Just in time for the holidays, the U.S. Department of Education is giving families the gift of a new and improved FAFSA (Free Application for Federal Student Aid).  Set to be released in December, an exact date has not yet been announced.  But before you add “completing the FAFSA” to your holiday to-do list, there are steps you can take now to get ready for it, as well as important information to know about its changes.

Once the FAFSA becomes available, students should complete and submit it to colleges ASAP.  However, before you can start filling out the FAFSA, you will need to get an FSA ID, and you can do so here.  (This is a change from the old FAFSA, which you could begin filling out before getting an FSA ID.)  To get an FSA ID, you will need your full name, Social Security number, and birthdate.

The new FAFSA uses multi-factor authentication to generate an FSA ID.  You will elect to receive a secure code via text, email, or an authentication app, and then you’ll use that code to log into the FAFSA.  Once you establish an FSA ID, it is yours for life and you will never need a new one.  If you already have an FSA ID from previous years, you’ll have to confirm personal information the first time you login and then you’ll be asked how you want to receive your secure code.

The student and at least one parent will need an FSA ID, depending on your household situation.  For example, if parents are married and file taxes jointly, only one will need an FSA ID, but if they’re married and file taxes separately, both will need an FSA ID.  If parents are divorced, only the one who provides the most financial support (as explained below) will need an FSA ID.  The new FAFSA includes a “parent wizard” tool that asks students a series of questions to help them determine which parent or parents need to provide information.  Then, the student can invite their parents (called “contributors”) to log in and fill out parental information.

Some changes will make completing the FAFSA easier for everyone.  First, whereas the old FAFSA had 100-120 questions, depending on your situation, the new one has 40-50 questions.  Second, you can now submit the FAFSA to up to 20 colleges, an increase from ten.  Third, you will no longer need tax forms and W-2’s to fill out the FAFSA.  That’s because it has a built-in direct data exchange between the IRS and the Dept. of Education, so with the filer’s consent, the FAFSA will import financial information directly from the IRS.  (Note that if the student and/or parents file foreign tax returns, the direct data exchange won’t work.)

The downside to the data exchange is that you won’t be able to see or edit the financial information on the FAFSA.  Since the FAFSA uses your taxes from the prior prior year (meaning the 2024-25 FAFSA will use 2022 taxes), your circumstances may have changed.  If they’ve changed drastically, you will need to contact colleges’ financial aid offices and fill out a special circumstances application.

One of the most significant changes to the new FAFSA affects families in which parents are separated or divorced.  Previously, the “custodial” parent — the one with whom the student lived the most over the past year — had to provide their information.  Now, the parent who contributed the most financial support to the student must provide their information.  If parents provided equal financial support, the one who makes the most money will need to provide their information.  (While the FAFSA uses tax information from the prior prior year, the determination of which parent’s information to provide is based on the prior year.)

Another change is that the new FAFSA no longer takes into account if a family has more than one child in college.  Although the new FAFSA asks about the number of children in college, that information has been removed from the federal formula that will be used to calculate financial need.  However, colleges will receive this information and can include it in their financial aid calculations if they so choose.

Finally, there are some changes that impact families who own farms or small businesses.  Previously, families who owned a farm did not have to report the farm’s adjusted net worth on the FAFSA.  Now, they will have to report it.  Similarly, on the old FAFSA, if you owned a business with under 100 employees, you did not have to provide its adjusted net worth.  On the new FAFSA, you’ll have to include your business’s adjusted net worth regardless of its size.

After submitting the FAFSA, students will receive a FAFSA Submission Summary (previously called a Student Aid Report) within a couple days.  This report will include basic information about the student’s eligibility for federal financial aid, including the Student Aid Index, which used to be called the Expected Family Contribution.  Additionally, the colleges you listed on your FAFSA will receive your data electronically, and they will have access to families’ financial information even though students and parents won’t be able to see it.  Colleges may request additional information through a process called Verification, but with the new data exchange tool, it is expected that far fewer families will be required to go through Verification.

Sallie Mae has put together a step-by-step guide to completing the new FAFSA.  Again, as families wait for its release, students and parents can get a head start by applying now for an FSA ID.