From EFC to SAI – What does this mean for student aid packages and awarding strategy?

At SightLine we are focusing on proactively supporting financially underserved students through changing #FAFSA requirements and need-based aid qualifications. We are keeping a close eye on these changes to help our college and university customers seamlessly make the transition.

In December of 2020, the Future Act and the FAFSA Simplification Act were signed into law. These acts allow the IRS to share data with the Federal Student Aid office and significantly reduce the number of questions that students and parents need to fill out on the FAFSA form.

There has been a phased rollout of changes instituted by these acts, beginning in academic awarding year 2021-22, with full implementation of the FAFSA simplification act expected in awarding year 2024-25.

One of the primary changes instituted is replacing Expected Family Income (EFC) to the Student Aid Index (SAI) as a factor in determining student need-based aid eligibility.?

According to the Consolidated Appropriations Act of 2021, conceptual definitions are as follows:

• SAI - an index that reflects an evaluation of a student’s approximate financial resources to contribute toward the student’s postsecondary education for the academic year
• EFC - a measure of how much the student and his or her family can be expected to contribute to the cost of the student’s education for the year.

What does this mean for new student applicants and their decision to enroll or not?

We consistently find one of the top indicators of enrollment at an institution to be the overall out-of-pocket cost to the student to attend. This may be particularly true for low income students, depending on the institution.

Changing the EFC metric to the SAI with an all-new formula, means that there will be both winners and losers for the amount aid each student will qualify for.

Examples include changes in what qualifies as income for students from separated or divorced families as well as the multiple child benefit disappearing. Other students may benefit from the increased ability for grandparents to give without steep penalties.

Depending on the composition of students applying to your institution, these changes in need-based aid qualifications are difficult to predict. Predicting enrollment on an individual student basis and overall enrollment may also be challenging.

Proactively identifying students with below average scholarship and grant packages, as compared to similar students during prior years, will be critical to enrolling and supporting our most underserved students.?

How can we use institutional need-based aid to make sure all students are supported during this transition?

An important step in SightLine’s typical financial aid leveraging process is to test whether there are financially underserved students that would need additional financial support in order to enroll. Although institutions cannot control state and federal aid qualifications, there is flexibility with institutional scholarships and grants. During the Fall 2023 enrollment period, we recommend working with SightLine to apply predictive analytics and simulate ‘what-if’ scenarios to identify students that may be impacted by changes in need-based aid allocation.

These scenarios can be used to develop strategic, targeted scholarships to make sure that no students fall through the cracks. Your institution will also gain a better understanding of how these need-based awarding changes will affect overall enrollment numbers in the coming academic years.

To learn more about partnering with SightLine to get ahead of FAFSA changes, contact us