More than half of full-time students pay for their higher education with the help of financial aid — a combination of awards including grants and scholarships, work study and loans. The Free Application for Federal Student Aid (FAFSA) is a vital step for students seeking financial assistance for their post-high school education.

If you're planning to file the 2024-25 FAFSA for your student, the application’s availability has been pushed from October of this year to a December release to accommodate some changes to the requirements and format.  

The simplified FAFSA for the 2024-25 academic year holds big changes for families seeking financial assistance for college. While the updated process aims to be more user-friendly and equitable, families may experience some challenges navigating the changes. Here are seven notable updates:

1. Fewer Questions on the FAFSA

The FAFSA is slimming down by reducing the number of application questions from 108 to 46. This simplification aims to make the form more user-friendly. Plus, some respondents will answer even fewer questions, thanks to some "skip logic.”

2. More Colleges Can Be Listed

In the past, families could only list up to 10 potential colleges on the FAFSA. This year, families can list up to 20 colleges. In addition, families needing to add more schools later can make changes after receiving the FAFSA Submission Summary, a document that provides basic information about your student’s eligibility for federal financial aid. Previously known as the Student Aid Report, this FAFSA Submission Summary gives families a chance to review, supplement and correct the information listed on their FAFSA.

3. Number of Children in College

There are two important changes on the FAFSA relating to the number of children in college. One update to the Income Protection Allowance increases the aid percentage amount, while the other update to that allowance decreases aid eligibility when there are two or more children from your family in college at the same time. The previous application focused on cash flow more than wealth, reasoning that parents who have two children in college at the same time do not have twice as much money available to pay for college. The simplified FAFSA changes this, no longer providing families with any benefit from having children overlap in college.

4. Income Protection Allowance

Income Protection Allowance is the amount of a family’s income that doesn't get counted when calculating your student’s financial aid. Starting this year, the FAFSA will no longer reduce the Income Protection Allowance when there are multiple children enrolled in post-high school education. This change could lead to a higher Student Aid Index and affect the eligibility of middle- and high-income students for financial aid. The Student Aid Index is an eligibility index number that a college's or career school's financial aid office uses to determine how much federal student aid the student would receive if the student attended the school.

The Income Protection Allowance for parents and students is set to increase by 20 percent and 35 percent, respectively. Single parents are in for a significant boost with a 60 percent increase in their Income Protection Allowance. These increases are designed to offer more financial protection by shielding a greater portion of a family’s income from the need analysis. In simpler terms, it's a way to help ensure that your family gets the financial aid it needs. These changes may, however, lead to a decrease in the Student Aid Index.

5. Changes to Income Reported

Certain types of untaxed income, like cash support and money paid on the student's behalf, will no longer need to be reported on the FAFSA. For example, if a grandparent gives a gift to their grandchild to help with college expenses, or the family takes a qualified withdrawal from a grandparent-owned 529 college savings plan, that gift or withdrawal does not need to be reported.

Other types of income that no longer must be reported on the FAFSA include workman’s compensation and veterans’ education benefits.  Furthermore, child support received will be reported as an asset on the FAFSA instead of as untaxed income. Related: Can I Combine a 529 Plan with Financial Aid?

6. Federal Pell Grant Eligibility

Eligibility for the Federal Pell Grant is now linked to specific adjusted gross income thresholds based on factors like family size and where you live. The simplified criteria make it easier for students to understand their eligibility. Additionally, incarcerated students are once again eligible for the Federal Pell Grant. Related: Four Things to Know About Pell Grants

7. Divorced or Separated Parents

The updated FAFSA has changed its process regarding which parent should file the application: Instead of automatically defaulting to the custodial parent, the FAFSA will now look at each parent’s financial support to decide who is responsible for filing. The family size on the FAFSA will include both the student and the parent, following the IRS rules for dependent status. So, it's essential to have a clear understanding of these rules. If your family has multiple support agreements, applying for federal aid can become more complex. Specific rules for these situations will be determined by the U.S. Department of Education. Related: 529 Plans and Divorce: 3 Factors to Consider

Visit the Federal Student Aid site to learn more about completing a FAFSA application.