Financial aid offices everywhere breathed a sigh of relief when the Department of Education announced they would delay implementation of the FAFSA Simplification Act until 2024. Our Financial Aid Optimization team has been studying the shift from Expected Family Contribution (EFC) to Student Aid Index (SAI), and it’s clear what a substantial change this will be.
However, with change comes opportunity. And we believe this is a good time for institutions to take advantage of what Congress has done to create stronger and more transparent financial aid programming. Each institution will need to review the changes through their own lens, taking care to identify areas of specific concern based on the demographics of their student population.
There are three strategic aid policy questions that came to the forefront as we learned more about the new SAI. And as you consider these questions, our Financial Aid Optimization team urges you to formulate a communication plan that helps you get out ahead of the questions that students and parents already have about what’s coming.
3 policy questions to consider
1. How will you address the additional need that will be created?
While the changes in the need analysis formula are varied and will both positively and negatively impact the EFC/SAI, there are two changes that will clearly create additional need among your students: the new minimum SAI of -1500, and the larger Income Protection Allowances for dependent students and parents and independent students. Will you be able to meet all this additional need, or just a portion of it? Will you use the negative SAI to distinguish between your neediest students? There are certainly no easy answers but understanding the potential impact and funding implications is the first step.
2. What will you do with more Pell eligible students?
Many institutions and states offer special need-based and/or merit aid to Pell eligible students. It’s very clear that the new SAI calculation and the Pell Grant eligibility tables based on income and household size will produce some more Pell eligible students. How will you address this in your policy planning?
3. Will you decide to consider how many children in the household are enrolled in college when you award your institutional need-based dollars?
The new SAI calculation, which no longer considers the number of people in the household in college, will reduce many students’ financial need. For some it won’t make a difference in the total grant you offer because so much of their need is met by merit aid. But for others, there may be a significant difference, and you’ll need to be able to quantify for your population how much less aid will be offered, how much of it you may be able to replace, and most importantly, how that might impact yield.
It’s important to note here that the FAFSA will still provide the answer to the question about the number of college-enrolled students in a household, so you’ll have what you need if you decide you still want to factor that into your aid decisions.
Proactively develop a communication plan
Even though implementation of the new law is three years away, we have heard from college counselors and seen on college search social media outlets that students and parents are already worried about the changes the new SAI will bring. Institutions would be well advised to get out ahead of these concerns with proactive and reassuring communications.
Consider convening a planning group in the coming months to begin to formulate a plan for how to address questions about the new system. Your financial aid and admission teams will need to be prepared to answer the queries they’ll inevitably receive, but your other communications also need to provide answers for the students and parents who don’t take the time to reach out. And 2024 will be here before you know it. For example, it would not be unreasonable for the parent of a first-year student in EC 2021 to ask how eligibility might change (or not) when a younger sibling enrolls in college in 2024. Are you prepared to provide an answer?
Further down the road, the FAFSA Simplification Act prioritizes transparency for students, and the new Pell Grant awarding criteria will make it easy to communicate ahead of time if a student qualifies for a Pell Grant. Are there other ways you can rearrange and organize your print and digital communications to take advantage of this and convey equally understandable messages about your other aid programs? Families are getting savvier and many of them assess cost and eligibility ahead of time to determine whether a college is affordable. Your messaging needs to convey your value and keep them engaged.
Questions need answers
For our EAB Financial Aid Optimization partners, we will be working in the next several months to collect FAFSA data, examine the impact of the new SAI calculation, and build new assumptions into our financial aid modeling to account for those changes. Working together, we can address where funding gaps and opportunities may lie and ensure an easy transition to the new world of the Student Aid Index and easier FAFSA filing.
Ready to find out more?
EAB’s dedicated in-house team guides you from financial aid policy development through yield management, and our financial aid analytics platform allows you to monitor real-time performance throughout the enrollment cycle.