President Biden signed the Extension of Continuing Appropriations and Other Matters Act, 2024, a Continuing Resolution (CR), on March 1, 2024. This CR will fund the federal government until March 22, 2024. While CRs are common in government procedures, this particular one is noteworthy for its impact on financial aid, particularly in recalculating the student aid index (SAI). For the 2024-2025 FAFSA cycle, the SAI floor will be -1500, but come the 2025-2026 FAFSA cycle, the SAI floor will reset to zero.
The Student Aid Index (SAI)
Under the FAFSA Simplification Act, the former expected family contribution (EFC) has been replaced by the SAI. Just like the EFC, the SAI is calculated based on the student's FAFSA information. This change served two main purposes. Firstly, it aimed to modernize a dated calculation method that many felt did not accurately represent students and their families' financial situations. Secondly, it aimed to dispel the misconception that the "EFC" was the exact amount a student would have to pay a college or university. As many families are aware, the EFC could fall short of the actual college expenses for a student.
In late January 2024, the U.S. Department of Education announced plans to revise the tables used to compute a student's SAI—specifically the income protection allowance tables—adjusting for inflation post-2020. Though these modifications resulted in a delay in FAFSA processing, an estimated 2.1 million more students are anticipated to qualify for Federal Pell Grants. Following the submission of the 2024-2025 FAFSA, an expected 7.3 million students are expected to qualify for a Pell Grant.
Due to delays in processing FAFSA applications, students may not have their SAI for the 2024-2025 academic year yet. However, they are expected to receive this information by the end of this month. If a student receives a -$1500 EFC, showing exceptional financial need, and likely qualifying for federal need-based financial aid such as the Pell Grant.
SAI Floor Set to Zero for 2025-2026 FAFSA and Subsequent Years
Setting the Student Aid Index (SAI) floor to zero, as opposed to the -1500, could have an impact to those trying to pay their tuition bills. Also included in the CR is additional mandatory funding of the Pell Grant program through fiscal year 2027.
The maximum Pell Grant for the 2024-2025 award year is only set to be $7,395. For many students, that’s only a small part of their cost of attendance. But as students try to find ways to cover their bill, any help in the form of grants or scholarships helps.
Many congressional members argue for expanding access to federal Pell Grants rather than limiting it, as intended by the FAFSA Simplification Act. However, worries have arisen regarding the SAI calculation potentially leading to a Pell budget shortfall if the SAI floor remains -1500. With this CR mandated change, those opposing the negative SAI floor believe that resetting the floor to zero will establish stability for Pell Grants in the long run.
Who is Benefitting from Changes to the Federal Student Aid Programs?
This intricate issue encompasses various perspectives. College students face two main challenges: financing their education and handling student loan debt. The current administration has made efforts to reduce existing federal debt, yet students argue that the core issue of high college expenses remains unaddressed.
By mid-January, the Biden administration has forgiven or discharged over $136 billion of federal student loan debt for borrowers. While the 2024-2025 FAFSA release based on the FAFSA Simplification Act (enacted during the Trump administration in 2020) has been anything but smooth for students and their families. They have faced FAFSA delays, issues with completion, and delays of processing. This year, student’s will not receive financial aid packages from their schools until April, leaving minimal time to negotiate their offers with their schools.