Under the new need analysis system, which is scheduled to go into effect on July 1, 2024, family farmers and small business owners will have to pay more to send their children to college because the assets in their farms and small businesses will now be considered available to help pay for college.

However, a bill introduced by Senators Joni Ernst (R-IA) and Jon Tester (D-MT) would restore the exclusion of family farm and small business assets from consideration for eligibility for federal student aid.  This change in consideration of the treatment of family farms and small businesses has gotten particular attention from legislators from farm states.  The Ernst bill, the Family Farm and Small Business Exemption Act, is co-sponsored by Senators Grassley (R-IA), Lummis (R-WY), Moran (R-KS), Ricketts (R-NE), and Braun (R-IN).  It mirrors a similar bill introduced in the House by Rep. Tracey Mann (R-KS) that has 35 co-sponsors.  

The pending change in the treatment of family farms and small businesses is one of several changes that could slash aid eligibility for certain families.  Perhaps the most significant impact is likely to come from a change in the need analysis formula that would no longer consider how many children a family has in college.  Families with two children in college, for example, could see their expected family contribution double. Certain other subgroups of students could also lose out, including those who received combat pay, which used to be excluded from need analysis.

The changes in federal need analysis come about because of the FAFSA Simplification Act of 2020, which will only be fully implemented in the 2024-25 award year.  While many families will see a sharp drop in aid, many others will see an increase, particularly among students who may have qualified for a Pell Grant below the maximum award amount.  Many of those students will now get a maximum grant. 

The Department of Education is working to develop tools for institutions and students so they will have a better understanding of the new need analysis on eligibility.