eligible to renew their dependency override during subsequent years if they receive a final determination of independence and their circumstances remain unchanged.

Renewal applicants who were previously determined to be independent due to unusual circumstances must still indicate that they are unable to provide parental information; their dependency override does not carry over on the 2023-24 FAFSA form. As already noted, under the Act they are to be presumed independent if they were previously determined to be independent at the same institution, their circumstances have not changed, and the institution does not have conflicting information. For the 2023-24 application cycle, schools may choose to develop a method to proactively identify these students and use a previous determination to manually carry forward their dependency override.

Yes. However, institutions must not maintain a practice that delays or hinders the awarding and/or disbursement of federal student aid for such students and may not require them to submit additional documentation unless there is conflicting information that the institution needs to resolve. Section 479D(d) of the HEA, as amended by the Act, will remove barriers for this vulnerable student population.

No. The timeframe in the law is intended to encourage FAAs to make determinations as quickly as practicable. It is not intended to inhibit FAAs from making such determinations later in an award year. The Department encourages schools to act on a request for a determination of independence within 60 days of the student making such a request. However, institutions may deny such requests if a student does not provide requested documentation within the 60-day timeframe.

FAAs may document the discussion from a telephone call, collect a written statement, or use a verifiable electronic data match to determine independence. For the 2023-24 year, there will not be a comment or other indicator on the ISIR. Therefore, institutions who are made aware of a determination of a student’s independence at another institution through other means (e.g., a conversation with the student) should work with the student to obtain documentation from the institution that made the determination to use it as the basis for a determination of independence. Further, FAAs who make a determination of independence at their own institution should be prepared to provide similar documentation to FAAs at other institutions.

Resources and Contact Information

As noted above, other items have been excluded from this guidance if they will not be implemented until a later date. The Department will provide guidance on other FAFSA Simplification Act topics being implemented in 2024-25 at a future date. We will make any additional publications available in the Knowledge Center.

You may refer additional questions to the Department using the Contact Customer Support form in FSA’s Partner Connect Help Center. To submit a question, please enter your name, email address, topic, and question. When submitting a question related to this Dear Colleague Letter, please select the topic “FSA Ask-A-FED/Policy.”

We thank you for your patience and continued partnership in implementing these many changes.

Sincerely

Annmarie Weisman
Deputy Assistant Secretary for Policy, Planning, and Innovation
Office of Postsecondary Education

Last Modified: 03/07/2023