Module 4 – Assignment 3

2023 – 2024 FAFSA Basics and Changes to 2024 – 2025 FAFSA

 Free Application for Federal Student Aid
 Available from October 1st – The Federal deadline is June 30th, but can also be various deadlines
like state and institutional deadlines which can be as early as Dec 1st
 The FAFSA application is free to complete
 Can be filled out online at fafsa.gov, or print a pdf version and fill it out and mail it.
 The FAFSA need to use prior-prior year’s tax information
 Many states and colleges use FAFSA to check the student's eligibility for financial aid under state
or the institution
 From the 2024-2025 application you list up to 20 schools you want to share your SAI with.
 6 things needed to fill out FAFSA:
o Username and Password – FSA ID
o SSN
o Prior prior year tax information
o Records of untaxed income
o Records of your assets
o List of schools you are interested in
 The SAI defines parent as someone “providing the greatest portion of student financial support.
The FAFSA guideline regarding which parent information to be included on the application is as
follows:
o If your parents are married or are living together even if they are not married, divorced
or separated, you must report information for both of them on the FAFSA form.
o If your parents are divorced or separated and are living separately, you must report
information for the parent you lived with more in the past year.
o If you lived with both parents for equal time or lived separately from your parents
include the information of the parent you provided the most financial support in the
past 12 months and if the parent is re-married then you also need to provide the
information of the step-parent
 Within 3 days or 3 weeks of completing FAFSA your Student Aid Report (SAR) will be available
 SAR is like a receipt of what you entered in FAFSA. When FAFSA is completed it shows SAI. SAR
also contains a four digit Data Release Number (DRN). DRN is assigned to you FAFSA form. The
SAR is noe called as FAFSA Submission Summary(FSS) from 2024-2025
 The college financial aid assessing your financial aid using SAI number. The SAI can as low as -
$1500
COA – SAI = Financial need
 Sometimes the FAFSA can be selected for verification. This is nothing bad about this Verification
process. Verification is a process where your school confirms the data you reported on your
 FAFSA. Your school has the authority to contact you for documentation that supports income
and other information that you reported on your FAFSA.
 Changes to FAFSA
o Fewer question
o More list of colleges – went from 10 to 20
o It no longer provides the benefit of having two children attending college
simultaneously. It also doesn’t divide the SAI by the number of children attending the
college simultaneously
o Pell Grants eligibility is expanded
o SSN to get a FSA ID not required anymore
o IRS DRT now changes to IRS DDX – which is now mandatory. By completing FAFSA
students and contributors are consenting to the tax information exchange from IRS to
FAFSA. If you do not provide consent you will be ineligible for student aid

Summarizing key Changes to FAFSA 2024-2025

o A spouse or step parent may need to participate in FAFSA form as a contributed
o Tax information directly transferred from IRS and this transfer to happen consent must
be given and this consent is mandatory
o Student and contributors must have their own FSA ID and SSN is no longer necessary to
create ID, of course you must be a US citizen or eligible Non citizen to be eligible for
federal student aid
o You can check the status of completion of your application on the website
o The number of colleges listed is now increased to 20
o Several types on untaxed income will no longer be reported on FAFSA
o Child support will be viewed as an income
o Parent giving more financial support must be listed
o Pell grant eligibility simplifies

Interpreting financial aid offer

 Timelines of Financial Aid
o September – creating FSA ID, Preparing the list of colleges and other requirements to fill
out FAFSA
o October – Oct 1st FAFSA is available, complete as early as possible
o November – National Scholarship month.
o December – Accept early decision financial aid if applicable
o January – Continue applying for scholarships
o March – Compare financial aid offers from different schools you are admitted into
o May – May 1st National Decision Day, notify the school you plan to attend and pay
deposit
o June – June 30th federal last day for FAFSA
 Types of Financial Aid
o Scholarships and Grants: Scholarships are Merit-based or achievements, Grants are
need-based
o Aid can be a combination of both scholarships and grants – all free money
o FAFSA decides students' eligibility to receive grants
o Aid can also be obtained from various external sources, like employers, corporations,
Non-profit org
o Types of Grants
 Pell Grants – for undergrads with exceptional financial need
 Teach Grants – for students pursuing a career in teaching
 Service Grants – for students whose parents died defending the country
following 9/11
 Federal Supplemental Educational Opportunity Grants - for undergrads with
exceptional financial need
o Type of Scholarships
 Merit-based: Granted by Colleges or Organization based on academic or
extracurricular achievements like athletic, community service, personal
attributes, hobbies and interests
 Need-based: Granted by Colleges or organisations based on your or your
family’s income
 Community-based: By local businesses, community organizations or individuals
o Work–Study Grants: Working on campus while studying. Helps pay for college while also
being able to pay for expenses. Are part-time and offer flexible hours. Be sure to check
the box saying you are interested in Work -study on the FAFSA application and complete
the application early as these work-study jobs are limited and are offered on a first-
come first serve basis. Having work-study on your financial aid offer doesn’t mean you
got the job, you still have to apply and interview for the job
o Loans Types of Loans
 Subsidized Direct Loans: The federal government pays the interest while you are
in school
 Unsubsidized Direct Loans: Interest accrues while you are in school and gets
added to your loan balance when you start making payments
 Direct PLUS Loans: Similar to an unsubsidized loan but they are given to those
pursuing graduate and doctoral degrees or to parents of undergraduate
students
 Private: Loans offered by banks or credit unions. You should shop around for the
best offer you can find. Students generally need a parent or other family
member to co-sign.
 Benefits of choosing a Federal Student Loan: No credit check or co-signer
required, low and fixed interest rate, flexible repayment options
  Financial Aid offers – What to look for and comparing the offers
o Cost of Attendance
o Look for if your aid includes PLUS
o Look at the balance between grants and loans
o While evaluating different offers look at these key things to while comparing
 Make sure that format of COA is same for all the offers – ie they include both
direct and indirect costs
 Separate gift aid and self-help aid – some offers lump them paid together
 Calculate the net price of each college which is COA less gift aid
o You DO NOT have to accept all the financial aid, you first accept all the gift aid, then self-
help aid, and finally move on to loans(federal loans precede private loans
o You can appeal for a financial aid offer. Contact the institution's financial aid office and
submit an appeal letter. You need to have a valid reason

Federal Student Loan Repayment

 Most loans have a grace period before you need to start making payments
 It is the time between when you graduate and your first loan repayment due date
 A 6-month grace period after the student graduates leaves school, or drops below half–time
 Direct subsidised and unsubsidized have 6 6-month grace period. Direct Plus loans do not have
any grace period
 There are several repayment plans available for federal loans: Standard Repayment, Graduated
Repayment, Extended Repayment, Income-based Repayment, Revised Pay as you earn
Repayment, Income-contingent Repayment
 Standard Repayment:
o Repayment length: 10 years. Up to 30 years for Direct Consolidated loans
o Number of payments: 120.
o Payment amounts: The same amount each month.
o Other qualifications: Must have federal student loans.
o Payments under standard repayment are larger than under other plans that extend your
repayment term. But you’ll pay the least interest and finish repayment the fastest using
standard repayment.
 Graduated Repayment:
o Repayment length: 10 years. Up to 30 years for Direct Consolidated loans
o Number of payments: 120.
o Payment amounts: Increase every two years, but can’t be more than triple any previous
payment.
o Other qualifications: Must have federal student loans.
o This payment plan is correct when you want to make small payments but you income
does not qualify for Income-driven Repayment Plan
 Extended Repayment(Without Consolidation):
 o Repayment length: 10 – 30 years.
o Payment amounts: Payment amount can be graduated or fixed
o Other qualifications: Must have 30,000 is federal student loan debt
o You pay more interest than under the standard 10-year repayment plan and monthly
payment will be lower than the standard plan
 Extended Repayment(With Consolidation):
o Repayment length: Up to 30 years
o Payment amounts: Payment amount can be graduated or fixed
o Other qualifications: Required student loan consolidation
o You pay more interest than under the standard 10-year repayment plan and monthly
payment will be lower than the standard plan
 Income-Driven Repayment:
o Repayment length: 20 – 25 years.
o Payment amounts: Payment amounts vary based on the income the student receives.
Monthly payments can be capped at 10% or 15% of the discretionary income
o Other qualifications: Must have 30,000 is federal student loan debt
o You pay more interest than under the standard 10-year repayment plan and monthly
payment will be lower than the standard plan
o There are four income based repayment plans – Saving on Valuable Education(SAVE),
Income based repayment, Pay as you earn, Income contingent replacement
 Loan Simulator: A tool by Federal Student Aid, to help find a repayment plan based on your
needs and goals
 PSLF and Loan Consolidation: Direct loans and Plus loans are qualified for PSLF. A Direct
consolidation loan allows you to consolidate multiple federal education loans into one loan, and
also gain access federal forgiveness programs. A Direct Consolidation Loan has a fixed interest
rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the
loans being consolidated, rounded up to the nearest one-eighth of one percent.