Preparing for the Complexities of the Simplified FAFSA

The most significant overhaul yet to the Free Application for Federal Student Aid (FAFSA) is coming this December when the US Education Department plans to release its new simplified form.

Reducing the application from over 100 questions to less than 50 will no doubt make it easier for many of the nearly 18 million students and their families who complete it annually. However, the changes are more complicated for the institutions tasked with swiftly modifying their financial aid award formulas and allocation processes to align with the new form. The rollout of the simplified form presents the following challenges for institutions:

• Truncated Timeline: Students will have less time this year to complete their applications, and institutions will also have an abbreviated timeline for reviewing them because the FAFSA will not be available until two months later than usual—it is typically available on October 1st. This delay means that students applying for early decision lose that window from October to mid-December to submit their forms, creating the potential risk of their packages not being processed on time. With many financial aid offices already understaffed, this could be a significant issue if states and institutions with earlier deadlines do not offer extensions to accommodate students and their families.

• No More Family Member Discount: Before this year, families with more than one child in college at the same time would receive a discount on their expected family contribution (EFC), but that benefit is going away. According to one study, over 1 million families could lose a combined total of $3.7 billion in grant aid due to this change. The FAFSA form will still ask for and collect data on the number of college students per family, so institutions will have to make professional judgment calls on whether to factor that data into their institutional aid package allocations. They will also need to field queries from confused applicants on the policy shift.

• Parental Income Shifts: In the past, when parents were unmarried, divorced, or separated, FAFSA duties were the responsibility of the parent the student had lived with the most during the previous 12 months. On the new form, the parent who provided the most financial support in that time period will be responsible for completing the FAFSA. If both parents provided equal support, the filing parent should be the one with the greater income or assets. Institutions will have to spend time tweaking their processes to account for the new policy and will need to explain the change to applicants.

Financial aid officers can consider factors such as the family’s number of college students during a professional judgment review, and they will likely see increased demand for one-on-one advising and counsel as students and families navigate the changes to needs analysis and other elements of the process.

Gearing Up With Modernized Solutions – Is Your Institution Ready?

Several vendors now offer cloud-native SaaS solutions that go beyond cool user interfaces with functionality that can significantly reduce the manual effort needed to calculate and award aid. 

Institutions that have modernized their financial aid solutions are likely in a better position to weather the impact of these changes and handle the deluge of related queries from students and families,  assuming they have engineered their people, processes, and data to take full advantage of their modern systems.

Based on our analysis of clients who have maximized their modern financial aid solution investment, we have identified some common threads in their approaches to implementing and leveraging their systems. The following best practices are helpful for other institutions to consider as they gear up for a highly complex debut year for the simplified FAFSA:

• Align workflows with the system: Take the time to re-engineer financial aid processes and workflows to align with your chosen solution and maximize your use of native built-in functionality. While adapting processes requires more upfront work, it pays dividends in the long term by minimizing the need for ongoing maintenance, streamlining the upgrade processes, and ultimately automating many repeatable, well-defined operations. 

• Minimize Customizations: In one conversation I had recently with an IT leader at a small private college who made the transition to a modern system, they said: “One of the major reasons our Financial Aid implementation was successful is that we maximized the system’s functionality and minimized the amount of customization deployed.” Tambellini research also shows that institutions that do not take the opportunity to implement best business practices often fail to realize the maximum return on their new solution investment.

• Always Be Training: Training isn’t just for new team members—it should be a regular occurrence for everyone using a platform in order to maximize the value of evolving system functionality.

While many students and families will welcome the simplification of the FAFSA, the myriad of other changes may not be so welcome for many who may see awards decrease from the past. These changes will have an impact on both financial aid offices and students. 

Institutions that have modernized their financial aid solutions and continue to re-engineer their processes to take advantage of the latest tools may be in the best position to deal with the complexities and issues related to the FAFSA Simplification Act changes.

Tambellini can help you consider the optimal financial aid tools and systems for your institution and, more importantly, how to best position your people, processes, and data to maximize the benefits of your technology investments. Reach out to a Tambellini analyst on our team for more guidance.