The Student Aid Index (SAI) is a number calculated from the information provided on the Free Application for Federal Student Aid (FAFSA). Colleges use this number to assess a student’s eligibility for need-based financial aid. In simple terms, the SAI represents a family’s financial strength—the lower the SAI, the greater the student’s financial need.
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 the Consolidated Appropriations Act of 2021, which simplified the FAFSA.
What is SAI?
The Student Aid Index (SAI) is a number calculated from the student’s and parents’ (if applicable) income, assets, tax information, and family details submitted on the FAFSA. It’s used to determine the need for federal student aid.
While there are adjustments for family size, the big change is that the parent contribution is no longer divided by the number of children in college at the same time. This means families with multiple children in college may see reduced financial aid eligibility.
A higher SAI means less financial aid, while a lower SAI increases eligibility for need-based financial aid. The new formula for financial need hasn’t changed much:
Financial Need = COA – SAI – EFA
where COA is the total cost of attendance, and EFA is estimated financial assistance from other sources, like scholarships.
The SAI can go as low as -1500, but negative numbers don’t increase federal student aid or allow financial aid to exceed the school’s cost of attendance (COA). Instead, the negative SAI helps colleges identify students with the greatest financial need. However, no colleges have announced plans to provide extra grants for students with a negative SAI.
If an applicant has a zero or negative SAI, they automatically qualify for the maximum Federal Pell Grant. Families can also qualify if their adjusted gross income (AGI) is below 175% of the federal poverty line (or 225% for single parents).
Your Student Aid Index can change each year if your financial situation changes.
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:
1. Number of children in College
Although the FAFSA still includes questions about the number of children who will be in college simultaneously, the answers to this question will no longer impact 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. Now, if a family has two children in college at the same time, they may no longer see the same reduction in their financial contribution as they did under the old formula.
The impact of this change is greater on families with higher incomes and who have multiple children in college. Only 40% of families simultaneously have just one child in college, with no overlap among their children. This loophole has been eliminated from the SAI calculation.
2. Small Business Exclusion
The small business exclusion has been eliminated in the calculation of the SAI. The small business exclusion sheltered the net worth of small businesses owned and controlled by the family, with less than 100 full-time or full-time-equivalent employers. 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 business’s net worth.
3. Family Farm Exclusion
The FAFSA Simplification Act also removed the family farm exclusion. This exclusion sheltered the net worth of a family farm owned and operated by the family. While this exclusion was removed, the primary residence (if on the same deed as the farm) can still be excluded from assets.
Other changes
Some changes may benefit middle- and high-income students. Several types of untaxed income will no longer be reported on the FAFSA. In particular, eliminating 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.
Why Change the Name from EFC to SAI?
The Expected Family Contribution (EFC) has been renamed the Student Aid Index (SAI) as part of several FAFSA updates. Other changes include renaming the Simplified Needs Test (SNT) to Applicants Exempt from Asset Reporting (AEAR) and the Student Aid Report (SAR) to the FAFSA Submission Summary (FSS).
The new names are more descriptive but not necessarily easier to pronounce. The term “Expected Family Contribution” was often misunderstood—many families mistakenly thought it was the total amount they would pay for college.
In reality, most families pay more than the EFC because colleges often leave students with unmet need. Even schools that claim to meet “full need” may rely on loans, which must be repaid with interest. Only a few colleges replace loans with grants, but these schools typically set a minimum contribution for all students, even low-income ones.
Renaming EFC to SAI helps reduce confusion. However, the SAI is still more of a rationing tool for financial aid than an exact reflection of a family’s ability to pay for college.
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 a better financial aid package to cover college costs.
Although changes in the financial aid formula are not sufficient justification for a successful appeal, other special circumstances may 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 they quit their job to return 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, real estate losses, and severe disability of the student, parent, or spouse.
If the parents refuse to complete the FAFSA, the student can get unsubsidized federal student loans in the form of 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.
Overall, the move from EFC to SAI is a step toward simplifying financial aid calculations and reducing confusion. However, families should know how these changes might impact their eligibility, especially if they have multiple children in college, own a small business, or operate a family farm.
To maximize financial aid opportunities, consider consulting your school’s financial aid office or an advisor to ensure you maximize your benefits under the new FAFSA rules.
