The Free Application for Federal Student Aid (FAFSA) form for the 2026-2027 school year is now available. The FAFSA was significantly enhanced under the Consolidated Appropriations Act (CAA) of 2020. These changes simplified the application process and expanded eligibility for some students. The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, introduces additional enhancements.
College students and their parents (or legal guardians) use the FAFSA to apply for federal, state and institutional financial aid. The application opens by October 1 of the year preceding the school year. Even families who don't expect to qualify for need-based aid should often complete it, as many schools and scholarships require it. It's not just for high school seniors who plan to attend college next year. It must be completed by June 30 each year the student attends college. The deadline for the 2026-2027 school year is June 30, 2027. Any corrections or updates must be submitted by September 12, 2027.
Important: Many states and colleges have earlier priority deadlines, so families shouldn't wait until the federal June 30 deadline.
The FAFSA now includes as few as 36 questions and no more than 46, depending on the filer's circumstances. You can submit the form online or send a paper copy. Technically, college students submit the form, but parents usually take the lead, often with assistance from professional advisors. Married college students may also need input from their spouses. The form is processed by the U.S. Department of Education, which sends the FAFSA information to the colleges the student lists. Colleges then use this information to assemble the student's financial aid offer. Some states and institutions — especially private universities — may require additional financial aid forms.
Parents with older children may be familiar with the previous method for calculating the "expected family contribution" (EFC), which affects financial aid eligibility. Historically, the EFC included factors such as household size, family income and the values of most family assets (excluding retirement funds). The calculation was based on the following income and expense items from the prior year (the "base year") for parents, such as:
Certain information can now be imported directly from the IRS, making the process easier for students and parents to navigate. Typically, the lower the EFC was, the more financial aid a family was eligible to receive.
Starting with the 2024-2025 school year, the CAA streamlined the FAFSA and eased the rules. Three key changes under the CAA are:
1. New methodology. The biggest change is that the FAFSA now uses a new formula to calculate the amount of available financial aid. The EFC metric has been replaced by the Student Aid Index (SAI). Although the SAI is similar to the EFC in many respects, there are some significant differences.
Notably, you might no longer need to include certain income on the FAFSA application, such as money received from grandparents and other relatives. Other sources of untaxed income — for example, housing and living allowances paid to service members — also don't count. Finally, there's no longer a benefit to having multiple children in school at the same time.
Important: It's the base year — not the year the child will be entering school — that matters. The 2026-2027 application will use your 2024 tax information.
2. Improved security. Anyone required to fill out part of a student's FAFSA — including a spouse, parent or stepparent — must create a Federal Student Aid ID and password. This serves as a digital signature on your application for security reasons.
3. Broader reach. The revised FAFSA allows students to include more schools than before. Previously, you could list up to 10 schools on the form. Now you can list up to 20 schools. However, if you fill out the PDF version of the FAFSA, you're still limited to 10 schools.
The OBBBA now provides another boost to students seeking financial aid. It specifically exempts certain types of business assets from the SAI computation, starting with the 2026-2027 school year. Specifically, FAFSA applicants are no longer required to report the assets from:
Note that this isn't a full exemption. Income from these business operations must still be reported on the FAFSA.
The OBBBA also enhanced the eligibility requirements for Pell Grants, which may provide additional financial relief for lower-income families. (See "More Leeway for Federal Pell Grants" below.)
As college costs continue to rise, the FAFSA remains one of the most important tools for lowering the cost of higher education. With recent updates under the CAA and OBBBA, it's essential to understand how the rules apply to your family. Even families who don't expect to qualify for need-based aid can benefit from completing the FAFSA, along with any required state or institutional forms. Contact your financial advisor for help understanding the new requirements, preparing financial aid forms and exploring additional opportunities to make higher education more affordable for your family.
The maximum federal Pell Grant award for the 2025-2026 school year is $7,395 per student, the same as the prior year. Although the amount is indexed annually, it's not expected to rise for the 2026-2027 school year. Notably, Pell Grants don't need to be paid back. They're awarded to students with pressing financial needs based on information provided on the FAFSA form.
The eligibility rules for Pell Grants were recently revised to reflect family size and adjusted gross income compared with federal poverty figures, opening new avenues for those in financial need. Beginning with the 2026-2027 school year, the One Big Beautiful Bill Act creates even more opportunities, including:
The Pell Grant eligibility changes took effect when the new FAFSA became available on October 1, 2025.
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