Key Takeaways
Contrary to popular belief there are no FAFSA income limits. Your family may be eligible for financial aid.
Applications open October 1. Don’t delay.
The new Student Aid Index (SAI) has replaced the Expected Family Contribution (EFC), offering greater flexibility in adjusting financial aid.
With back-to-school routines now underway, many of you have been asking about financing your children’s or grandchildren’s higher education. No matter where they go, it likely won’t be cheap. However, since there are technically no family income limits for FAFSA (Free Application for Federal Student Aid), I urge you to apply when applications open on October 1st for the academic year 2025-2026. You may be eligible for grants, scholarships, work-study programs, college loans, or even career school.
The once burdensome FAFSA has been greatly simplified to thirty-six questions from 100-plus. Yet, according to the National College Attainment Network (NCAN), only three in five students (58%) complete the FAFSA. That’s just leaving money on the table.
I also wanted to mention the simplified FAFSA to the parents of prospective graduate students. Many of you did not need financial aid to get your kids through college (thanks to diligent savings in 529 plans). But now those savings are mostly depleted, and the cost of graduate and professional school can be jaw-dropping—just when you’re thinking of winding down your career.
To Qualify For Aid, You Must Meet The Following Criteria:
Be a U.S. citizen or eligible noncitizen.
Have a valid Social Security number.
Are enrolled or accepted into an eligible degree or certificate program.
Have a high school diploma or its equivalent.
Don’t Delay
FAFSA applications for the academic year 2025-2026 open on October 1st. Although you have until June 30, 2025, to complete your FAFSA, applications are reviewed on a first-come, first-served basis. Therefore, it’s beneficial to apply early to maximize your aid. A new change in the streamlined FAFSA is that applicants must agree to allow the IRS to import their federal tax information directly. While this may make some applicants uncomfortable, it will simplify the process for families.
After submitting your FAFSA, the government sends you an email with your Student Aid Report (SAR). This is a summary of the information you provided on the FAFSA, and it also includes what was known as your Expected Family Contribution (EFC) -- an index that colleges and universities use to evaluate your aid eligibility. It determines how much of the school’s total cost of attendance is covered by grants and other need-based aid. The smaller your EFC, the more financial aid you receive.
Since many families found the EFC confusing, the government replaced it with the simpler Student Aid Index (SAI) for the 2024-25 award year and beyond. However, parents no longer get a discount for having multiple children in college at once.
Like the EFC, the SAI takes information from your FAFSA application to determine your aid eligibility. The new SAI methodology allows financial aid professionals to make aid adjustments due to extenuating circumstances, such as having a drop in income due to a death in the family or divorce. Personally, my parents went through a divorce just before I started college. While it was a challenging time, it ultimately allowed me to receive more financial aid than I would have otherwise.
NOTE: Starting with the 2024-25 form, the parent who provided the most financial support for the student over the last 12 months will be considered the FAFSA contributor. Previously, FAFSA used the financial information of the parent with whom the student lived the most regardless of whether they provided the most financial support.
State Aid
Some financial aid distributed by states is based on income. You can find financial aid opportunities by contacting your State Education Agency. States that offer need-based grants include:
New Jersey. Through the New Jersey Tuition Aid Grant program, students can receive an award that covers a portion of the tuition at an eligible school in the state.
Institutional Aid
Colleges often provide their need-based grants, using the information you submit on your FAFSA to determine your eligibility. For example:
Penn State University. The Penn State Academic Grant is a need-based award for undergraduate students who are enrolled full-time.
Work-Study
Students with financial need—as determined by the FAFSA—may be eligible for federal or state work-study programs. Through these programs, students get part-time jobs and use their earnings to pay for some of their education-related expenses.
If you don’t qualify for need-based aid, other financial aid options are available to all students regardless of finances such as:
Scholarships. Scholarships are usually awarded based on your achievements rather than financial need and can come from your college, state, nonprofit, or corporation.
Unsubsidized Loans. Federal direct unsubsidized loans are available to undergraduate and graduate students who need additional funding for college, and there’s no financial need requirement. However, you’re responsible for paying interest on these loans at all periods, including while attending school and during periods of deferment.
PLUS Loans. Parent and Graduate PLUS loans allow you to borrow up to the total cost of attendance, and there is no income limit to qualify. Both types of PLUS loans are unsubsidized.
Another point I want to stress to families: Filling out the FAFSA should NOT lower your admission chances at highly selective schools, and it shouldn’t prevent you from qualifying for other types of financial aid. The FAFSA considers many factors, including your family size and the schools you wish to attend, so you may be surprised by how much financial assistance you can receive.
As Mahatma Gandhi famously said: “If you don't ask, you don't get it.”
Conclusion
At Novi, we do not charge extra to help our clients with higher education. If you or someone close to you has concerns about financing higher education, don’t hesitate to reach out. I’m happy to assist.
BRENDEN LEESE, CFP® is an Associate Wealth Advisor at Novi Wealth Partners
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