FAFSA Simplification: Campus-Wide Implications

Prairie View A&M University Office of Student Financial Aid & Scholarships Report Prepared by: Joy D.Thomas, Ed.D. Director, Student Financial Aid & Scholarships

What is FAFSA Simplification?

● FAFSA Simplification is the product of 3 laws passed since 2019:

• Changes the way Pell grant eligibility is determined-AGI, family size, and marital status • Includes new automatic maximum/automatic minimum Pell grant based on federal poverty guidelines • Changes the EFC to the Student Aid Index (SAI) and makes changes to the formula to calculate it • EFC can’t be lower than 0; SAI can be as low as -1500 • PVAMU Office of Financial Aid & Scholarships used NAFSAA’s Student Aid Index (SAI) Modeling Tool as a source to predict the impact on our student.

○ The FUTURE Act, which amends the Internal Revenue Code to permit IRS to share federal taxpayer information (FTI) with the Dept of Education for purposes of financial aid applications (FAFSA) and applying for income-based student loan repayment ○ Consolidated Appropriations Act of 2021, which streamlines and simplifies the FAFSA by leveraging the FUTURE Act to obtain applicant income information directly from the IRS

■ Takes the hardest questions to answer (income questions) off the form completely

This law also:

■

● Makes significant changes to student eligibility for federal student aid (Pell for Prison Education programs, removal of limitations on eligibility for students with drug convictions or who fail to register w/ Selective Service System)

Major Changes to the Free Application for Federal Student Aid (FAFSA) – An overview • FAFSA will not be available until December 2023 – no specific date has been communicated as of yet. • An “FSA ID” is required to access FAFSA form • FAFSA is now roles-based: • Roles = Student (Applicant), Parent, and Preparer (if applicable) • Once all required data has been provided and signed, any role can submit the FAFSA form. • Introduction of Contributors • Parent 1, Parent 2, s tudent’s spouse, and student must provide the required information and sign their respective section prior to submission. • Dependent students must invite parent(s) to contribute to their form if parent information is required. • Integration of FAFSA on studentaid.gov’s Dashboard (all information is now located in on place). • The general look and feel of the FAFSA form has changed; questions have been reduced from 108 to 33. • Allow users to transfer federal tax information via direct date exchange (replacing the IRS Data Retrieval Tool). • EFC (expected family contribution) will be replaced with SAI (student aid index). 3

Pell Grant Guarantee (Automatic Eligibility)

• Eligibility for the maximum Pell Grant award is guaranteed to the following individuals: • Students in single-parent households (both dependent students and single parents themselves) with an AGI of less than the 225% federal poverty line. • Students in households with an AGI of less than 175% of federal poverty line. • Eligibility for the minimum Pell Grant award is guaranteed to the following individuals: • Single student parents with an AGI of less than 400% of federal poverty line • Married student parent with an AGI of less than 350% of federal poverty line. • Dependent children of single parent with an AGI of less than 325% federal poverty line. • All other student with an AGI of less than 275% federal poverty line.

Why were these changes made?

• Expand Access Through Simpler Aid Application Process: • Low-Income and 1 st Generation students are 2-3 times more likely to report finding the FAFSA difficult to complete • Larger low Socioeconomic status (SES) quintile did not complete FAFSA in comparison to those in the middle three-fifths and the highest fifth of SES. • 34% of Hispanic and 27% of Black student did not complete the FAFSA because of lack of information or knowledge, in comparison to 18% of white students. • Pell Grant Predictability and Transparency: • No longer requiring a lot of demographic, income, and asset information to determine EFC. • New system: lowest income students will only provide demographic information; the rest is done behind the scenes to calculate Pell grant amount and SAI

• Program Integrity, Data Accuracy = Less Need for Verification • Income date comes directly from IRS, therefore, DOE will know it’s accurate. • Protects Taxpayers from fraud and abuse • Reduces the need in the verification process since IRS income will not required verifying.

Sources: https://www.insidehighered.com/admissions/article/2021/04/12/why-students-dont-fill- out-fafsa

https://nces.ed.gov/pubs2018/2018061.pdf https://nces.ed.gov/pubs2018/2018061.pdf

Implications of FAFSA Simplification on Campuses • National trend of more Pell recipients, larger Pell awards, and lower SAIs vs. EFCs (see slide #11 for PVAMU SAI Modeling Tool Results) • More Pell dollars flowing into the institution. • Part time recipients will also receive higher awards. • Year-round pell may increase due to removal of ½ time enrollment requirement (during summer terms) • Lower SAI’s translate to higher need, which means more eligibly for institutional aid. • Results of PVAMU SAI Modeling Tool (models the potential impact on PVAMU’s students) • New treatment of emergency financial aid • Student does not have to demonstrate financial need to qualify for emergency aid, and emergency aid will not impact their other aid. 6

Implications of FAFSA Simplification on Campuses (cont’d) • Change to treatment of multiple family members in college • Starting 2024-25, no different treatment for more than one in college (not Pell eligible) • Ex. If EFC = 10,000 and 2 in college, each student’s EFC = 5,000; with changes it will not matter. • Impact: Student loses Pell grant and institutional aid eligibility. • Change to treatment of small businesses and family farms. • Currently, family farms and business with more than 100 employees are exempt from reporting as assets. Starting 2024-25, assets must be reported. • Questions removed from FAFSA • Housing Choices: We will need to now determine the student’s housing component in COA another way. • Option for Independent Student to Report Parent Data • Delayed release of 2024-25 FAFSA (anticipated to open in December; opened on October 1st in prior years. • Institutions will need to determine whether to change institutional FAFSA filing deadline (already addressed by THECB – new priority deadline is March 15) 7

Other Offices Impacted -Who needs to be involved?

• The Financial Aid Office (FAO) is not the only area that is impacted by FAFSA simplification. Other campus entities will also be impacted: • Student Life/Admissions: New rules surrounding disclosure of the FTI that relies on FAO to share FAFSA data for reporting purposes, such as residence life reports, etc. • Information Technology: ongoing updates are needed (Banner, ARGOS reporting, Security of FTI, DOE reporting, etc.) • Enrollment Management: Awarding methodologies to account for changes due to SAI vs. EFC. May also impact recruitment and retention due to eligibility. • Budget/Fiscal: Make accommodations to increase institutional aid/budgets to account for student need. • Institutional Research: Data element changes used for institutional reporting will need to be updated/revised. 8

What have we done so far? • Conduct Ongoing Outreach • Media Campaigns • Social media •

Campus advertisements (yard signs will be posted at campus locations during the week of 11/6/2023)

• Working with Trellis to send early alerts • Designed FAFSA Simplification webpage

• Send mass emails to student and families regarding changes • Collaborating with campus organizations to host events • Conduct parent chats (December 2023) • Upgraded/Updated Technology, Reporting, and Processing Needs • Work with Oculus to ensure that all Banner Financial Aid updates are installed timely to accommodate new SAI calculations. • Determined how we will report Federal Work Study payments to Common Originations & Disbursements (COD) • Determined how we will identify and track student’s housing status for Cost of Attendance (COA) purposes. • Staff Training • Host internal trainings on upcoming changes • Staff attends NASFAA, TASFAA, and local conferences and webinars to stay up to date on changes • Subscribe to and monitor organizational listservs and newsletters for updates

What do we still need to do? • Continue to educate financial aid team and campus constituents regarding the upcoming changes and impact. • Communicate to Executive Leadership • Review financial implications to budget/fiscal offices to advocate for additional institutional funds and scholarships. • Communicate (and participate) with recruiters, campus partners, ect. The impact of theses changes on recruitment and retention strategies prior to our competitors. • Review packaging philosophies (contingent upon data assessment once 2024- 25 FAFSA’s are loaded) • Develop a policy that addresses professional judgement/special circumstance situations where the new changes have impacted students. 10

Student Aid Modeling (SAI) Tool Results and Implications at PVAMU About the NASFAA Student Aid Index (SAI) Modeling Tool: • Intended to model how recent changes to federal methodology (FM) EFC, renamed the SAI, will impact student need and financial aid budgets on campuses. • Estimates the student’s Pell grant award under the new provisions. • These are only estimates based on FAFSA data retrieved for the 2023-24 award year. Pay attention to assumptions! • Data retrieved from Banner and imported into and excel workbook designed by NASFAA, where they’ve modeled the new SAI formula (very robust – high use of computer resources)

• 10,000 record limit • Key contributors:

• Joy D. Thomas – Director, Financial Aid • Swaytha Ramakrishnan – Systems Administrator II, Financial Aid • Todd Emo – Oculus/Banner Consultant • Margo Simmons – Oculus/Banner Consultant

Student Aid Modeling (SAI) Tool Results and Implications

Disclaimers : • The student population for respective data is from 2023-24

• Data is based on the # of pell grant recipients as of 10/20/2023 (the date that the SAI tool was extracted). • This model used prior-prior income based on the 2023-24 FAFSA and used the poverty guidelines from 2021. • The model used the baseline income protection allowance (IPA) and asset protection allowance (APA) tables from the new FAFSA Simplification Act Legislation. • This model is not a prediction, but, rather a model of what the SAI would look like as compared to the EFC for the 2023-24 award year. Actual results will vary and we will be able to predict as we begin to import 2024- 25 FAFSA’s Assumptions: • There are instances where: • The new formula requires data that is not currently asked on the FAFSA and is therefore not available. • The new formula required data that is currently asked on the FAFSA but the answer will be different for the 2024-25 award year. (household size, custodial parent, single parent household) • Pell grant amount estimates are based on the 2023-24 pell grant payment schedule; this is anticipated to change in the 2024-25 award year. 12

Analyzing the SAI Tool Data – PVAMU Evaluation

Pell Comparison

2023-24 (current methodology) full-time scheduled Pell award

Estimated Pell award using SAI for 2024-25

Difference

$ total (sum)

31,632,942.24

40,970,320.00

9,337,377.76

Average received

6,171.00

6,682.49

511.49

Median

7,395.00

# of recipients

5013

6131

1118

• #of Student’s eligible for Pell (using new federal methodology based on the SAI) = 6131 • Estimated # of additional Pell grant recipients under new SAI calculation = 1118 (22% increase) • Estimated # of students eligible for maximum Pell grant based on tax filing status or AGI groups using new Pell methodology = 4461 • Estimate # of students eligible for minimum Pell grant based on AGI groups using new Pell methodology = 91 • Total estimated Pell grant dollar increase = $9.3 million (30% increase)!

Analyzing the SAI Tool Data – PVAMU Evaluation • PVAMU Current Pell Grant Percentage of 2023-24 students receiving the Pell Grant: • 67% of PVAMU enrolled students are flagged as Pell grant eligible. • 71% of PVAMU applicants are flagged as Pell grant eligible. • SAI vs EFC comparison

• 3746 students have a zero EFC and SAI is calculated at -1500 • 40 students have a zero EFC and SAI is calculated at -1 to -1499 • 4 students have a zero EFC and SAI is calculated at zero

• 453 students had an EFC between 1 – 6656 and had a calculated SAI as -1500 • 730 students had their EFC increase or remain the same when converting to SAI • 149 of those students may lose Pell grant eligibility when converting to SAI. • 7,779 students had their EFC decrease when converting to SAI (lower SAI = Increase Pell eligibility)

Analyzing the SAI Tool Data – PVAMU Evaluation

Charts

VS.

Analyzing the SAI Tool Data – PVAMU Evaluation EFC vs. SAI Comparison by Range

Actual SAI by range (# in each range)

Actual EFC by range (# in each range)

code Summary: actual EFC

# in range

code Summary: estimated SAI

1 -$1500

0 0

4208

1 -$1500

2 -$1499 to -1

575 350

4 $1-6,000

2347

3 $0

5 $6,001-9,000 6 $9,001-15,000 7 $15,001-20,000 8 $20,001-30,000 9 $30,001-40,000 10 $40,001-50,000 11 $50,001-60,000 12 $60,001-70,000 13 $70,001-80,000 15 $90,001-100,000

489 534 308 385 225 123

4 $1-6,000

1267

344 393 254 414 227 145 118

5 $6,001-9,000 6 $9,001-15,000 7 $15,001-20,000 8 $20,001-30,000 9 $30,001-40,000 10 $40,001-50,000 11 $50,001-60,000 12 $60,001-70,000 13 $70,001-80,000 14 $80,001-90,000 15 $90,001-100,000

97 67 38 25 57

63 37 23 20 68

16 $100,001+

**For 2023-24 and prior, there was a maximum EFC for Pell grant eligibility (6656). Under the new SAI, the is no maximum SAI, Pell grant will be determined by the poverty line thresholds. Pell grants may be offered to students, using the SAI, who don’t qualify on AGI alone.

Analyzing the SAI Tool Data – PVAMU Evaluation • Identified data elements that may have caused significant changes. • The # in household and # in college , which is no longer a part of the FM methodology, accounted for over 70% of the increase in EFC when converted to SAI. Therefore, deeming these students Pell grant ineligible and receiving a significant lesser amount. • Typically, based on the state and institutional packaging philosophy, this group of students will also be eligible for less or no institutional funding. • Other areas affected: • Dependent students • Those who have family farms and business with more than 100 employees (are now required to report assets on FAFSA).

The “Ask” to Executive Leadership • To better financially support our students who are impacted due to FAFSA Simplification, I am recommending an increase of the allocation of total institutional dollars: • Allocate more need-based institutional dollars, such as undergraduate designated tuition and Texas Public Education Grant, to accommodate the impact of those who are no longer eligible for the Pell grant AND those who are newly eligible for the Pell grant. • 2024-25 = Minimum $1.5 million • 2025-26 and beyond = Minimum $3 million **This is only an estimation, data will be assessed to determine the appropriate amounts needed. • Create a new, non-need based institutional fund to support specific populations that may negatively impacted, such as those with higher EFC’s, but with no unmet need. • Invest more funds to increase renewable, merit aid opportunities.

The “Ask” to Executive Leadership (cont’d) • Reasons:

• Sibling Discounts: Students with siblings in college that fall into specific income ranges will not fare as well. For them, the sibling discount would have meant they received large Pell Grants under the old formula. But without the sibling discount, their grant would be perhaps a few thousand dollars smaller, with larger changes for students who have two siblings in college. Institutional funding could assist this population. • To support newly eligible students who will now qualify for institutional funding as well as those who have become ineligible. • Helps reduce the rate of student loan borrowing. • As tuition & fees/net price continues to increase, more financial support will be required to support, especially since HEERF Grant is no longer available. • Provides ability to provide institutional grants in proportion to unmet need. • Allows us the opportunity to revise packaging philosophy to create renewable award packages (based on eligibility). • Have funding support to address special circumstance/professional judgement situations, where students have been negatively impacted by the EFC/SAI conversion. 19

Conclusion

In conclusion, in all of this is the strategic decision that PVAMU will make in response to the altered financial aid landscape, that will largely impact HBCU’s and their student population. For questions, feel free to contact: Joy D.Thomas, Ed.D. – Director, Student Financial Aid & Scholarships jdthomas@pvamu.edu (936) 261 - 1206

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