--- title: "FAFSA Updates: Key Changes and Why Business Owners Should Apply" description: Discover the latest updates to the FAFSA, including fewer questions and expanded Pell Grant eligibility, and learn why filing it is crucial for almost every college funding plan. image: https://www.jesimmons.com/hubfs/AI-Generated%20Media/Images/The%20image%20shows%20the%20acronym%20%20FAFSA%20%20Include%20Free%20Application%20for%20Federal%20Student%20Aid%20below%20the%20image%20%20%20%20Add%20some%20other%20small%20icons%20or%20drawings%20of%20stud-1.png --- [Skip to content](https://www.jesimmons.com/blog/fafsa-updates-small-business-exclusion#main-content) [💻Client Login](https://www.jesimmons.com/client-logins) [![JE Simmons and Company Logo for Dallas Texas based wealth management firm](https://www.jesimmons.com/hs-fs/hubfs/KyleSimmonsLogo%20Final.webp?width=400&height=201&name=KyleSimmonsLogo%20Final.webp)Homepage](https://www.jesimmons.com) - [Dental Practices](https://www.jesimmons.com/dental-practice-management) - [B2B Service Firms](https://www.jesimmons.com/owner-operated-b2b) - Services - [Financial Planning](https://www.jesimmons.com/savings-retirement-planning) - [Tax Planning and Preparation](https://www.jesimmons.com/tax-planning) - [Investment Management](https://www.jesimmons.com/investment-management) - [Business Consulting](https://www.jesimmons.com/business-consulting) - About Us - [Our Team](https://www.jesimmons.com/team) - [Our Process](https://www.jesimmons.com/our-process) - [Blog](https://www.jesimmons.com/blog) [Book an intro call](https://www.jesimmons.com/meetings/kylesimmons/introduction-call) - [Dental Practices](https://www.jesimmons.com/dental-practice-management) - [B2B Service Firms](https://www.jesimmons.com/owner-operated-b2b) - Services - [Financial Planning](https://www.jesimmons.com/savings-retirement-planning) - [Tax Planning and Preparation](https://www.jesimmons.com/tax-planning) - [Investment Management](https://www.jesimmons.com/investment-management) - [Business Consulting](https://www.jesimmons.com/business-consulting) - About Us - [Our Team](https://www.jesimmons.com/team) - [Our Process](https://www.jesimmons.com/our-process) - [Blog](https://www.jesimmons.com/blog) [Book an intro call](https://www.jesimmons.com/meetings/kylesimmons/introduction-call) ![FAFSA](https://www.jesimmons.com/hs-fs/hubfs/AI-Generated%20Media/Images/The%20image%20shows%20the%20acronym%20%20FAFSA%20%20Include%20Free%20Application%20for%20Federal%20Student%20Aid%20below%20the%20image%20%20%20%20Add%20some%20other%20small%20icons%20or%20drawings%20of%20stud-1.png?width=1024&height=1024&name=The%20image%20shows%20the%20acronym%20%20FAFSA%20%20Include%20Free%20Application%20for%20Federal%20Student%20Aid%20below%20the%20image%20%20%20%20Add%20some%20other%20small%20icons%20or%20drawings%20of%20stud-1.png) Student Loans Financial Planning Education # FAFSA Updates: Key Changes and Why Business Owners Should Apply ![Kyle Simmons](https://www.jesimmons.com/hs-fs/hubfs/Signature/Kyle-%20round.jpg?width=48&height=48&name=Kyle-%20round.jpg) Kyle Simmons October 17, 2025 Even if your family has a high enough income that you think won't qualify for aid, it can be beneficial for a family to include the FAFSA in college funding plans.  Business owners also could potentially exclude the value of their small business in certain situations. This is the time of year that college seniors are filling out college applications and financial aid forms.  The new FAFSA became available online November 21, 2024. Let’s review the changes.  There are changes to the number of questions, and the tech has been upgraded a bit. But there are also some changes to the way eligibility is calculated, how much income is sheltered, and who fills out the form. #### Why We Believe the FAFSA Should be Part of Almost Every College Funding Plan Income is only one of many factors used to determine how much the family will be expected to contribute to the child's education. There is no income limit, so even high-earning families should go through the process and submit the FAFSA. Many schools and private universities make the FAFSA part of the admissions process, and for many schools, the FAFSA is part of the scholarship application. College usually takes at least four years, and even if financial aid isn't needed right now, it's a good idea to be prepared. If unexpected changes occur to the parents' income situation or other events reduce income, having a FAFSA on file can help keep things on track for your college student if you need aid in the future. Filing a FAFSA is also required for eligibility for Federal Direct Student Loans. Besides benefits and protections that are not available with private loans, these fixed-rate government loans are forgivable through the Public Service Loan Forgiveness program after 120 qualifying payments have been made. The range of jobs that qualify for PSLF is large, and filing the FAFSA keeps the door open for this benefit. #### Changes to the FAFSA—Fewer Questions, More Colleges Instead of a potential 108 questions, the new FAFSA is much shorter and asks only 46 questions. The form also uses intelligent skip logic to eliminate questions based on answers to prior questions and tax information. For some applicants, only 18 questions will need to be answered. Students will now be able to list as many as 20 colleges, up from 10 in the prior form. #### The Estimated Family Contribution (EFC) Is Now the Student Aid Index (SAI) It's more than a name change. The EFC was confusing because it seemed to imply this was the number that families would have to pay or the amount of aid they would receive. The new name clarifies that it is an index that is used to assess financial need relative to other applicants. The SAI calculation does not allow for increased benefits if more than one child is in college at the same time. This was a major benefit of the EFC for some families, and removing it may increase costs to families. However, it may be somewhat offset by an increase in the parent income protection allowance of 20% and a 35% increase in the student income protection allowance. The income required to be reported has also changed. Cash support and money paid on the student's behalf will not be required to be reported on the FAFSA. This covers things like a grandparent giving a gift to help with college, or a family taking a qualified distribution from a grandparent-owned 529 college savings plan. #### Pell Grants Are Expanded The Federal Pell Grant program has been expanded to more students and eligibility is linked to family size and the federal poverty level. Adjusted gross income (AGI) will be used, along with the SAI, to determine eligibility. #### Who Fills Out the FAFSA Has Changed Currently, either parent can fill out the FAFSA in a two-parent household. If parents are divorced or separated, the custodial parent fills out the FAFSA. The amended FAFSA requires the parent who provided the most financial support in the "prior-prior" year to fill out the form. This means that parents must submit tax returns from two years prior. For example, students from the class of 2026 would submit 2024 tax returns. Submitting tax returns will no longer be done manually. Instead, the IRS Direct Data Exchange must be used. This reduces the number of questions asked and makes the form easier to fill out. If you own a business, you may opt out of the direct data exchange so that you can fill in the details separately.  In some cases, small business or farm valuations can be excluded from the financial aid calculation.   Check out the finaid.org link to learn more about the small business exclusion. [https://finaid.org/fafsa/smallbusiness/](https://finaid.org/fafsa/smallbusiness/) This is a huge point of emphasis for small business owners. #### The Bottom Line Filling out the FAFSA is getting easier, and several long-standing problems have been fixed. Including the submission as [part of a college funding plan](https://www.jesimmons.com/savings-retirement-planning) can be beneficial. If you want help planning for future education expenses, book a complimentary introduction call today!     This work is powered by Advisor I/O under the Terms of Service and may be a derivative of the original.  The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed herein is not a guarantee against investment losses. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been obtained from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. 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