History of the FAFSA and Need Analysis

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This timeline summarizes the history of the Free Application for Federal Student Aid (FAFSA) and need analysis formulas.

Year Event
2014 U.S. Department of Education issues new regulations defining gainful employment, requiring a program’s completers to have a debt-service-to-earnings ratio of 8 percent or less and a debt-service-to-discretionary-earnings ratio of 20 percent or less for the program to retain eligibility for Title IV federal student aid. The new rule requires 50 percent greater income for a program to pass the rule as compared with the 2011 final rule.
2013 The U.S. Supreme Court ruling on the Defense of Marriage Act (DOMA) causes students and parents in same-sex marriages to be counted as married on the FAFSA, effective with the 2014-2015 award year.
2012 Consolidated Appropriations Act of 2012 (P.L. 112-74) reduces the auto-zero EFC threshold from $32,000 to $23,000.
2012 Judge Rudolph Contreras of the U.S. District Court for the District of Columbia issues a ruling vacating several key provisions of the gainful employment rule. The court finds that the loan repayment rate metric is arbitrary due to a lack of reasoned decision-making and also overturns the two other debt measures because of the intertwined nature of the regulation.
2011 The U.S. Department of Education issues new regulations defining gainful employment, requiring a program to pass a debt-service-to-earnings ratio, a debt-service-to-discretionary-earnings ratio, or a loan repayment rate for continued eligibility for Title IV federal student aid.
2009 IRS Data Retrieval Tool becomes available starting with the 2009-2010 award year.
2008 Higher Education Opportunity Act of 2008 (P.L. 110-315) authorizes the creation of an EZ FAFSA and experimentation with prior-prior year need analysis.
2007 Bulk distribution of paper FAFSAs ends with the 2008-2009 award year.
2007 College Cost Reduction and Access Act of 2007 (P.L. 110-84) makes changes to the federal need analysis methodology that eliminate Worksheet A from the FAFSA, double the income-protection allowance for undergraduate students over five years (50% increase for graduate and professional students), increase the auto-zero EFC income threshold from $20,000 to $30,000 and index it for inflation.
2005 Deficit Reduction Act of 2005 (P.L. 109-171) adds small business exclusion to the FAFSA.
1998 Higher Education Amendments of 1998 (P.L. 105-244) authorizes sharing of data between the U.S. Department of Education and the Internal Revenue Service (IRS). Although intended to combat fraud, this also paved the way for the IRS Data Retrieval Tool.
1997 FAFSA on the Web created starting with the 1997-1998 award year.
1992 Higher Education Amendments of 1992 (P.L. 102-325) creates the Free Application for Federal Student Aid (FAFSA), merging the Pell Grant Formula with the Congressional Methodology to yield the Federal Methodology (FM).
1987 Higher Education Technical Amendments Act of 1987 (P.L. 100-50) adds automatic zero EFC and exclusion of the family’s principal place of residence from assets.
1986 Higher Education Amendments of 1986 (P.L. 99-498) create the Congressional Methodology (CM) and allows financial aid administrators the discretion to adjust data elements on financial aid applications through professional judgment (PJ). Added simplified needs test.
1976 CSS creates the Financial Aid Form (FAF) as a combined form to replace the PCS and SFS.
1974 The Uniform Methodology is developed by the National Task Force on Student Aid Problems.
1972 The Higher Education Amendments of 1972 (P.L. 92-318) creates the Federal Pell Grant (originally called the Basic Educational Opportunity Grant) and establishes the Federal Pell Grant Formula for determining eligibility for the grant.
1961 CSS creates the Married Student Statement (MSS) form, which will eventually become the Student’s Financial Statement (SFS).
1956 CSS creates the Parent’s Confidential Statement (PCS) form.
1954 The College Board creates the College Scholarship Service (CSS) to create and evaluate financial aid application forms.
1953 John Monro of Harvard University creates the first financial aid need analysis formula.
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