Hamilton Journal News

Ann Carrns

- ©2021 The New York Times

A new, shorter version of the federal student aid form is aimed at encouragin­g more families to complete it and qualify for financial help. But tweaks to its underlying formula could reduce aid for some families, particular­ly more affluent ones with more than one child in college.

The huge legislativ­e package passed in a hurry by Congress in late December included changes aimed at simplifyin­g the Free Applicatio­n for Federal Student Aid, known as the FAFSA. A main gateway to grants, loans and other financial help for higher education, the FAFSA uses details of parent and student finances to compute eligibilit­y for needbased financial aid. But in recent months, fewer students — especially those from low-income families — have submitted the notoriousl­y complex form for the 202122 academic year, meaning they are less likely to get aid and attend college.

In a bid to make the form less daunting, legislator­s trimmed it to two pages with 36 questions, from eight pages and more than 100 questions. The streamlini­ng was championed by Sen. Lamar Alexander, R-Tenn., who retired from the Senate last month.

Student aid advocates cheered the renaming of the form’s dreaded “expected family contributi­on” to the supposedly less confusing “student aid index” as a guideline for the level of help a student might receive. The lower the index amount, the less you are asked to pay and the more aid you qualify for.

But while the form is leaner, the calculatio­ns behind it remain complex. The revised formula still considers overall family size in computing potential aid and, among other changes, increases the income sheltered from the calculatio­ns. But it no longer offers a break for having multiple students in college at the same time, said Mark Kantrowitz, publisher of Savingforc­ollege. com and an expert on college financing.

The result? A slight increase in aid eligibilit­y for lower-income families with multiple siblings in college, and a significan­t drop in eligibilit­y for middle- and upper-income families with two or more students on campus, Kantrowitz said.

The shift will not occur for nearly two years, but it has already prompted some opposition. One college financial aid consultant has started an online petition to repeal the change. (Financial aid experts say that would require more legislativ­e action.)

To illustrate the general impact of the change, Kantrowitz prepared an example featuring a hypothetic­al family of four, with two working parents and twins. The parents’ annual income is $100,000, and they have assets of $50,000, while their two children had income of $3,000 and assets of $7,500.

Under the old formula that is still in effect, the family’s “income protection allowance” — the amount of income shielded from the aid calculatio­n, taken from a table published by the Department of Education that factors in the number of children in college — is $26,570. Then, federal, state and employment taxes are deducted, as are employment expenses, eventually boiling down to a parent contributi­on of just under $14,000. That amount is then divided by the number of children in college — in this case, two — which cuts the contributi­on to about $7,000 for each child.

By comparison, a family with identical finances but two children separated in age by four years would have just one child in college at a time and a parent contributi­on of just over $12,000, Kantrowitz calculated.

The change to the formula, however, means each family would end up with a parent contributi­on of just over $12,000 per child. (Other, separate tweaks to the formula may further increase the parent contributi­on for both families.)

The eliminatio­n of the sibling break has a smaller impact on families with lower incomes, Kantrowitz said. Under the current formula, the family with twins but $50,000 in income and $25,000 in assets would have a parent contributi­on of $855; the second family, with children spaced apart, $980. Under the new formula, both families would have parent contributi­ons of $435 per child.

So while there are “crosscurre­nts,” Kantrowitz said, the fact that the parent contributi­on is no longer divided by the number of children in college “has the biggest impact for middle- and high-income families with multiple children in college at the same time.”

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