FAFSA Advice for 2025
A new federal financial aid application drops on October 1 — and being an early bird will likely pay off.
After a challenging period in which a redesign led to widespread delays in applying for and receiving financial aid, the Free Application for Federal Student Aid (FAFSA) appears to be back on track.
The new and improved form, which includes changes courtesy of the Big Beautiful Bill passed by Congress this summer, will become widely available for the 2026–27 college year on October 1, its traditional release date.
“The government has repaired all the problems from last year’s FAFSA fiasco,” says Mark Kantrowitz, an expert on student financial aid.
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That’s good news for families hoping to score merit- or need-based aid for a college-bound student.
You’ll want to move quickly, though, because aid is often awarded on a first-come, first-served basis. Students who file the FAFSA within the first three months of its release get twice as many grants on average as students who file later, Kantrowitz says.
Changes to the FAFSA form
New to the form this year: an easier way for parents to enter financial information via a simple e-mail invitation from the student, rather than a requirement for the parent to establish a unique ID first.
If you create an account using your Social Security number, you will also now get immediate verification, compared with having to wait one to three days previously.
Plus, as a result of the One Big Beautiful Bill Act, you can once again exclude the net worth of a family-owned farm or small business and, for the first time, a family fishing business as well.
Other recent changes include a simplified form with fewer than 40 questions (down from more than 100) and an increase in the number of colleges to which students can send the application (now 20, up from 10).
Distributions from a grandparent-owned 529 plan also no longer affect a student’s aid eligibility, so families might consider rolling a parent-owned 529 plan over to a new 529 plan in the name of the student’s grandparent to boost aid eligibility.
FAFSA and reporting parental income
Another helpful strategy: Because the FAFSA also no longer considers contributions to a 401(k) or 403(b) account, “You can reduce the income you report on the FAFSA by maximizing pretax contributions to your retirement plan,” says Kantrowitz.
This strategy works best, he adds, if you start increasing your retirement contributions two years in advance of filing the FAFSA.
That’s because, while the FAFSA asks for the value of your bank accounts, 529 plans, investments and other assets as of the day you submit the form, it pulls income information from the tax return you filed two years before the academic year for which you’re seeking financial aid.
That means this October’s application, for the school year starting in 2026, will use information from your 2024 return.
What if your income drops after you’ve submitted your aid application? Says Kantrowitz, “You should always appeal for more financial aid if your financial circumstances change.”
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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