The Student Aid Index (SAI):

All You Need To Know

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The government incorporated a number of changes to the FAFSA Simplification Act's provisions into its 2021 Consolidated Appropriations Act in order to streamline the procedure and make the financial aid application process easier to understand. In December 2020, this became a law. The Student Aid Index will be used in place of the EFC as part of this change (SAI). Beginning on July 1, 2023, the term "EFC" will be replaced with the term "Student Aid Index," or SAI, for use in academic years 2023–2024 and later. Now, exactly what does the Student Aid Index mean? The Student Aid Index (SAI) is an established program and practice. It is essentially a rebranding of the term Expected Family Contribution, or EFC, as it is currently used.

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‍The Current Situation

Right now, after completing the Free Application for Federal Student Aid, students can obtain their expected family contribution (EFC) (FAFSA). You are given this EFC in the Student Aid Report. Colleges use your EFC to calculate the amount of financial aid you'll be eligible for if you enroll.

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However, the term "EFC" is frequently misunderstood. It's not what your family is expected to contribute toward your education, as the name would imply. In actuality, after taking out loans to make up for gaps in financial aid, the majority of families end up paying much more than the EFC amount. Many people even think that the EFC determines how much you will pay or how much assistance you will get. That is definitely not the case.

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This confusion about what the EFC actually is—a number that colleges use to determine how much financial aid to give you—has been addressed by renaming the EFC to Student Aid Index.

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Let's take a closer look at the Student Aid Index and the new changes that it has brought about.

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The Student Aid Index: What Is It?

When determining financial aid awards, financial aid administrators will use the Student Aid Index. Federal student loans, work-study programs, and most other types of financial aid, with the exception of Pell Grants, are all based on this calculation.

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The Student Aid Index: How Is It Calculated?

Your SAI will be determined by the financial profile information you enter on the Free Application for Federal Student Aid, or FAFSA, for you and your family. The index will be equal to the total of your income, your parents' income, and your assets.

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The new simplified FAFSA, which includes a maximum of 36 questions in comparison with the 108 on the current application, will also go into effect July 1, 2023, for the 2023-2024 academic year and later.

Once you submit the FAFSA, you’ll receive your Student Aid Report, which details the information you included on the application and your SAI.

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What Are The Primary Distinctions Between SAI And EFC?

Clarifying the purpose of the index is the main goal of the switch from EFC to SAI. The SAI operates differently from the EFC, for example:

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How The Expected Family Contribution Worked

You currently receive an EFC following the submission of your FAFSA. The EFC is determined by applying a formula based on the income, assets, and any other benefits you and your family may receive.

Your college will determine how much you personally need to pay for school by deducting the EFC from their cost of attendance to determine your financial need.

Consider the following scenario: You have a $5,000 EFC and the cost of attendance at the college of your choice is $25,000. Your financial need will be $20,000 after deducting your EFC from the cost of attendance. Your eligibility for need-based assistance is indicated by this number. Although some schools may have their own scholarship and grant programs, federal need-based grants are also an option.

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Schools also decide how much additional financial aid, such as other student loans, you can receive after need-based aid. Colleges deduct your current financial aid awards from the cost of attendance to determine this additional aid. What you can borrow in direct unsubsidized loans and direct PLUS loans is the sum of these numbers.

Suppose you were eligible for up to $10,000 in need-based aid. You can borrow up to $10,000 in federal student loans by subtracting that amount from the cost of attendance—$20,000.

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How The Student Aid Index Will Work?

The SAI is factored into the equation used to determine financial needs. It is calculated by deducting the cost of attendance at your particular school from the Student Aid Index and any additional financial aid that is provided. Tuition, fees, and room and board are all included in the cost of attendance. 

Tuition, fees, and room and board are all included in the cost of attendance. The equation below is used to determine this amount:

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Your level of financial need does not always correspond to the total amount you are eligible for. Your financial need may not be fully met by colleges through need-based aid like grants or scholarships. In order to meet the need, colleges may also include loans on your financial aid award letter. The name change will move forward to make this crucial distinction clear.

Wrapping Up

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Here are the key differences between EFC and Federal Student Aid Index.

• The number of questions: the new simplified FAFSA consisting of the Student Aid Index, will have a maximum of 36 questions in comparison to the 108 on the current application with the EFC.
• Range: At this time, you can only receive an EFC of $0. However, thanks to the introduction of SAI, you can now get a SAI for as little as $1,500. This will assist you in paying for all the additional costs not listed in the school's published list of attendance costs.‍
• Pell Grant Eligibility: You will be able to see if you are eligible for Pell Grants even before applying for financial aid.

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Read more on the other changes made to the new FAFSA from here.

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