Navigating the New Landscape of Federal Student Aid
New Rules for Calculating Aid: Impact on Small Businesses and Farms
A notable alteration within the new legislation benefits families involved in small farming, business, and commercial fishing operations. Previously, the FAFSA Simplification Act had removed an exemption for these assets when calculating a family's Student Aid Index (SAI). However, the updated bill reinstates this exclusion, which is expected to result in a lower SAI for these families and, consequently, higher Pell Grant allocations.
Full Scholarships and Pell Grant Eligibility: A Shifting Paradigm
Under the revised guidelines, students who secure sufficient non-federal grants or scholarships to cover their entire educational expenses, including those on full-ride scholarships, will no longer be eligible for Pell Grants, regardless of their family's income level. This represents a significant shift in the program's framework, aiming to prioritize aid for those without comprehensive alternative funding.
Closing Pathways for Higher-Income Households
Historically, certain exceptions allowed students from higher-income backgrounds to qualify for Pell Grants, such as cases where a single parent's Adjusted Gross Income (AGI) fell below a specific poverty guideline percentage. The new legislation eliminates these exceptions. It imposes a stringent rule: students become ineligible for Pell Grants if their SAI reaches double or more than the maximum Pell Grant amount, thereby closing a previous loophole that some families utilized to secure aid.
The Inclusion of International Income in Financial Assessments
Another key change mandates that families must report all foreign income when calculating their Student Aid Index. This addition is likely to increase the SAI for some applicants, which could result in a reduction of their Pell Grant awards. This measure ensures a more comprehensive and equitable assessment of a family's financial capacity to contribute to educational costs