FAFSA Updates Explained: How New Rules Could Affect Your College Aid

Graduation cap with the words FAFSA on top of money

Key Takeaways

  • The 2026-27 FAFSA opened early and now runs about 36 questions instead of more than 100.
  • The One Big Beautiful Bill Act reshapes loans and Pell Grants starting July 1, 2026.
  • Parent PLUS loans now cap at $20,000 per year and $65,000 total per child, and Grad PLUS loans are no longer available.
  • Family farms and small businesses no longer count as assets on the form.
  • File early. The 2026-27 deadline is June 30, 2027, but many state and college deadlines are much earlier.

Paying for college already feels like aiming at a moving target, and the rules just shifted again. Between a redesigned application and a sweeping new law, the 2026-27 Free Application for Federal Student Aid (FAFSA) looks different from the form your older siblings probably completed. Here’s a plain-English guide to what changed and how it could shape your aid.

FAFSA Form

A Simpler FAFSA Experience

Applying for financial aid has become much easier in recent years. The U.S. Department of Education opened the 2026-27 FAFSA on October 1, 2025, returning to its traditional early fall launch date after several years of delays.

The application itself is also much shorter. Most students now answer as few as 36 questions, down from the more than 100 required on older versions of the form. The FAFSA also uses a new calculation called the Student Aid Index (SAI), which replaces the former Expected Family Contribution (EFC) and helps colleges determine how much financial aid you may qualify for.

Another major improvement is the Direct Data Exchange, which allows families to securely transfer tax information directly from the Internal Revenue Service after giving consent. It reduces paperwork, minimizes errors, and speeds up the process. Applicants can now verify their identities almost instantly.

Major Financial Aid Changes for 2026-27

A new federal law, the One Big Beautiful Bill Act, was signed into law on July 4, 2025. Many of its student aid provisions take effect on July 1, 2026, impacting students and families applying for aid during the 2026-27 academic year.

  • New Limits on Federal Loans

One of the biggest changes affects federal borrowing.

Previously, parents could use Parent PLUS Loans to cover nearly the entire remaining cost of attendance after grants, scholarships, and other aid reduced the bill. Beginning July 1, 2026, Parent PLUS borrowing will be limited to $20,000 per year and $65,000 total per student, regardless of which parent borrows.

Graduate students will face significant changes as lawmakers eliminate Grad PLUS Loans and impose new borrowing caps on federal graduate and professional student loans.

Families who already have Parent PLUS or Grad PLUS loans may be able to continue under the current rules for up to three years, provided the student remains continuously enrolled in the same program.

  • Changes to Pell Grant Eligibility

Because students don’t have to repay Pell Grants, they remain one of the most valuable forms of financial aid. However, new eligibility requirements are taking effect. Students must now enroll at least half-time to qualify. In addition, students whose Student Aid Index exceeds certain thresholds may no longer be eligible for Pell Grant funding.

There is good news as well. Pell Grants are now available for many short-term workforce training and trade programs, making financial aid accessible to students pursuing career-focused alternatives to traditional degree programs.

  • Some Family Assets No Longer Count

The FAFSA no longer counts certain family assets when determining financial aid eligibility.

For example, the FAFSA no longer counts family-owned businesses with 100 or fewer employees, family farms where the family lives, or family fishing operations as assets.

For some families, this could lower their Student Aid Index and increase eligibility for need-based aid.

 

Family on couch looking at laptop

What Students and Parents Should Do

Even if you think your family income is too high to qualify for aid, complete the FAFSA anyway. Many colleges, states, and scholarship organizations require a FAFSA on file before awarding grants, scholarships, work-study funds, or other financial assistance.

It’s also important to pay close attention to deadlines. While the federal FAFSA deadline for the 2026-27 academic year is June 30, 2027, many schools and states distribute aid on a first-come, first-served basis.

Finally, review your college financing plan carefully. With new borrowing limits in place, some families may need to rely more heavily on scholarships, payment plans, savings, or lower-cost college options. Your school’s financial aid office can help you understand your options and create a plan that works for your situation.

The FAFSA remains the gateway to billions of dollars in grants, scholarships, work-study opportunities, and federal student loans. Filing early and understanding the new rules can help your family maximize the aid available.

Look Beyond Federal Financial Aid

The FAFSA remains one of the most important tools for making college more affordable, but it shouldn’t be your only source of financial aid. Scholarships can help fill funding gaps, especially as new federal borrowing limits take effect.

UNCF also provides scholarships, college readiness resources, and other support that help students access and complete higher education. By filing the FAFSA early, meeting deadlines, and pursuing additional scholarship opportunities, students can maximize available aid and reduce the cost of earning a degree.