Any time things change, some people benefit and others are worse off. This is also true of FAFSA Simplification. While many of the formula changes benefit large swaths of the population-- such as removing 401k contributions from income or changing child support from income to an asset-- other are less advantageous. Two big ones are eliminating the sibling discount and including small businesses in assets. Does this mean that college is going to cost more?

Let's start by looking at what college actually costs-- which is a big question in and of itself. List prices for colleges range from north of $80,000 for some private colleges, while in-state list costs at four-year public colleges can go into the $40,000-plus range. But tuition discounts abound, with NACUBO's annual tuition discounting survey showing the average discount rate at four year colleges was over 50% last year. In addition, the College Board's Trends in College Pricing and Student Aid showed that scholarships and grants are increasing faster than the cost of college at both private nonprofit and public four-year colleges, while the cost of tuition itself declined at public two-year colleges.

While some of the increases in grant aid can be attributed to increases in need-based financial aid, it's worth noting that federal grant aid-- which is awarded strictly on the basis of need-- has been declining as a share of grant aid over the past decade, while institutional grants increased from $50.2 billion (in 2021 dollars) in 2011-12 to $74.4 billion in 2021-22. And a great deal of that increase is merit awards, which have nothing to do with a student's ability to pay.

A recent article from the Hechinger report, "Surprising patterns in who gets merit and need-based aid from colleges," shows that a growing share of students are getting a growing amount of institutional scholarships, with almost 60% of undergraduates at private nonprofit colleges receiving institutional aid, with an average scholarship size of over $20,000. At four-year public colleges, more than 2/3 of students receive some form of tuition discount. Robert Massa, a retired college admissions and enrollment director who is now a research associate at the Center for Enrollment Research, Policy and Practice at the University of Southern California, says, "Put merit in quotation marks. It’s really not about rewarding students for their wonderful performance in high school, as much as it is trying to change that student’s enrollment decision."

All by way of saying, the vast majority of colleges are actively trying to recruit and enroll students, and one of their best tools for doing so is by discounting tuition. That means you don't have to pay more just because of changes to the FAFSA. Instead, look for colleges that offer scholarships to students like you. If you're eligible for need-based financial aid, make sure to apply to colleges that are generous in meeting need. If you're not eligible for financial aid on the basis of need, look for colleges that are generous with merit scholarships. Net price calculators (every college has one on its website) and tools like CollegeData and College Navigator can help you identify colleges that are likely to offer scholarships to students like you.

The FAFSA is an important tool in getting college scholarships, but it's not the only one. And while there is a large enough segment of the population that is willing to pay full price for college and therefore driving the list price of college up— every year, colleges turn away hundreds of thousands of students willing to pay full price, so there is very little downward pressure on list prices— increases in scholarship sizes to keep the average price of tuition relatively flat means that colleges— who are the ones actually awarding scholarships— recognize that most families’ ability to pay is finite.