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🎓 Overview

This session, led by Mark Kantrowitz (a nationally recognized expert on financial aid) and Heather Jarvis (a leading student loan attorney), provides advisors with critical updates on the 2026–2027 FAFSA, the CSS Profile, and new rules affecting federal student loans after the One Big, Beautiful Bill Act (OBBBA).
Moderated by Tom Dickson, the program emphasizes actionable insights for helping clients optimize aid eligibility and manage education debt.

🧾 FAFSA 2026–2027: Key Changes & Advisor Guidance

1. Simplified FAFSA and Timing

• The new FAFSA launched early (September 24, 2025) and will continue to use the “prior-prior year” tax data — in this case, 2024 income.
• Advisors should urge clients to file early, as grants are often awarded on a first-come, first-served basis.

2. New Student Aid Index (SAI)

• Replaces the Expected Family Contribution (EFC).
• Can now be negative (as low as –$1,500) to reflect extreme need.
• Aid eligibility = Cost of Attendance – SAI.

3. Updated Rules on Assets and Income

• Retirement accounts and the primary home remain non-reportable assets.
• Cash on hand, brokerage accounts, and non-primary real estate are reportable.
• The Asset Protection Allowance for parents is now zero, meaning no shelter from FAFSA reporting.
• Small business and family farm exclusions have been reinstated under OBBBA, benefiting many business-owning clients.

👉 Advisor Tip: Recommend clients pay down consumer debt before filing FAFSA to reduce reportable cash balances.

4. 529 Plans and Grandparents

• Parent- and student-owned 529s are counted as parent assets (5.64% assessment rate).
• Grandparent-owned 529s are no longer counted and no longer reportable as untaxed income on withdrawal — a major planning opportunity.
  • See: Federal Student Aid – 529 Plans and FAFSA rules

5. Impact of Divorce, Custody & Support

• The “custodial parent” for FAFSA purposes is now the one providing more financial support, not necessarily the one with physical custody.
• Step-parent income must be reported if remarried as of the filing date, regardless of prenuptial agreements.
  • Federal Student Aid – Who is my parent when I fill out FAFSA?

6. Multiple Children in College

• The sibling discount (formerly dividing parental contribution among children) has been eliminated, significantly affecting middle- and high-income families.
• Advisors can help families appeal directly to financial aid offices when multiple dependents are enrolled.

🏦 CSS Profile Differences

• Required by ~200 private colleges, the CSS Profile includes:
  • Home equity.
  • Retirement contributions.
  • All 529 plans naming the student as beneficiary (including those owned by grandparents).
• It offers institutional flexibility, meaning aid calculations vary widely between schools.
  • College Board CSS Profile information

💰 FAFSA & Asset Planning Strategies

• Do before filing:
  • Pay off high-interest debt.
  • Max out 401(k) or 403(b) contributions.
  • Time asset transfers or withdrawals strategically.
• Avoid:
  • Reporting home value or retirement accounts as investments.
  • Moving funds into children’s names (child assets are assessed at 20%).

🎓 Student Loan Reforms (Heather Jarvis Segment)

1. Grad PLUS Elimination & Borrowing Limits

• Grad PLUS Loans will end for new borrowers starting July 1, 2026.
• New borrowing limits under OBBBA:
  • Parents: $20,000 per year / $65,000 total per child.
  • Graduate students: $20,500 annual / $100,000 aggregate.
  • Professional students (law, med, etc.): $50,000 annual / $200,000 aggregate.
  • Congressional Research Service: Student Loan Borrowing Limits (2025)

2. New “WRAP” Income-Driven Repayment Plan

• Replaces older plans like SAVE and PAYE by 2028.
• Payment = tiered % of adjusted gross income, minus $50 per dependent.
• Interest will not accrue beyond required payments if loans are in good standing.
• Loan forgiveness after 30 years under WRAP (vs. 20–25 years under prior plans).

3. Public Service Loan Forgiveness (PSLF) Updates

• PSLF remains intact post-OBBBA, but eligible repayment plans are narrowing.
• Borrowers must:
  • Work full-time (≥30 hours/week) for government or 501(c)(3).
  • Make 120 qualifying payments under an eligible plan.
  • File the PSLF Employment Certification Form annually via StudentAid.gov.
• The PSLF Buyback Program allows borrowers to “buy back” missed months from forbearance periods to regain credit toward forgiveness.

4. Tax Implications

• The temporary tax-free treatment of student loan forgiveness expires Dec. 31, 2025.
• Starting in 2026, most non-PSLF forgiveness will again be taxable as income.
  • IRS – Student Loan Forgiveness and Taxes

🧭 Advisor Takeaways

• File FAFSA early — even high-income families can qualify for merit-based or institutional aid.
• Review family ownership of 529s for optimal financial aid impact.
• Prepare for client confusion with FAFSA reforms and new loan structures; proactive education adds significant value.
• Reassess student loan repayment strategies before July 2026 to benefit from grandfathered terms.
• Coordinate appeals with aid offices for clients facing major life or income changes.

Fact-check sources used:

• Federal Student Aid (https://studentaid.gov)
• IRS (https://www.irs.gov)
• College Board CSS Profile (https://cssprofile.collegeboard.org)
• Congressional Research Service (https://crsreports.congress.gov)