If you’ve applied for federal student loans in the past, chances are you’re familiar with the Expected Family Contribution, or EFC—a number used by colleges to figure out how much financial aid students are eligible for.
Starting for the 2024-2025 school year the EFC will be replaced by the Student Aid Index or SAI. It fulfills the same basic purpose but works a little differently, which we’ll discuss in-depth below.
This change was part of the larger FAFSA® Simplification Act, which itself was part of the larger Consolidated Appropriations Act passed in December 2020. The idea is to simplify the federal aid application process by making it more straightforward for students and their families, particularly for lower-income earners. But all changes come with a bit of a learning curve, even if simplicity is the goal. Here’s some helpful information about the Student Aid Index.
Key Points
• The Student Aid Index (SAI) replaces the Expected Family Contribution (EFC) starting from the 2024-2025 school year, aiming to simplify the federal aid application process.
• Unlike the EFC, the SAI can have a negative value, potentially increasing the amount of aid for which students are eligible.
• The SAI calculation considers a family’s financial assets and income to determine a student’s financial need, influencing eligibility for Pell Grants and other federal aid.
• Changes include a simplified FAFSA form with fewer questions and adjustments to financial aid eligibility criteria.
• The SAI also allows financial aid administrators more flexibility to adjust aid amounts based on a student’s or family’s unique circumstances.
Student Aid Index vs the Expected Family Contribution (EFC)
While both of these calculations perform a similar function, there are important differences in how they work—and important ramifications on how students receive financial aid.
How the EFC Currently Works
Despite its name, the Expected Family Contribution is not actually the amount of money a student’s family is expected to contribute—a point of confusion Student Aid Index is meant to clarify. (Most families end up paying significantly more than the calculated EFC when funding a college education, especially when you factor in loan interest.)
Rather, the EFC assesses the student’s family’s available financial assets, including income, savings, investments, benefits, and more, in order to determine the student’s financial need, which in turn is used to help qualify students for certain forms of student aid, including Pell Grants, Direct Subsidized Loans, and Federal Work-Study.
A very simplified version of the calculation looks like this:
Cost of college attendance – EFC = financial need
However, a college is not obligated to meet your full financial need, and they may include interest-bearing loans, which require repayment, as part of a student’s financial aid package.
Still, the EFC plays an important role in determining how much financial aid you’re eligible for and which types.
How Will the Student Aid Index Work?
The Student Aid Index will work in much the same way: the figure will be subtracted from the cost of attendance to determine how much need-based financial aid a student is eligible for. However, there are some important updates that come along the rebranding:
Pell Grant Eligibility
Pell Grant eligibility will now be determined before the FAFSA is submitted if their adjusted gross income (AGI) is less than a certain threshold determined by the poverty line. Pell Grants may still be offered to students after an application is submitted, using the SAI, if they don’t immediately qualify based on income alone.
A Wider Range of Financial Need
The SAI offers a greater range of financial need than the EFC, whose lowest amount is $0 (meaning a student demonstrably needs the full cost of college covered by aid). The lowest possible SAI, on the other hand, is -$1,500, which creates a cushion to help the lowest-income students cover adjacent college expenses that aren’t bundled into the school’s calculated cost of attendance figure.
New Rules
The SAI comes along with new rules that allow financial aid administrators to make case-by-case adjustments to students’ financial aid calculations under special circumstances, such as a major recent change in income. The bill also reduces the number of questions on the FAFSA down to a maximum of 36 (formerly 108), removes questions about drug-related convictions (which can now disqualify applicants from receiving federal aid), and more.
Recommended: FAFSA Guide
How Will the Student Aid Index Be Calculated?
The Student Aid Index will be calculated much the same as the Expected Family Contribution is calculated today, though the bill does include some updates to make the process easier.
For one thing, the bill works together with the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act to import income directly into a student’s FAFSA, simplifying the application process.
The new FAFSA will also automatically calculate whether or not a student’s assets need to be factored into the eligibility calculation, shortening the overall application and offering more students the opportunity to apply without having their assets considered.
The bill also removes the requirement that students register for the Selective Service in order to be eligible to receive need-based federal student aid.
Recommended: Getting Financial Aid When Your Parents Make Too Much
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What Is a Good Student Aid Index Score?
The Student Aid Index isn’t like a test or a report card—there aren’t really “good” or “bad” scores, or “scores” at all. It just depends on your personal financial landscape.
But just like the EFC, the lower the SAI, the more need-based aid a student may be qualified for. Since need-based aid includes grants, which don’t need to be repaid, and subsidized loans, whose interest is covered by Uncle Sam while you’re attending school, a lower SAI may translate into a lower overall college price tag.
How Will the Student Aid Index Be Used?
Like the EFC before it, the SAI will be used to help colleges determine a student’s financial need based on their financial demographics. Although the school itself may have its own grant programs and other types of aid, certain forms of federal student aid such as Pell Grants and Direct Subsidized Loans are offered based on demonstrable financial need, and the SAI is a key part of the calculation used to determine that need.
In short: the SAI will be used to determine how much financial aid a student is eligible to receive.
When Will the SAI Go Into Effect?
The SAI will be implemented in the 2024-2025 academic year. In the meantime, students will still use the same, extended FAFSA to apply for federal financial aid, and will still receive an EFC.
The Takeaway
The Student Aid Index is essentially the same number as the Expected Family Contribution, but it’s been renamed as part of the FAFSA Simplification Act in order to clarify to families what exactly the number means. This act also bundles in some other important changes that will hopefully simplify the overall student loan application process and increase access to education for the lowest-income students and their families.
Submitting the FAFSA and exhausting need-based federal student loan options, which tend to be the most generous to borrowers or grantees, is an important first step when it comes to funding a college education. But there are other tools in a student’s college-funding toolbox, as well.
Students can also apply for Direct Unsubsidized Loans from the government, which often have competitive interest rates and may offer more flexibility to postpone, lower, or forgive the repayment. Additionally, federal loans for undergraduate students don’t require a credit check to qualify, while private student loans usually do.
For those pursuing private student loan funding, SoFi offers no-fee student loan options for undergraduates, graduate students, and parents with competitive interest rates—not to mention the 0.25% discount for borrowers who set up autopay.
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