Many Americans are aware of the Biden administration’s battle for student loan forgiveness. But a major policy decision that has flown under the radar is a change to the way federal student aid will be distributed among students. Stuffed into those end-of-the-year pork-filled bills is a provision that spells trouble for families.

In 2020, Congress passed the Consolidated Appropriations Act, 2021, which includes the FAFSA Simplification Act. One of the provisions of the FAFSA Simplification Act will replace the Expected Family Contribution (EFC) metric with the Student Aid Index (SAI) in the 2024–2025 award year. 

The EFC uses income and asset information from the FAFSA form to determine how much a family can reasonably pay for college. Need-based federal aid is calculated by subtracting the EFC from the total cost of attendance for one year. Critics of the EFC claimed the metric misled families regarding the actual cost of college. The primary complaint was that it excluded other costs families might owe, like student loans (which were lumped in with the federal aid category). 

But it is hard to believe that this is the justification for eliminating the EFC altogether. The change goes further than presenting the information differently. It totally revamps the formula for computing family contributions in a way that penalizes larger families and sneaks in a small stipend for low-income students.

The SAI disregards family size when determining how much a family should receive in federal student aid. Families with multiple children enrolled in college at the same time will receive much less aid than they would have in the former plan. Declining birth rates in the U.S. already present major problems down the road. The SAI formula becomes another policy that makes it a burden to have children.

[Related: “Biden Plans to Turn Student Loans into Delayed Grants”]

The new formula also gives students an automatic stipend just for being at college as long as they are poor. The formula allows for a -$1,500 score, which essentially gives low-income students extra funds that could cover expenses besides those calculated by the college. Free money is a powerful incentive to get students to consider attending college. But providing such benefits, without considering if students are academically prepared, could actually prove harmful to these very students. 

Low-income students are nine times more likely to have a high school GPA below 2.5. Common sense tells us that these students are more likely to enter college with an academic disadvantage. Money does not fix shortcomings that should have been taken care of during K–12 education. Without tying aid distribution to academic merit, the government is more likely to encourage academically unprepared students to attend college. And it’s these students who struggle to finish, making their time and financial investments worthless. This doesn’t mean low-income students should be prohibited from college attendance or from receiving federal aid. A better approach would consider academic qualifications when distributing federal aid. As a result, academically qualified low-income students would have the opportunity to attend college. Those who are not qualified would be protected from wasting time and money. 

The SAI keeps the higher education industrial complex afloat. These changes, if anything, prevent us from seriously considering alternatives to college degrees and dismantling the idea that every person benefits from a college education. This is good for universities struggling with declining enrollment—not so for students and families in the long term.

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