Student Aid Index (SAI) Replacing Expected Family Contribution (EFC)

For the past two years, the Free Application for Federal Student Aid (FAFSA) has been undergoing changes to make the form simpler for students and their families. These efforts toward simplification aim to make it easier for students to fill out the form, and thereby qualify for financial aid. In 2022, the following changes were made to simplify the FAFSA:

• Cost of Attendance (COA) – In the past, colleges could be somewhat vague about the cost of attending. Now, they’re required to provide more details and approximations of college costs, from books and supplies to transportation.
• Independent Students – It’s easier now to declare oneself as an independent student on the FAFSA. Once independence is verified, it will roll over year-after-year.
• Pell Grant Eligibility – Last year, Pell Grant eligibility was extended to 15% more students.

In December 2023, the 2024–25 FAFSA will be released as well as more FAFSA simplification measures, including a new formula for how students will qualify for aid.

History of the EFC

Up until this year, students and their parents answered questions on the FAFSA form to determine how much they could pay towards a college education. This figure, which would be determined by the U.S. Department of Education, was known as the Expected Family Contribution (EFC).

The form asked questions about taxed and untaxed income, assets, and benefits. It also required information on household size and number of members in college at the same time.

Once those questions were answered, the Department of Education would send the EFC in a Student Aid Report (SAR). The problem with the EFC is that it was misleading, or inaccurate. It was the amount that the family, or student, was expected to pay toward college.

Often, families couldn’t pay that “expected” amount, and financial need would be met with student loans in financial aid packages. As a result, the Department of Education has attempted to rebrand the EFC to make it more accurate.

What is SAI?

This year’s FAFSA will introduce a new term: the Student Aid Index (SAI). The formula for determining SAI will remain virtually the same as when it was called the EFC. However, there are a few different factors that will be considered when determining a student’s SAI.

Cost of Attendance (COA) Changes

COA changes will impact a student’s SAI. Here are a few examples:

• Transportation allowances between home, school, and work will be factored into COA. A financial aid administrator will set those figures.
• A student will need to be enrolled at least part-time to receive a personal expenses allowance.
• Room and board allowances must be split into separate costs for housing and meals. Additionally, meal allowances should be calculated for three meals a day.
• Housing allowances cannot be set to zero for students who opt to live at home with their parents.
• An allowance for federal loan fees for both students and parents is mandatory, rather than being left to the discretion of the college.

Being more detailed with COA and providing more allowances will give students and parents a more accurate picture of what it really costs to attend a particular school.

Multiple Students in College Assessed Differently

In the past, the EFC took into account when multiple members of the same household were enrolled in college. The new SAI will not make this distinction. The College Investor sums up the impact as follows:

“Previously, the number of dependents in college had two impacts. It divided the parent contribution, and it reduced the income protection allowance. Eliminating the former causes a decrease in financial need. Eliminating the latter causes a slight increase in financial need. The impact of the former is greater as income increases, so it mostly leads to less aid for middle- and high-income families with multiple children in college at the same time.”

Pell Grant Eligibility

New rules will make it easier for students to qualify for the Pell Grant. Students will also be able to estimate in advance if they qualify for the minimum or maximum Pell Grant award. Configurations will be based on:

• Dependency status
• State of residence
• Student or parent AGI (depending on dependency status)
• Family size

Negative SAI Will Be Possible

A student’s EFC could never be less than 0. However, the SAI can drop to -$1,500. This helps colleges meet the full amount for a student that may demonstrate significant financial need.

Calculating SAI

In advance of the FAFSA launch in December 2023, students and their families can estimate their SAI with the Federal Student Aid’s revised calculator. Getting an SAI estimate now can help students proactively plan to pay for college.