In early 2021, The FAFSA Simplification Act was passed into law. Due to be implemented in the 2024–25 school year, passage will result in fewer questions on the FAFSA (36 questions instead of 108), a maximum Pell grant to students whose family incomes are below a specific threshold based on federal poverty level regardless of their cost of attendance, and the Expected Family Contribution (EFC) will become the Student Aid Index (SAI) which will have use a modified formula to determine eligibility for student aid.
The Urban Institute utilized 2015-2016 data and their Pell Grant Reform Simulator model to estimate the impact of the new formula. According to their simulated calculations:
- The maximum Pell grant ($6,495 per year for full-time enrollment students) will be automatically administered to applicants who earn less than twice the federal poverty level for their household size.
- The minimum grant (about $650) will be guaranteed to students from households earning below 275, 325, 350, or 400 percent of the poverty level, depending on the household structure.
- Families with multiple children attending college may see decreases in their aid eligibility under the SAI.
- 13% of dependent students in the second income quartile who applied for aid could see a decline of over $500 in their Pell award, and 7% of those in the third income quartile could see a similar decrease due to the new sibling rules in the formula.
- The number of students receiving Pell is expected to increase and the average Pell award amount will be around $3,900.
- Dependent students in the second ($38–$75,000) and third ($75–$125,000) income quartiles will experience the most change in their Pell awards.
- Some dependent students who were previously ineligible for Pell will receive a small grant.
- Overall, 76 % of Pell recipients will receive the maximum, 16% will receive the minimum, and 8% will receive an amount a middle amount.
- 60% of Pell recipients get the maximum award in the current formula.
