Student Aid Index & EFC: Everything You Need to Know
The Student Aid Index & Expected Family Contribution
At first, it seemed like FAFSA simplification was something that would never happen. Now, all of a sudden, we are less than half a year from changes taking effect. For many financial aid officers, this news has been met with a mix of excitement and dread. An easier process should lead to more students completing the form — but it also means university staff must understand the new processes, field new questions from students, and update their net price calculators. We thought we would break down what’s coming - starting with the SAI.
The Student Aid Index (SAI) is a new financial aid tool that makes understanding and filing FAFSA simpler and more accurate. The SAI was created with Expected Family Contribution (EFC) in mind.
EFC determines how much a family will contribute to a child’s tuition costs. Unfortunately, EFC calculations are often inaccurate, which can lead to incorrect financial aid offers. Viewed in this way, EFC calculation directly affects where students apply, as college tuition costs are a driving factor in student interest. According to the Wall Street Journal, “Most colleges give inaccurate price details in financial aid letters.”
And a lot of that inaccuracy trails back to inaccurate EFC calculations, which means makes the SAI even more impactful. If the data is correct, the letters will be too.
Federal Aid & the Application Process
As mentioned above, one of the most important elements driving student and family interest in higher education is tuition cost. Students and families target and apply to schools they feel they can afford.
Many students and families skip the FAFSA altogether because it seems so complicated. They get stumped filling in the information required for the EFC to be calculated. Even those who do fill it out don’t always get it right. Which means universities don’t have the right info either.
This has real consequences: an inaccurate EFC can lead to an incorrect financial aid offer… which means your university’s top prospective students might opt to attend another college due to inaccurate information about cost. In other cases, students might be overpaying for higher education.
Either way, EFC has led to financial confusion and ongoing issues for admissions staff and financial aid officers. So how exactly will SAI change the current FAFSA landscape?
SAI to the Rescue
The Student Aid Index is designed to be simpler and more accurate than the current method used to calculate EFC. This is based on a comprehensive database of education costs that includes tuition and fees, room and board, and other living expenses.
The index also includes data on financial aid awarded to students, such as grants, scholarships, and loans. By calculating the average cost of college for a given school and comparing it to the average amount of financial aid awarded, the index can provide a more accurate estimate of the student’s EFC.
These transparent calculations are expected to reduce the number of errors in financial aid packages, resulting in students and families receiving the aid they are eligible for. In addition, the index will provide more detailed information about college costs and financial aid packages, making it easier for students and families to make informed decisions about which school to attend.
NASFAA & SAI: Building a New FAFSA Norm
The National Association of Student Financial Aid Administrators (NASFAA) has developed a five-step implementation checklist for schools to incorporate the Student Aid Index into their financial aid process. The checklist includes steps such as reviewing and understanding the index, developing a plan to integrate the index into the school’s financial aid process, and training staff on how to use the index.
These changes are expected to alter the atmosphere in the Bursar’s office and the financial aid office, both places where finances meet student success. After all, it’s not just families and students who are hamstrung by complex FAFSA demands. Non-academic staff, from financial aid officers to enrollment staff, are often in the weeds with students searching for solutions.
As SAI and NASFAA seek to bring more transparency to FAFSA, higher education administration is also set to benefit in a big way. After all, greater financial transparency leads to fewer errors in filing, more accurate aid estimates, and happier students.
How Meadow Can Help
The five-step implementation process we mentioned above has a lot of tasks assigned within each step (it’s an 8-page document, in fact). And buried at the bottom of the list was one of the most pivotal parts: updating your school's net price calculator. Meadow Price, our own net price calculator, is ready for all the changes. Let us know if you want to learn more!
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