How Is Your Student Aid Index (SAI) Calculated?

The Student Aid Index (SAI) replaces the Expected Family Contribution (EFC) as the new measure for federal student aid eligibility. It measures a student’s and family’s financial strength to contribute towards college costs. The lower the SAI, the greater a student’s calculated financial need for federal aid. The SAI guides financial aid offices in structuring aid packages.

Information Needed for SAI Calculation

SAI calculation relies on financial and household information collected through the Free Application for Federal Student Aid (FAFSA). Primary inputs include income data for the student and, if applicable, their parents. This covers taxed sources like wages, salaries, self-employment earnings, and certain untaxed income.

While most financial information is now directly transferred from the Internal Revenue Service (IRS), some untaxed income, such as child support received, is reported as an asset for FAFSA purposes. Parents’ pre-tax contributions to employer-sponsored retirement plans, like 401(k)s, no longer count as part of their reported income.

Asset information for students and parents also plays a role. Reportable assets include cash, funds in savings and checking accounts, and the net worth of investments such as stocks, bonds, mutual funds, and real estate equity that is not the primary residence. Conversely, the value of a family’s primary residence, retirement accounts like 401(k)s and IRAs, and the cash value of life insurance policies are excluded from asset calculations.

Household details, such as family size, are also factored into the SAI. The number of family members simultaneously enrolled in college is no longer considered in the SAI formula. This adjustment can affect aid eligibility for families with multiple children pursuing higher education concurrently.

Calculating the Student Aid Index

The Student Aid Index (SAI) combines parent and student contributions to determine a family’s financial resources after accounting for basic living expenses. The process involves assessing income and assets, applying allowances, and then combining the resulting contributions.

For parents, their income is first totaled, and then various allowances are subtracted to arrive at an available income figure. The Income Protection Allowance (IPA) shields a portion of income for living expenses based on family size. Other deductions include U.S. income tax paid, a payroll tax allowance, and an employment expense allowance for working parents.

Parental assets are also considered, with an Asset Protection Allowance (APA) intended to protect some savings for emergencies. However, for the 2024-25 and 2025-26 award years, the Asset Protection Allowance has been set at $0. Any remaining unprotected parent assets are then assessed at a specified percentage, which can be up to 5.64%.

The parent contribution from income is calculated using a progressive rate, meaning a higher percentage of income is expected to contribute as income increases. For students, their income is also subject to an Income Protection Allowance, which for dependent students is a fixed amount (e.g., $11,130 for 2024-25 and $11,510 for 2025-26). Income exceeding this allowance is assessed at a 50% rate.

Student assets are assessed at a higher rate of 20% of their value, with no asset protection allowance. The calculated parent contribution and student contribution are then combined to determine the overall Student Aid Index.

It is possible for the SAI to be a negative number, going as low as -$1,500. A negative or zero SAI indicates a high level of financial need, and students in this category may automatically qualify for the maximum Federal Pell Grant. Certain low-income students or those not required to file federal income taxes may also be automatically assigned a -$1,500 or $0 SAI.

Understanding Your Calculated SAI

The Student Aid Index (SAI) is an index number used to gauge a student’s eligibility for federal student aid, not an amount a family is expected to pay directly. A lower SAI indicates a higher level of financial need, which can lead to greater eligibility for need-based federal student aid. This number provides a consistent baseline for financial aid offices to assess a student’s circumstances.

Colleges utilize the SAI in conjunction with their Cost of Attendance (COA) to determine a student’s financial need. The formula is straightforward: the college’s COA minus the student’s SAI equals their financial need. The COA encompasses all estimated costs of attending a particular institution for an academic year, including tuition and fees, room and board, books, supplies, transportation, and personal expenses. The resulting financial need figure guides financial aid offices in determining the types and amounts of federal student aid a student may receive.