Enrollment Management
Student Aid Index

Expected Family Contribution to Student Aid Index:  Aid and College Changes


The sticker price for a college (more commonly, the cost of attendance) often shocks many families. Financial aid can help make higher education accessible even when the cost of tuition is intimidating. Though numerous, the options on the table can be overwhelming between the scholarships, grants, and financial aid involving student loans. The most notable type of financial aid among students is the Free Application for Federal Student Aid (FAFSA).

The FAFSA employs an entity namely the Student Aid Index (SAI) formerly known as the Expected Family Contribution (EFC) that is based on the applicant’s financial information and reflects the amount of money the applicant and their family would be able to allocate towards the applicant’s education.

The FAFSA Simplification Act, of 2021 however, brought about a significant overhaul of federal student aid, including the FAFSA form, many procedures for schools to participate in the Title IV programs as well as need analysis- including the important transition of the EFC to SAI.

This post explains the details behind this important shift in terminology and calculation.

What is SAI?

SAI or the Student Aid Index is the factor that determines need-based financial aid. The index is designed to be easier and more precise than the current method used to calculate EFC.

A great deal of understanding and attention has been attributed to renaming the Expected Family Contribution to Student Aid Index. The transition is perceived as good, even if it is primarily gratuitous.

Looking at the change on the face of it, the formula and the inputs remain predominantly the same, and the result wavers only by a bit; a tool with which students and colleges can assess a student’s financial need based on a congruous set of metrics.

Why was the name changed from EFC to SAI?

The Student Aid Index (SAI) will now replace the Expected Family Contribution (EFC) in the key formula that determines financial need and aid eligibility:

SAI and EFC difference

While just a terminology change on the surface, the shift from EFC to SAI aims to facilitate clearer understanding around the aid eligibility process.

Previously, EFC was often misconstrued as the total amount families would pay, when in reality it intends to measure a student’s resources and ability to contribute. SAI provides a name that more accurately reflects this purpose as an index of financial strength rather than an explicit expected contribution.

By replacing EFC with SAI, the Department of Education seeks to stress that this index assesses eligibility and availability to pay for college, rather than defining a required family payment. This renaming aims to facilitate more accurate interpretation and administration of needs-based financial aid for students.

How is the SAI calculated?

The important parameters that would help determine a student’s aid index include:

  1. the applicant’s family size,
  2. the parents’ marital status
  3. and state of residence, along with
  4. four major financial inputs- parents’ income in 2022, parents’ assets as of the date of filing, the applicant’s income in 2022, and the applicant’s assets.

Even though the Need Analysis formula to determine a student’s SAI remains like that of the calculation of the EFC, some notable differences between the calculation of the EFC and SAI involve that – the calculation of the EFC required the number of students in the college whereas the SAI would not require any computation of the number of students in the college while determining an applicant’s aid index.

A detailed formula involving the step-by-step guide can be accessed as a pdf on the official website: https://fsapartners.ed.gov/sites/default/files/2022-11/202425DraftStudentAidIndexSAIandPellGrantEligibilityGuide.pdf

The SAI Formulation: Factors Removed and Factors Altered

As indicated by the Act of 2021, the simplified FAFSA would now have a reduced number of overall factors – and notable changes in several factors – in the basic formula to calculate the SAI amount. Some important changes to the formulation in addition to not accounting for the number of college attendees, are:

  1. Elimination of the Currently Enrolled in College Family Members

Even though the calculation of both EFC and SAI involves asking mostly similar questions on the FAFSA based on the family income, assets, and size of the household; the SAI calculation will not be considering the number of family members currently enrolled in college. The EFC considered that number, which reflected a gain for families with more than one student in college.

  2. Removal of the Allowance for State and Local Taxes

EFC gave a state-specific allowance to students. The SAI calculation eliminates the same and only accounts for the state residency while determining the maximum Pell Grant eligibility using the poverty guidelines for a state.

 3. The Possibility of Negative SAI Scores

The EFC calculated amounts as less than $0, the simplified FAFSA (2021) however, allows SAI values as low as -$1,500. The rationale behind the lowering of this maximum need threshold is simple – by differentiating greater levels of need, the possibility of negative SAI scores enables catering to the financial needs of the neediest students.

 4. Adjustments to Income Protection Allowance (IPA)

The Income Protection Allowance (IPA), which shields a portion of the parental income from inclusion in the calculation of total income, will increase as a result of the simplified FAFSA when the SAI is determined. However, the SAI calculation will no longer result in a higher IPA for the additional family members who enroll in college simultaneously with the student.

What is a good SAI score? How will having a good SAI score translate to an applicant’s financial need?

Similar to the Expected Family Contribution (EFC) concept, a lower Student Aid Index (SAI) indicates higher financial need. Lower SAI scores, especially those approaching the threshold of -$1,500, signify increased eligibility for need-based aid programs. This includes grants that don’t require repayment, thereby reducing the overall cost of college. It’s important to note that this eligibility extends to various federal financial aid programs, encompassing support like Pell Grants, Federal Perkins Loans, Stafford Loans, and Federal Work-Study Programs.

How is the SAI Used?

As soon as the FAFSA Simplification Act has been implemented, SAI will become a crucial component in the equation that determines a student’s financial need and involves two additional factors: Cost of Attendance (COA) or what the tuition and other costs for attending college would be, and Other Financial Assistance (OFA) meaning the assistance the student stands to receive from other sources like loans.

The financial need is then calculated as follows:

Financial Need = Cost of Attendance (COA) – Student Aid Index (SAI) – Other Financial Assistance (OFA)

A student aid report (SAR) with the official SAI value will then be sent to the student and their family as well as any schools listed on the FAFSA, any federal/state assistance programs, and any other scholarship sources once an applicant has submitted all this information on the Free Application for Federal Student Aid (FAFSA). Each program and each institution put together a financial aid package that includes a letter outlining the total amount of grants and loans that the applicant is qualified for.

When will the SAI come into effect?

Even though the FAFSA Simplification Act of 2021 passed the changes concerning the transition of EFC to SAI, the changes will come into effect starting the academic year of 2024-2025. In the meantime, the students would be able to make use of the same extended FAFSA and continue to receive an EFC.

How can colleges prepare for the shift from EFC to SAI?

Now that we have familiarized ourselves with the concept of SAI and the changes in its method of calculation, there are three basic strategic and policy aid questions that if tackled optimally, can help to create a stronger and more transparent financial aid programming.

The three policy questions that higher-ed institutions must consider are:

1. How would the additional need be addressed

The new minimum of SAI  is -$1,500 and the higher income protection allowances for dependent students and parents, as well as independent students, these are the two major developments that will undoubtedly result in increased financial need among the students. Further, the actual needs of student can be accessed after understanding their level of affordability such as: Whether the student is  able to cover the entire demand or simply a fraction of it? Whether  they  identify  themselves as neediest students  using  negative SAI? Discussing these prospective workflow would be the foremost  step in the right direction.

2. What would happen with respect to the more Pell Eligible Students

For students who qualify for Pell Grants, numerous colleges and states provide extra need-based or merit-based funding. It is obvious that the revised SAI computation and the income- and household-based Pell Grant eligibility tables will result in some additional Pell-eligible students. How would the schools handle this?

3. When allocating your institutional need-based funds, will the school opt to consider the number of children in the home who are currently enrolled in college?

Many students’ financial needs will be lessened by the revised SAI formula, which no longer considers the number of individuals living in the household while at college. Some people will not notice a difference in the overall grant amount offered because merit aid will cover a large portion of their need. However, there might be a noticeable difference for some people, so one need to estimate how much less assistance will be provided, how much one might be able to replace, and most crucially, how that might affect production.

Conclusion :

The transition from EFC to the Student Aid Index represents an important shift in federal financial aid policy. Colleges must prepare now to meet students’ financial needs under the new SAI system starting academic year 2024-2025. Take action to understand the SAI transition and how your institution can strategically update systems ahead of the deadline. Planning early will ensure a smooth shift to supporting students’ financial aid eligibility through SAI. To learn more about getting ahead with Virtue’s SAI ready net price calculator, contact us today. Our SAI updated calculator enables legally compliant affordability estimates tailored to each student under the new regulations.