What is the Student Aid Index (SAI)

The Student Aid Index (SAI) is a measure of the family’s financial strength, namely its ability to pay for college.

The Student Aid Index (SAI) replaced the Expected Family Contribution (EFC) starting with the 2024-25 Free Application for Federal Student Aid (FAFSA). Congress enacted this change in December 2020 as part of FAFSA simplification through the Consolidated Appropriations Act, 2021.

Why Change the Name from EFC to SAI?

Replacing the Expected Family Contribution (EFC) with the Student Aid Index (SAI) was one of several name changes relating to the FAFSA. For example, the Simplified Needs Test (SNT) will now be known as Applicants Exempt from Asset Reporting (AEAR) and the Student Aid Report (SAR) will now be known as the FAFSA Submission Summary (FSS).

The new names are more descriptive, but the new acronyms are harder to pronounce.

But, the new names may fix a few minor problems. The term “expected family contribution” can be misleading, since many families incorrectly believe that the EFC is all they pay.

Most families pay more than the EFC. Most colleges leave their students with unmet need. Even when a college meets “full need,” financial need is met with loans. Loans must be repaid, usually with interest. A few dozen colleges replace loans with grants in the financial aid package, but these colleges redefine financial need. For example, most of these colleges have a minimum student contribution that sets a minimum EFC greater than zero even for low-income students. These colleges do not meet full need according to the federal definition, even though they may have a lower net price than other colleges.

Changing the name from EFC to SAI avoids this source of confusion. The FAFSA uses the EFC or SAI as more of a rationing system than a way to award need-based financial aid based on the family’s actual ability to pay for college.

How Does the SAI Affect Financial Aid Eligibility?

These name changes do not make college more affordable or the FAFSA easier to complete. But, the name changes occurred as part of legislation to simplify the FAFSA, which also expands eligibility for the Federal Pell Grant.

The SAI is a number that is calculated based on the student’s and parents’ (if applicable) income, asset, tax and demographic information on the FAFSA. There are adjustments for family size, but the parent contribution is no longer divided by the number of children in college at the same time.

The SAI can go negative, to as low as -1500, but negative numbers do not increase eligibility for federal student aid or allow financial aid to go above the college’s cost of attendance (COA). Instead, this allows colleges to identify students with greater financial need, instead of bunching them all up around a zero SAI or EFC. So far, no colleges have announced plans to provide more financial aid or more grants to students with a negative SAI.

A higher SAI leads to less financial aid, while a lower SAI increases eligibility for need-based financial aid.

The new financial aid formula is similar to the old one, Financial Need = COA – SAI – EFA, where COA is total college costs and EFA is estimated financial assistance from non-federal sources. Eligibility for need-based financial aid is based on Financial Need.

If an applicant has a zero or negative SAI, they qualify for the maximum Federal Pell Grant. Applicants can also qualify for the maximum Federal Pell Grant if adjusted gross income (AGI) is less than or equal to 175% of the poverty line (225% for single parents).

Impact of Changes in the Financial Aid Formula

With FAFSA simplification, the changes may cause some students who previously qualified for financial aid to lose eligibility, due to changes in the calculation of the SAI. These changes particularly affect middle- and high-income families, since the changes shift the focus away from cash flow and more toward wealth.

In particular, the new financial aid formula makes three key changes:

• Number in College. Although the FAFSA still includes a question about the number of children who will be in college at the same time, the answers to this question will no longer have an impact on the SAI. Previously, the parent contribution portion of the EFC was divided by the number of children in college. This was akin to dividing the parent income in half when the number of children in college increased from 1 to 2. The impact of this change is greater on families with higher income who have multiple children in college. Only 40% of families have just one child in college at the same time with no overlap among their children. This loophole has been eliminated from the SAI calculation.
• Small Business Exclusion. The small business exclusion sheltered the net worth of small businesses that were owned and controlled by the family and which had less than 100 full-time or full-time-equivalent employers. The small business exclusion has been eliminated in the calculation of the SAI. So, the net worth of a small business will be reported as an asset, although it will still be subject to the bracketed sheltering of part of the net worth of the business.
• Family Farm Exclusion. The family farm exclusion sheltered the net worth of a family farm that is owned and operated by the family. However, if the family lives on the farm and the family home and farm appear on a single deed, it is possible that the net worth of a family farm can still be excluded from assets on the FAFSA due to the exclusion of the net worth of the family’s principal place of residence. Note, however, that farm equipment and livestock must still be reported as an asset, as only the land and structures can be excluded if they appear on the same deed as the family home.

There are also some changes that may benefit middle- and high-income students. Several types of untaxed income will no longer be reported on the FAFSA. In particular, the elimination of the cash support question means that gifts to the student and qualified distributions from grandparent-owned 529 plans (and other 529 plans owned by someone other than the student or parent) will no longer affect eligibility for need-based financial aid.

How to Address a Shortfall in Financial Aid

If the switch from the EFC to the SAI causes a student’s financial aid to decrease, the family should consider appealing for more financial aid.

Although changes in the financial aid formula are not sufficient justification for a successful appeal, there may be other special circumstances that can qualify the student for more financial aid.

College financial aid administrators may no longer have a policy of denying all financial aid appeals. Some colleges had a policy of denying all appeals to reduce their workload. For example, some community colleges would not consider appeals about a change in the student’s income when the student quit their job to go back to school full-time. This caused the students to not qualify for the Federal Pell Grant.

There are also new examples of special circumstances. These include unusual business, investment and real estate losses, as well as severe disability of the student, parent or spouse.

If the parents refuse to complete the FAFSA, the student can get unsubsidized Federal Direct Stafford Loans even if the parents do not cut off financial support to the student. However, the student will not be eligible for any other federal student aid.