Last week Sen. Edward Kennedy (D-MA), chairman of the Senate's education committee, introduced the Strengthening Student Aid for All Act that would increase the maximum Pell Grant for students with a negative EFC by up to $750. This article explains how a student could have a negative EFC and some of the possible effects it would have on students and schools.
Since 2002 - when Congress began examining HEA reauthorization - NASFAA has advocated for additional Pell Grant funding to offset calculated negative EFCs, not to exceed the student's cost of attendance.
Allowances in the EFC calculation allow for certain students - generally the poorest of the poor - to end up with a negative EFC when total allowances exceed total income. Some of those allowances include:
- State tax allowances
- Employment allowances
- Income protection allowances (to accommodate basic living expenses based in part on size of household)
- Education savings and asset protection allowances
Today negative EFCs are simply rounded up to zero, but under Kennedy's legislation those students would receive additional Pell Grant funds for each negative dollar of calculated EFC, up to a maximum of $750. While a student could have a negative EFC beyond -750, NASFAA advocated for a dollar-to-dollar match only to $750 for budgetary reasons. With the maximum Pell Grant increasing to $4,731 in the 2008-09 award year, students with negative EFCs could qualify for up to $5,481 in total Pell Grant funds. The proposed legislative changes would affect dependent students (limited to negative parent contributions) and both independent models (i.e., independent students with dependents and those without dependents other than a spouse).
The best place to look to determine whether a student would be impacted by this change would be the "Adjusted Available Income"(AAI), which is listed under "Intermediate Values" on the ISIR. The AAI takes into account all income and assets after all allowances. The AAI may not work for students who qualify for an automatic zero since no calculation is performed. ISIRs on those students may not include intermediate values. It could be necessary for the Department to reissue ISIRs for students who would qualify for a negative EFC. Schools would also be required to repackage students who qualify for additional Pell Grant funds.
If Kennedy's bill becomes law and is fully funded, the implementation date is scheduled for July 1, 2008.
Additional Resources
By Justin Draeger
NASFAA Assistant Director of Communications
Joan Berkes, NASFAA Senior Associate for Professional Assessment, Training, and Regulatory Assistance, also contributed to this article.
Posted 04/08/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
