Cover Story: Student Aid Index 101

Understanding and completing FAFSA is the first empowering step in the financial aid process. It opens the door to grants, loans, and work-study, giving you the power to finance your college education. How does the federal government determine your ability to receive a need-based grant or loan? That’s where the Student Aid Index (SAI) comes in.

The SAI is a number that brings relief, indicating your eligibility for federal need-based aid. The lower the SAI figure, the more need-based aid you can receive. For instance, a negative AI of 1,500 indicates an exceptionally needy student and a maximum Pell Grant award. As your SAI increases, the less need-based aid you will qualify for, but a low SAI opens the door to increased aid.

A college’s Financial Aid Office determines a student’s financial need. It’s a simple formula:

Cost of Attendance budget – SAI – Expected Financial Aid = Financial Need

Financial need can be as low as zero or as high as a student’s cost of attendance budget. Expected Financial Aid sources, like grants or scholarships from an institution, reduce a student’s financial need. Low-income students with a low or negative SAI will qualify for a Pell Grant award. Since the Pell Grant award program’s inception, the Pell Grant award has served as a floor in a student’s financial aid package.

Institutions that participate in the campus-based programs, like the Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study (FWS), use the SAI calculation to award the appropriate amount from those programs. Typically, only a Pell Grant student can receive a supplemental grant. The higher a student’s SAI figure, the less likely they are to receive work-study funding.

Subsidized loans rely on a student’s financial need calculation. Students displaying exceptional need and limited expected financial aid resources are more likely to receive a full subsidized loan award. Subsidized loans do not accrue interest when a student enrolls in school, so they’re a worthwhile loan option to consider.

Before the FAFSA Simplification Act, the federal methodology, the federal government’s formula used to calculate a student’s financial need from the FAFSA results, previously published a figure known as the Expected Family Contribution (EFC). This term was a misnomer because many families mistakenly believed that it was the figure needed to finance their students’ education. Instead, it’s a figure the federal government uses to determine a student’s eligibility for a need-based grant. Determining a student’s financial need for other aid was also critical.

Federal methodology remains with the FAFSA Simplification Act, and SAI replaced the EFC. Although components of the federal methodology formula changed, the overall practice of assigning a figure to determine a student’s financial need for need-based grants at the federal level remains. An easy way to remember the SAI figure is to view it as an index figure for determining a student’s eligibility for need-based aid.

Even with low SAI, it’s important to remember that colleges and universities do not meet all students’ financial needs. However, by assembling a robust financial aid package from various sources, such as grants and scholarships, loans, and work-study, you can meet your financial needs. Submitting the FAFSA form on time is crucial and can bring peace of mind, increasing your chances of receiving other need-based assistance from a college or university.

SAI calculations depend on financial data from two years prior, meaning any changes to a student’s financial situation do not appear in the figure. Students can appeal their SAI calculation by requesting a professional judgment decision by a financial aid administrator. A financial aid administrator may request certain documents to substantiate the change to your financial situation.

When exercising professional judgment, a financial aid administrator will adjust certain data elements on a FAFSA form to recalculate the SAI figure to reflect the changes to a student or family’s financial situation. Students who previously had a high SAI may receive a lower SAI, unlocking access to need-based grants or subsidized loans. Financial Aid Offices are not permitted to have a blanket policy denying all professional judgment requests. However, after reviewing the submitted documentation, the Financial Aid Office retains the right to reject a professional judgment request. Chatting with an experienced financial aid administrator can help you navigate this confusing process.

Students with questions about their SAI or FAFSA results can chat with a financial aid counselor. Although the SAI may not fully depict your family’s ability to pay for college, it’s the only way the federal government can assess your financial need. Some schools have institutional aid to augment federal awards. Talking to a financial aid counselor is a good first step if you feel your SAI deprives you of additional funding sources from the federal government, and you still need funding to finance your education. Building a robust financial aid package takes time, so don’t dither on this process too long.