articles details

The Free Application for Federal Student Aid (FAFSA) is used by colleges and universities to determine a student’s eligibility for financial aid. Several key figures influence the amount of aid a student may receive, including the Student Aid Index (SAI), the Cost of Attendance (COA), and the Expected Family Contribution (EFC). These numbers help colleges assess financial need and allocate grants, scholarships, work-study opportunities, and loans. Understanding how each is calculated can help students and families better plan for college expenses.

What Is the Student Aid Index (SAI)?

The Student Aid Index (SAI) is a numerical value used to determine how much financial aid a student qualifies for. It replaces the Expected Family Contribution (EFC) starting with the 2024-2025 FAFSA. Unlike the EFC, which could not drop below zero, the SAI can be negative, allowing students with the greatest financial need to be eligible for more aid.

The SAI is used in the following formula to determine financial need:
Cost of Attendance (COA) – Student Aid Index (SAI) = Financial Need

For example, if a school’s COA is $40,000 and a student’s SAI is -$1,500, their financial need would be $41,500. Schools use this figure to determine how much need-based aid a student may receive.

How Is the SAI Calculated?

The SAI is determined using information from the FAFSA, which includes:

• Parental Income: A percentage of the family's annual income is considered available for college expenses after deducting necessary living expenses and taxes.
• Student Income: A portion of student earnings is protected, but any income above that amount is factored into the SAI at a higher rate than parental income.
• Parental and Student Assets: Non-retirement savings, investments, and real estate (excluding primary residence) are included in the calculation.
• Household Size: A larger household may reduce the SAI because financial resources are spread among more family members.
• Other Factors: Tax allowances, social benefits, and state aid programs can influence the final SAI figure.

Since the SAI can be negative, students with the greatest financial need may qualify for additional grants, including the Pell Grant, which is awarded to students from low-income families.

What Is the Cost of Attendance (COA)?

The Cost of Attendance (COA) represents the total estimated cost of attending a college or university for one academic year. Each school sets its own COA, which includes:

• Tuition and fees: The cost of instruction and required enrollment fees.
• Room and board: Housing and meal plan expenses, whether on-campus or off-campus.
• Books and supplies: The estimated cost of textbooks, lab materials, and other academic necessities.
• Transportation: Travel costs, including flights, gas, or public transportation.
• Personal expenses: Miscellaneous costs such as clothing, laundry, and personal items.

COA varies significantly between institutions. Private colleges and out-of-state public universities tend to have higher COAs than in-state public schools. Understanding the COA helps students evaluate their total college expenses and determine how much aid they may need.

What Was the Expected Family Contribution (EFC)?

Before the 2024-2025 FAFSA, financial need was calculated using the Expected Family Contribution (EFC), which represented how much a family was expected to contribute toward college costs. Although the EFC served a similar function to the SAI, it often caused confusion because families mistakenly believed it was the actual amount they had to pay.

The switch from EFC to SAI was designed to clarify financial aid calculations. While both figures are used to assess financial need, the SAI provides a more accurate representation of a student’s financial situation.

How Are These Factors Used to Determine Financial Aid?

Once a student submits the FAFSA, colleges use the SAI and COA to create a financial aid package, which may include:

• Federal Grants: Need-based aid such as the Pell Grant and Federal Supplemental Educational Opportunity Grant (FSEOG).
• Work-Study: A part-time employment program that allows students to earn money for educational expenses.
• Loans: Federal Direct Subsidized and Unsubsidized Loans, which must be repaid after graduation.
• Institutional and State Aid: Additional grants and scholarships offered by colleges and state governments.

If a student’s financial aid package does not cover all expenses, they may need to explore private scholarships, external grants, or alternative funding options.

How Students Can Maximize Financial Aid

To increase eligibility for financial aid, students should:

• Submit the FAFSA as early as possible after it opens on October 1, since some aid is awarded on a first-come, first-served basis.
• Ensure all information is accurate, as errors in reported income or assets can impact aid eligibility.
• Explore additional scholarships and grants, as many institutions and private organizations offer need-based and merit-based aid.
• Consider schools with generous financial aid policies, as some institutions commit to meeting a high percentage of demonstrated financial need.

Understanding the SAI, COA, and EFC helps students and families navigate the financial aid process and make informed decisions about funding their education. By knowing how these factors are calculated and used, students can take advantage of available resources and reduce the overall cost of college.