The US Department of Education has rolled out the latest FAFSA changes affecting institutional financial aid planning and processes. Implementing the FAFSA Simplification Act brings challenges and opportunities for leaders in higher education.
Some challenges have already presented themselves. As an institution administrator, you can leverage these gaps to create new strategies that attract new student demographics and retain existing students. This guide explores the key changes in the FAFSA process and the implications of FAFSA for institutional planning and enrollment management.
Since the latest FAFSA update, there have been a few key changes to the FAFSA process for students and higher education institutions.
The FAFSA Simplification Act changes how higher education institutions process aid as well as engage with students. The industry primarily used Expected Family Contribution (EFC) in order to calculate need-based financial aid. This method involves referencing income and assets to determine what the government expects a student to pay toward a year of college costs.
Now, the government has renamed the bill to the Student Aid Index (SAI). This name clarifies that the number provided does not represent the amount families should pay for college. Instead, it indicates a family’s paying capability, allowing institutions to determine the aid package for students. This change enables institutions to easily identify which students need financial aid most.
Changes to FAFSA have expanded Pell Grant eligibility to reduce barriers for certain student populations, such as students experiencing homelessness, those who are incarcerated, or those with low-income socioeconomic backgrounds. Some of the new criteria for determining Pell Grant eligibility include family size and federal poverty guidelines related to the student’s legal residence and whether they need to file a federal income tax return.
FAFSA has also changed to reduce the number of questions on the FAFSA form. This update makes the application process easier and more accessible for students and families who need federal financial aid. It also creates a more streamlined data transfer process with the IRS.
The FAFSA Simplification Act has specific factors that determine the dependency status for students. While graduate and professional students are automatically considered independent, undergraduate students are automatically dependent.
To change the dependency status from dependent to independent, students need to prove that they meet certain criteria. For example, they might show that they are married, at least 24 years old, have children financially dependent on them, or have a certain adverse family background.
The above FAFSA changes have affected the way institutions handle financial aid needs. Let’s explore how the impact of the reformed FAFSA process affects higher education planning, enrollment management strategies, and student success initiatives.
Institutions will need to adjust their financial aid policies to reflect changes in Pell Grant eligibility and SAI calculations. It is also important that institutions develop strategies that help students with the greatest need receive adequate financial support.
Simplified FAFSA also brings changes to the Institutional Student Information Record (ISIR) processing aspect of financial aid administration. You will need to update your policies with the latest ISIR data elements and processing timelines. This change may directly affect aid packaging and schedules for disbursements. To enhance funding access, incorporate intelligent scholarship matching systems and leverage data analytics for optimal aid distribution.
The delayed rollout may disrupt a state’s ability to fund grant programs on time. For example, let’s say students are unsure whether they will secure financial aid. In this case, it can discourage students from attending college the following year. For this reason, some institutions are reluctant to postpone deadlines due to the effect it could have on institution-wide budgeting and planning.
Many institutions had to push back their commitment deadlines at the last minute because they hoped the new rollout wouldn’t make it necessary. David Hawkins, chief education and policy officer at the National Association of College Admissions Counselors, says there is pressure on tuition-dependent institutions to predict yield rates early to understand how the next fiscal year will go. If they delay, they may need to push back the recruitment process for the following year.
Institutions can benefit from using software that forecasts the impact of FAFSA changes on enrollment rates and student demographics. They can then use this information to adjust institutional budgets to account for changes in financial aid revenue and expenses.
Institutions need to clearly and accurately communicate with students and parents about the changes to the new FAFSA process and financial aid options. Doing so can help minimize confusion and prevent prospective students from applying elsewhere. Consider offering workshops and training sessions to help students and their families navigate the new FAFSA form.
New eligibility criteria and SAI calculations may create enrollment gaps. For example, the old FAFSA rules lowered the EFC amount when a family wants to enroll two or more kids simultaneously. The SAI rules do not offer this advantage, which can reduce enrollment for siblings at your institution. Consider developing strategies to mitigate potential enrollment declines among specific student populations. You can also target your recruitment efforts to reach underserved students who are now eligible for more aid.
The phased ISIR delivery approach from the Department of Education impacts early decision and regular decision admissions cycles for financial aid teams. Offices are feeling the pressure due to the widespread changes to processes in such a tight timeline. According to a recent survey, only 28 percent of financial aid professionals believed that their institution was completely prepared or mostly ready for the FAFSA simplification rollout.
Institutions will need to prepare their financial aid staff for compressed processing timelines and potential delays in receiving ISIR data. You may also implement more efficient workflows to ensure timely aid packaging and disbursement.
To combat the latest implications of FAFSA changes, implement effective student success initiatives and enrollment management strategies to get ahead of potential impacts. A great way to do this is by using higher education management software like Watermark Student Success & Engagement.
Our solution supports your institution’s unique needs by helping you maximize student success, engagement, and retention. The software analyzes institutional insights in real time and provides detailed data-driven reports. These capabilities allow you to predict future outcomes, track student performance, identify at-risk students, and provide proactive support in reaction to student retention and enrollment rates.
To accurately track institutional planning and management strategies, learn more about Student Success & Engagement and request a demo today.
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