ED Announces Update to SAI Formula, Release of 100 Additional Test ISIRs

By Maria Carrasco, NASFAA Staff Reporter

The Department of Education (ED) on Tuesday announced that it updated the Student Aid Index (SAI) formula in order to be "in full alignment with the FAFSA Simplification Act," just weeks before institutions are expected to begin receiving Institutional Student Information Records (ISIRs).

In an electronic announcement, ED explained that previously, the SAI formula for dependent students was calculated by using a floor of -1500 on the Student’s Contribution from Income (SCI). In preparation to send ISIRs to institutions next month, ED said it identified that the FAFSA Simplification Act did not specify an income floor for dependent students. Further, ED clarified that implementing a floor would be “inconsistent with the letter of the law.”

Technical updates to SAI formula A will be reflected in the ISIRs that are delivered to institutions and state aid agencies in the first half of March, ED announced. The update to the SAI formula will result in 7.3 million students in total expected (2.1 million more than expected after ED adjusted IPA tables in January) to be eligible for federal Pell Grants in the 2024-25 award year, according to ED. The department said this update will not affect its timeline for delivering ISIRs to institutions in the first half of March. NASFAA will announce plans for updating its SAI Modeling Tool with the new formula later this week.

"We are putting all hands on deck and using every lever we have to make sure we can achieve the transformational potential of the Better FAFSA to make higher education possible for many more of our nation’s students," Education Secretary Miguel Cardona said in a statement. "The technical updates we are making today will not impact our implementation timelines, and, combined with other implementation efforts, the Department’s Better FAFSA will result in more students eligible to access more Pell Grants in the 2024–25 award year."

Specifically, this update allows the SCI, an interim calculation in the SAI formula, to have a negative calculated value with no floor. In previous iterations of the SAI formula, ED had set a -$1,500 floor on this value, which was inconsistent with statute. The change impacts only dependent students who do not qualify for the automatic maximum Pell Grant and associated automatic -1500 SAI. 

For impacted students, the formula modification could result in a decrease to the SAI of up to $4,065. This number will vary based on whether the student had income in 2022 and how much they earned. The lower the student’s income, the more their SAI would decrease with this most recent change, potentially making them eligible for new or larger Pell Grants and/or other types of financial aid. The impact on the SAI would phase out as students’ incomes increase, up to an income of around $13,500, where there would be no impact on the SAI from the latest changes.

This announcement comes as the Committee for a Responsible Federal Budget (CRFB) released an analysis last week that estimates Pell Grant costs will exceed new funds and the program’s reserves will soon be depleted. The CRFB, using data from ED and the Congressional Budget Office (CBO), estimates that the Pell Grant reserves will be exhausted by 2026 or sooner, and the Pell Grant program faces a $35 billion to $95 billion 10-year shortfall. 

Additionally, the costs of the federal Pell Grant program will exceed appropriations funding each year for at least the next decade, the committee estimated. In order to close this shortfall, Congress will need to require higher appropriations to the federal Pell Grant program, and give smaller benefits and have tighter eligibility. 

“Further Pell grant expansions will widen the shortfall and grow needed adjustments,” the committee wrote. 

“Given the size of these shortfalls, lawmakers should look for opportunities to find efficiencies and save money in the Pell Grant program and should identify spending cuts elsewhere in the budget to ensure appropriators can provide adequate funding to cover benefits,” the CRFB wrote in its analysis. “Certainly, it would be unwise to raid the existing reserves to further expand Pell Grant benefits without adequate offsets.” 

One such expansion of Pell Grants that could further impact the program's reserve funds is the proposal to extend Pell eligibility to certain short-term programs. A "workforce Pell" bill could be taken up on the House floor as soon as this week, though the mechanism to cover the cost of that expansion continues to be a source of concern and disagreement for policymakers.

Over the next few days, ED said it will work with institutions and vendors to put the SAI formula update in effect, and will be available to provide technical support and assistance to institutions through its FAFSA College Support Strategy, which NASFAA is partnering on. The department said over the next week, it will begin to deploy support from Federal Student Aid and nonprofit organizations — including NASFAA — to lower-resourced institutions to conduct needs assessments and provide help to institutions to prepare for processing student aid offers. 

In its announcement, ED also confirmed it will send system-generated test ISIRs to institutions and vendors this week. NASFAA was told by ED that this batch will be approximately 100 test ISIRs. So far, 11 test ISIRs have been provided by the department. 

This batch of test ISIRs will cover different student scenarios, according to ED, including dependent student records with one or two parents, independent student records with and without a spouse, and records reflecting the new provisionally independent student status. The test ISIRs will also provide examples of federal tax information (FTI) retrieved from the IRS. 

There will be examples of all three formulas (A, B, and C) used to calculate the new Student Aid Index (SAI) along with the intermediate values, Max Pell Indicator, and Min Pell Indicator. And there will be some rejected records that will not have an SAI but will include the associated reject codes. ED said it will continue to update additional test ISIRs and open-source tools stored in a public department repository.

Additionally, ED announced that it will transmit a test file to all active FTI-SAIG mailboxes. The purpose of the test, according to ED, is to assure that a test file can be received in the active FTI-SAIG mailbox and retrieved by the institution. The test file will be sent in the SAIG message class ISRF25OP and will include a message noting that it is a test file. ED stated that the test file will not mimic an ISIR file and should not be downloaded into the institution’s system.


Publication Date: 2/27/2024

Crista G | 2/29/2024 11:13:53 AM

I concur with David here.

David S | 2/28/2024 4:22:38 PM

Well, if you don't like things to be predictable and boring, I guess these are good times, huh?

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