Welcome back to another episode of Wine and Dine! In today's discussion, we will be diving into the changes in the Free Application for Federal Student Aid (FAFSA). As a financial planner, it is my goal to provide you with valuable information that can help you navigate the complexities of college planning. So grab a glass of wine, sit back, and let's explore the recent updates to the FAFSA.
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Introduction
The FAFSA is a crucial tool for families seeking financial aid for college education. It helps determine the expected family contribution (EFC) and the amount of financial aid a student may be eligible for. In this episode, we will be focusing on the changes in the FAFSA, including the transition from EFC to the student aid index, the shorter FAFSA form, and the impact on small businesses and farms. We will also discuss the expansion of the Pell Grant and the changes in reporting assets and income. So let's dive right in!
Key Takeaways:
The FAFSA is transitioning from the expected family contribution to the student aid index.
The FAFSA form is getting shorter, reducing the number of questions.
Small business and farm owners will now have to report the value of their businesses on the FAFSA.
The student aid index can be below zero, allowing for more financial aid for needy students.
The Pell Grant formula is linked to family size and the federal poverty level, providing additional funding opportunities.
Families with an AGI up to $60,000 will not be required to report assets on the FAFSA.
Contributions to pre-tax retirement plans will no longer be added back to AGI for FAFSA calculations.
Child support received will no longer be added to income, but the amount will be added to non-retirement assets.
Financial help from family members or friends will no longer be considered untaxed income for students.
Funds used from a grandparent-owned 529 plan will not be considered untaxed income for students.
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Conclusion and Future Outlook
In conclusion, the changes in the FAFSA aim to simplify the application process and provide more accurate financial aid assessments. While some changes may pose challenges for families, such as the inclusion of small businesses and farms in the formula, there are also opportunities for families to strategically manage their assets and increase their eligibility for financial aid.
As the FAFSA continues to evolve, it is essential for families to stay informed and seek professional guidance to navigate the complexities of college planning. By understanding the changes in the FAFSA and exploring the planning opportunities they present, families can make informed decisions and ensure a smoother path to funding their children's education.
Remember, college planning is a journey, and with the right knowledge and resources, you can navigate the financial vineyard and craft a delicious life for yourself and your loved ones. Cheers to a fruitful future!
Links for more information:
The FAFSA Simplification Act - Upcoming FAFSA Changes - College Aid Pro - B2C
A New FAFSA Form Is Coming, Along With Changes in College Aid - The New York Times (nytimes.com)
This episode is brought to you by Rooted Planning Group. Rooted Planning Group is a fee-only financial planning firm that specializes in working with women in their 30s and 40s who want to take control of their finances and plan for the future. Whether you're just starting out or you're looking to make a big change, Rooted Planning Group can help.
Visit www.rootedpg.com to learn more.