Kankakee Times

The 2023-2024 FAFSA application deadline is approaching, with an important change that could impact students and their families. This year, a new rule known as the 'Grandparent Loophole' is being implemented, affecting how college payments made by grandparents are considered in the financial aid process.

Under the previous FAFSA rules, grandparent contributions to a student's college fund were counted as untaxed student income, potentially reducing the student's eligibility for aid. However, as stated by an expert, "The new system for the 2023-2024 application will take information directly from their tax returns through the IRS Data Retrieval Tool (DRT)." This means that contributions made by grandparents will no longer be factored into the student's financial aid eligibility.

The 'Grandparent Loophole' is expected to have a positive impact on middle-class households, with experts noting that it will benefit them the most by increasing the number of students eligible for financial aid. This change aims to streamline the FAFSA process and make it easier for families to navigate the financial aid system.

For those looking to estimate their student's aid eligibility, the FAFSA website now offers a helpful tool called the "Student Aid Index". This calculator can provide an estimate of the financial aid a student may receive based on their individual circumstances.

As families prepare to submit their FAFSA applications, it is important to be aware of these changes and how they may affect financial aid eligibility. The implementation of the 'Grandparent Loophole' represents a step towards making the financial aid process more equitable and accessible for students from all backgrounds.