UCC Guide to 2021-2022 FAFSA changes

UCC Guide to 2021-2022 FAFSA changes

For 2021, the U.S. Department of Education made several changes for students filing for Federal Student Aid through FAFSA (the required Free Application for Federal Student Aid), the application used by states and colleges to calculate eligibility for tuition aid, grants and scholarships.  Some of the changes streamline the process for applying for college tuition assistance for students and their families. 

First is an increase in the income level for Expected Family Contributions (EFC), meaning that students’ families can make $1,000 more income (from $26,000 to $27,000) and automatically qualify for financial aid. Financial assistance may be available for students whose families make more than $27,000, but they may have to file extra paperwork.  However, students whose families now make $27,000 annually or less receive the maximum amount of aid possible, according to US News.

For those who are required to file a Schedule 1, 2 or 3 tax form along with a Form 1040, there are also new exemptions for those who qualify. 

Changes have also been made to the Data Retrieval Tool.  To simplify the application process, the online application will allow access to the IRS Data Retrieval Tool.  The Data Retrieval Tool automatically gathers the IRS tax information required and autofills the answers to the application’s affiliated questions. 

Options within the FASFA form have also expanded to include more sources of assets, such as crypto currencies.   While this tool is convenient, some may find that less financial aid will be offered when the Department of Education considers these additional assets. However, new exemptions added to the Schedule 1, 2 or 3 filing status will allow anyone who pays interest on student loans, teaches, lost a job or is an Alaska resident, to still qualify for the Simplified Needs Test and Auto Zero EFC.

The Simplified Needs Test, according to the website Savingforcollege,com, “causes assets to be ignored on the FAFSA for eligible applicants.” Auto Zero EFC means those families now with incomes of $27,000 or less annually.

If applicants do not initially qualify for the Simplified Need Test after completing the FAFSA Form, especially if they have qualified in the past, the UCC Financial Aid Office will provide assistance.

The changes to the Data Retrieval Tool and Schedule 1-3 questions have sparked so much concern that 10 senators wrote a letter to Betsy DeVos, former U.S. Secretary of Education, stressing the very real concern that qualifying students might not be receiving all aid on offer.  There is concern that not only will students be initially denied aid they rightfully qualify for but also that students and families will become frustrated with the new application and fail to file all together.

Another concern is that the tax deadlines for the 2019 returns were extended from the April 15 deadline to June 15, but the 2021 FAFSA form questions were not altered to reflect this extension.  Therefore, families subjected to Covid-19 related layoffs or medicals bills will need to submit financial aid appeals to ensure the maximum qualifiable aid amount is offered.

Those most heavily hit by the pandemic may have extra paperwork if they lost jobs or income after filing their previous tax return. FAFSA will allow applicants to add information beyond the previous tax filing if they have lost jobs or income.

FAFSA opens for applications Oct. 1, and UCC urges all students to apply, regardless of assumed qualifications. Not all scholarships are given based solely on grades or family finances, and most scholarships or aid programs still require a FAFSA application.

The U.S. Department of Education is recommending digital filing for the 2021 FAFSA applications.  Paper forms and PDF processing are expected to take longer than usual due to COVID-19, according to the Department of educations.

To make the process of identifying forms and locating information easier, screen shots have been added to the FAFSA help page to give examples of the tax forms students will need to complete the FAFSA.  To file, students will need both pages of their 1040 tax form.  For those who file a Schedule 1, 2 and 3, those forms will need to be included as well.  Images of student tax documents are highlighted, detailing where the information should be input into the FAFSA application. 

There is also a FAFSA app available for students to use that allows quick access to all forms and information associated with the application process.  A free download of the app is available in the Iphone, Andriod and Google Play stores. 

FAFSA is also working to implement plans for simplifications to the application process for the 2023-2024 application.  This will include fewer form questions according to the UCC Financial Aid department.

Contact me at:
UCCMainstream@yahoo.com

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