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FAFSA Application: What Do You Need for Filing, Changes for Small Businesses

The Free Application for Federal Student Aid (FAFSA) is the most common method to determine if you are eligible for college financial aid. However, individuals must demonstrate their need for assistance before receiving the funds.

The costs associated with attending college in the United States of America can be both eye-popping and perplexing.

Requirements For FAFSA

There is a great deal to consider, and for many individuals, it is necessary to determine which types of financial aid they may qualify for in order to assist with tuition, living expenses, and sustenance.

One way they do this is by requiring individuals to take the Simplified Needs Test. By selecting it, applicants can exclude assets from consideration when the US Department of Education calculates their Expected Family Contribution (EFC).

Some states require information on assets and income to determine eligibility for state aid. Certain queries on the original FAFSA application determine who must and who need not take the test. Students must satisfy a number of requirements to be eligible for the Simplified Needs Test.

The income threshold is less than or equal to $50,000. This means that their parents’ combined AGI cannot exceed $50,000 for dependent pupils.

The combined AGI of independent students and their spouses should not exceed $50,000. Non-tax filers should use the wages, salary, and gratuities listed on their W-2 forms, if applicable, as well as any additional revenues not reported on the W-2 forms.

Read more: Deadline Approaching: Get Up to $1,000 in Rebates by Filing Your Personal Income Tax Returns in New Mexico

Rule Changes For Small Businesses

fafsa-application-what-do-you-need-for-filing-changes-for-small-businesses
The Free Application for Federal Student Aid (FAFSA) is the most common method to determine if you are eligible for college financial aid.

By employing a new model formula, the Student Aid Index, Congress passed the FAFSA Simplification Act last year with the intention of expanding access to students in need of financial assistance.

This index considers assets and net worth, which could have significant effects on rural Iowa students.

Tim Bakula, director of the Financial Aid and Scholarships office at UNI, explains, “It is essentially requesting farmers and small business owners to report the net assets of their farm or business.”

He continues, explaining, “Using the current formula, a family with an adjusted total income of $60,000 would have an EFC of approximately $7000. It is very easy for a family with a net worth of approximately $1 million to see their expected measure of paying for college increase to approximately $41,000,” continuing, “when that sort of scale moves from $7,000 to $40,000, it reduces the students’ and families’ access to financial aid, particularly for some of our state aid programs.”

The majority of UNI’s students are from Iowa, and they anticipate a potential decline in enrollment once applications become available.

“It has the potential to have a significant impact on the families we serve — obviously, about 90 percent of the students at the university are from Iowa, and a large percentage of those families are comprised of small family farms, which are prevalent in the state. It has the potential to impact their financial aid results if they are required to include this information “Bakula said.

In response to the bill, Iowa senators Joni Ernst and Charles Grassley have joined a bipartisan effort to veto the new rule contained in the “Family Farm and Small Business Exemption Act.”

“They are typically capital- and investment-rich, but not necessarily income-rich. You will need to borrow money or sell the estate in order to send your children to college “Senator Grassley states.

Senator Ernst added, “It affects family farms, ranchers, and of course small businesses across the United States, so we have Republicans and Democrats working together on this measure, and I’m incredibly appreciative of their support.”

The legislation would exempt families and small enterprises with fewer than 100 employees from reporting farmland net worth, as was the case previously. Additionally, Senators Grassley and Ernst penned a letter to the Department of Education requesting action to safeguard rural families.

Iowa College Aid issued a report containing their predictions regarding the effects of the new rule changes, warning of a decline in enrollment, particularly in rural Iowa communities.

The application opens in December for the academic year 24/25. Statewide financial aid offices are preparing for an influx of inquiries.

Wiederspan warns that the effects may be felt for years to come if a resolution is not reached.

“There is a state demand for an educated workforce, we’re already confronting a workforce crisis, and I believe it will only worsen if many of these students are prevented from attending college due to a lack of financial resources,” he concluded.

Wiederspan and Bakula concur that you should contact your legislators if you are concerned. Grassley added, “not just from Iowa, but from the entire country, and especially from small business and farm proprietors.”

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