Beginning Phased Implementation of the FAFSA Simplification Act (EA ID: GENERAL-21-39)

Federal Student Aid
Beginning Phased Implementation of the FAFSA Simplification Act (EA ID: GENERAL-21-39)

Today, Federal Student Aid (FSA) announced that there will be a phased approach to implementation of the FAFSA Simplification Act, which passed on Dec. 27, 2020 as part of the Consolidated Appropriations Act, 2021. The FAFSA Simplification Act represents a significant overhaul of federal student aid, including the Free Application for Federal Student Aid (FAFSA®) form, need analysis, and many policies and procedures for schools that participate in the Title IV programs. Major aspects of the law include:

  1. Replacing the Expected Family Contribution (EFC) with the Student Aid Index (SAI)
    Not only will students and families see a different measure of their ability to pay for college, they will also experience a change in the methodology used to determine aid. The new need analysis formula removes the number of family members in college from the calculation, allows a minimum SAI of -$1,500, and implements separate eligibility determination criteria for Federal Pell Grants.

  2. Expanding Access to Federal Aid

    Federal Pell Grants

    • The FAFSA Simplification Act will expand the Federal Pell Grant to more students and link eligibility to family size and the federal poverty level.

    • Incarcerated students will regain the ability to receive a Federal Pell Grant.

    • Federal Pell Grant lifetime eligibility will be restored to students whose school closed while they were enrolled or if the school is found to have misled the student.

    Federal Direct Loans

    • Repeals the lifetime limit on the period for which a borrower can receive subsidized loans of up to 150% of program length (often referred to as Subsidized Usage Limit Applies, or SULA).

  3. Streamlining the FAFSA Form

    Where possible, the law mandates that FSA use data received directly from the Internal Revenue Service (IRS) to calculate Federal Pell Grant eligibility and the SAI. This data exchange has been made possible by the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act), which FSA will implement alongside FAFSA simplification. The FAFSA Simplification Act also removes questions about Selective Service registration and drug convictions and adds questions about applicants’ sex and race/ethnicity.

The FAFSA Simplification Act requires changes to most aspects of the processes and systems used to award federal student aid, including replacing the Central Processing System (CPS) and acquiring a new interface to directly receive federal tax information from the IRS. But FSA is not the only entity that has to adapt; the law will also affect every state that uses FAFSA data to award state grant aid and every school that participates in the Title IV programs.

The U.S. Department of Education takes seriously our responsibility to provide reliable, continuous access to the FAFSA form and to student financial aid. The U.S. Department of Education is working with Congress to provide FSA with additional flexibility for a phased implementation that would extend to the 2024–25 award year while working to implement some provisions early or as originally planned. This phased approach will improve the delivery of student financial aid as quickly as possible without limiting FSA’s ability to offer the FAFSA form and to provide federal student aid. It will also help FSA and our partners manage the development timelines, process and guidance updates, and communications requirements generated by these extensive changes.

Changes to Be Implemented for the 2021–22 Award Year

The elements of the FAFSA Simplification Act that will be implemented for the upcoming award year include:

  1. Repeal of the Subsidized Usage Limit Applies (SULA) requirements;

  2. The removal of negative consequences associated with an affirmative response on the drug conviction question on the FAFSA form; and

  3. The removal of the requirement that male students register with the Selective Service System to receive federal student aid.

Subsidized Usage Eligibility Limit (or SULA)

Today, FSA published an Electronic Announcement providing additional details about the repeal of the SULA requirements.

Questions About Drug Conviction and Selective Service

While it is too late in the development cycle to remove these questions from the 2021–22 and 2022–23 FAFSA forms, FSA has provided guidance to institutions about how to process FAFSA forms to eliminate the effect of the questions. FSA will also provide guidance to affected applicants about their eligibility for aid.

FSA will provide frequent updates as we finalize FAFSA Simplification Act implementation timelines in partnership with Congress. We appreciate your patience and commitment to our nation’s students.