Students and Parents will be completing the FAFSA 2020-2021 form and the application will be available on October 1, 2019. Families will be using the tax information from the tax year 2018 due to the rule called Prior Prior. This year there are a few FAFSA changes that people need to review before they begin to complete this form.
Tax Form Change
As a result of the 2018 Tax Reform Bill, the 1040 form was simplified. This tax change resulted in the elimination of the 1040A and 1040EZ forms. By having only one 1040, it changed FAFSA since both the instructions and the Simplified EFC classification depended on the 1040A and 1040EZ forms.
The FAFSA will no longer ask for the number of exceptions since this question was also removed from the 2018 tax 1040 form.
Parent Asset Allowance Reduction
Each year the FAFSA calculation has adjustments to the allowance tables. This year’s parents’ asset protection allowance table reduced these allowances for both parents and independent students. As a result, the EFC number will go up and more parent assets will be included in the calculation.
Simplified and Zero EFC Change
To qualify for a simplified or zero EFC, the person or family would have had to submit or qualify by using the 1040A or 1040EZ tax form. Under the new tax rules, these forms do not exist. To qualify under the new rules the person or parent must have used the 1040 form without the submission of a Schedule 1.
There are income limits and other requirements to qualify for a simplified or zero EFC.
FAFSA User Experience Upgrades
Both the desktop and mobile application versions have improved the user experience. Over the past few years, an effort for simplification has been ongoing. The mobile app has seen the biggest upgrades with some new features added such as myChecklist, and improved notification.
These changes will help the students and parents better navigate the FAFSA submission process. If you are seeking additional insight on how the EFC will impact your financial aid and the net cost of each college, visit our College Cost Analyzer and In College Payer.