The U.S. Education Department (ED) announced this week that it will update the income protection allowance for the purposes of calculating federal financial aid for the 2024-25 award cycle.
As ED worked to meet the December 31, 2023 deadline for launching the new Free Application for Federal Student Aid (FAFSA), it failed to appropriately adjust for inflation in determining the amount of income shielded in calculating a student’s Student Aid Index (the measure replacing the Expected Family Contribution).
The impact on students would be material. According to the agency, the change will deliver an additional $1.8 billion to students in the form of increased eligibility for Pell grants, campus-based aid and student loan subsidies.
While the department has announced that it will adjust SAIs to reflect the inflation adjustment, it has not yet announced a timeline for doing so. In addition to the FAFSA form being delayed for students and families, ED had already communicated that colleges should expect at least a month-long delay in the processing of Institutional Student Information Records (ISIRs). The department can now either send out ISIRs on their original timeline and issue corrections once the formula is corrected – likely causing processing delays at the campus level and introducing confusion for students and families – or fix the error before sending ISIRs to colleges, creating an even longer delay before campuses can package award letters.
