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Big Changes Are Coming to Federal Student Aid


For the first time in a long time, the federal financial aid system is changing. 

If this is the first you’re hearing about it, you’re not alone. Amid all the hype surrounding the call for student loan forgiveness (and the recently extended payment moratorium), it can be easy to overlook the fact that the Consolidated Appropriations Act of 2021 changed the FAFSA forever.

While it’s true that many of the new changes have been delayed in recent weeks, advisors must nevertheless get familiar with the new legislation and understand how the revised rules may affect their college-bound clients. 

In this blog, we’ll cover the most significant changes to federal FAFSA methodology, including: 

  • Renaming EFC to “SAI”
  • Expanded Pell Grant Eligibility 
  • Drug Convictions & Selective Service Registration 
  • HBCU Capital Financing Debt Discharging
  • And more

Let’s get started.

The Student Aid Index (SAI)

If you’ve visited our blog before, chances are you’ve heard us talk about the Expected Family Contribution (EFC). That’s the formula that helps colleges determine how much financial aid families should be allotted.

As we move forward, however, the EFC will now be officially known as the Student Aid Index (SAI). Ultimately, this is little more than a name change to better describe the formula’s function. The only major difference is that a family’s SAI can be as low as -$1,500, while the EFC cannot currently dip below zero. 

Expect to see “SAI” used more frequently later next year, when this component of the new FAFSA goes into full effect. 

Expanded Pell Grant Eligibility  

Unlike most federal and private loans, Pell Grants provide need-based aid that usually doesn’t have to be repaid. 

They offer tremendous value for college applicants, especially for low-income students that need extra support covering the cost of college. 

Thanks to the new legislation, Pell Grant eligibility is now based on two primary components: family size and adjusted gross income (AGI). 

The updated laws simultaneously expand eligibility for the maximum Pell Grant award while also establishing a new minimum. Families with an income under 175% of the federal poverty level (and single parents making less than 225% of the federal poverty level) will be granted the highest awards ($6,495 for the 2021–22 award year). 

The maximum Pell Grant awards will also go to:

  • Independent students who are not single parents whose student AGI is below 175% of the poverty level
  • Dependent students with parents who are not single parents whose parent AGI is below 175% of the poverty level
  • Students under age 33 whose parent died serving in the armed forces after September 11, 2001 
  • Students under age 33 whose parent died in the line of duty as a public safety officer 

The new laws also restore financial aid eligibility for incarcerated students and students formerly convicted of drug-related crimes. This a reversal of the 1994 Violent Crime Control and Law Enforcement Act, which first implemented the ban on financial aid for incarcerated students. 

Drug Convictions & Selective Service Registration 

The FAFSA is an infamously long and difficult document to complete, as evidenced by the increasing number of college-bound families who ignore the form altogether

As a result of these incompletions, billions of dollars in aid are left on the table each year. 

Fortunately, the new legislation trims the original ten page, 108 question form to a much more efficient three pages and 35 questions. 

While a range of topics were removed, two key questions have been left out of the new form: those inquiring about drug convictions and Selective Service eligibility (i.e. military conscription for men aged 18 – 25). 

Expect to see these changes reflected on the 2023-2024 FAFSA available in the fall of 2022. 

HBCU Capital Financing Discharging

The new legislation also offers significant relief to institutional recipients of the Historically Black College and University (HBCU) Capital Financing Program — created in 1996. 

Because these schools were unable to repay their loan as a result of the COVID-19 pandemic, the new legislation forgives over $1.6 billion in outstanding debt at 45 HBCUs (13 public and 32 private institutions). 

Click here to view a full list of the institutions receiving debt discharges. 

The National Emergency Clause

The global pandemic affected all areas of life, especially employment opportunities. In response to these developments, the new bill stipulates that during a “qualifying national emergency,” financial aid administrators can revise an applicant’s financial status to reflect their unemployment. 

In other words, financial aid administrators now have the power (or in legal parlance, the “Professional Judgment”) to adjust the reported income from students, parents, and spouses during times of need. 

All applicants need to do is show receipt of unemployment benefits. 

Moving Forward

As we’ve mentioned above, many of these new rules have been delayed. While they’re unlikely to be redacted in the months to come, it’s difficult to say when these sweeping changes will finally go into effect.

At College Aid Pro™, we’ve certainly been vocal about a few distressing rules and what they might mean for families with multiple kids in college at once. We will continue to speak up and lobby for families across America. 

Still, as legislation changes and the rules become more opaque, more and more families will look to advisors for leadership and strength. While the cost of college isn’t getting any cheaper, the national student loan debt is metastasizing. 

Advisors must have the necessary tools at their disposal to help families prepare for one of life’s biggest investments. With College Aid Pro™, you can consistently deliver expert college funding advice with confidence and ease.

Identify EFCs (& SAIs).

Access robust scholarship searches.

See salaries on a one, five, and ten-year basis.

Determine expected monthly loan payments.

Leverage the College Money Report™.

And so much more. All at your fingertips

Book a free demo of our software today.

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