Applying for college is a daunting task, and figuring out how you will pay for it can be downright confusing.

Your mind is likely spinning with questions like, 

  • How much does it actually cost? 
  • What do I currently have saved up? 
  • How will my income impact financial aid? 
  • Will my child be eligible for any scholarships or grants? 
  • Will they need to take out federal loans?

The government is changing how you calculate your child’s financial aid eligibility. As it stands today, college applicants applying for federal financial aid go through a standardized process with two main outputs.

 Free Application for Federal Student Aid (FAFSA): An application submitted to the government that is used to determine eligibility for federal student aid (i.e., loans, grants, and work-study). In addition to basic demographic information, the FAFSA will ask for information regarding previous tax returns, household income, and various assets that you can use to pay for college.

Expected Family Contribution (EFC): A dollar amount generated by your FAFSA results to determine eligibility for federal student aid. Subtracting the EFC from the annual cost of college tuition gives an estimate of your family’s financial needs.

Here’s an example:

  • College Tuition = $40,000 per year
  • EFC = $10,000
  • Financial Need = $30,000 ($40,000 – $10,000)

 Shortly, the government is replacing the EFC with the Student Aid Index (SAI). What does this mean for your college preparations moving forward?

What Is The SAI?

First, let’s clarify that the Student Aid Index (SAI) is not a new policy since the government currently uses the index to calculate financial aid eligibility. In many ways, the SAI and EFC are almost identical (with some minor technical differences).

This fact begs the question, why make the change at all?

Why The Government Is Changing Systems

The key reason for switching from EFC to SAI is to clarify the index’s purpose to families. 

Many families thought the EFC was an actual “pay this amount” calculator. When you hear “Expected Family Contribution,” you likely think that is the hard dollar amount that you will contribute to the cost of college tuition. In reality, it’s just a guideline used to determine financial aid.

The term “Student Aid Index” sounds much more like a calculation than a dollar contribution. With that said, there are a few differences between SAI and EFC that you should be aware of.


The SAI vs. the EFC is not just a battle of acronyms, nor is it solely driven by misinterpretations and confusing connotations. 

Two quantifiable differences make each stand out.  

  1. Range of SAI or EFC Score: Perhaps the most notable difference is that the SAI offers more generous financial assistance than the EFC. How so? While the lowest EFC is $0, the SAI will permit a result as low as -$1,500. This change will allow students to achieve more comprehensive financial assistance to account for college costs not published in the institution’s calculated cost of attendance.
  2. Pell Grant Eligibility: A Pell Grant is a type of federal aid awarded to undergraduate students with exceptional financial needs. Unlike student loans, Pell Grants do not typically require that students repay them. Eligibility for these grants will now be determined before the FAFSA is submitted if your adjusted gross income is less than a certain threshold. Students may still be eligible for these grants after completing the FAFSA by using their SAI (if they did not already qualify for the grant based on income).

The bottom line is that the SAI could broaden students’ eligibility for aid and competitive financial-based grants. 

What Should You Do To Prepare For These Changes?

The switch from EFC to SAI is set to take place on July 1, 2023. Here is what you should do to prepare.

First, familiarize yourself with SAI to understand how the government plans to calculate your financial aid. Knowing how the system works is an excellent way to prepare as you can tailor strategies and decisions to fit the new mold.

It’s also essential to understand the changes to FAFSA. SAI is not the only update to financial aid applications. Here are a few of the significant upcoming changes.

  • Reduction in the maximum number of questions on FAFSA (reduced from 108 to 36).
  • Elimination of some discounts for parents with multiple children in college. This provision may likely negatively impact many families. If you may have multiple kids in college simultaneously, let’s talk to see how your strategy may need to change. 
  • Changes to the rules regarding untaxed income. For example, you don’t have to report specific types of untaxed income, like cash, on the FAFSA. You also won’t have to report workman’s compensation or veteran’s education benefits. 
  • Changes to the income protection allowance. The government plans to increase the income protection for parents by 20% and students by 35%, which could dramatically impact how much income you can protect—saving money is always a good thing!

There are so many factors that can influence how much your family has to pay for college. Are you feeling a bit overwhelmed by it all? If so, download our Free College Money Report to get detailed information on your financial aid outlook and bring confidence to the college planning process.

You can also take a look at this helpful chart that brings to light some of the financial details you’ll need to consider as you plan to fund college.


At Chladek Wealth, we work directly with parents of college-bound children to demystify the financial aid application process. A lot of the strategy around financial aid eligibility begins well before your child applies for college. Finding ways to strategically place assets and reduce AGI are just a couple of commonly used tactics to maximize student aid eligibility. 

Schedule some time with our team today and see how we can help.


 The contents of this article are for general information and educational purposes and should not be construed as specific investment, financial planning, tax, accounting, or legal advice. Please consult with a professional advisor before taking any action based on the contents of this article. All investment and financial planning strategies involve risk of loss that you should be prepared to bear. We cannot guarantee any investment performance whatsoever, and past performance is not indicative of potential future returns.