Update on FAFSA for Farm Families
Beginning with the 2024/2025 FAFSA, students of farm families were required to claim the net worth of the farm as an asset, which caused some farm kids to be excluded from financial aid both from the government, and because some colleges and universities use the FAFSA score to determine college aid, from that aid as well.
Previous to 2024, farms with less than 100 workers had been exempt from this requirement.
There was a public outcry, and numerous legislators went to bat for farm families to change this unfair disadvantage for students living on family farms.
With the 2026/2027 FAFSA calculations are now far more favorable to farmers than first drafted for 2024/2025.
Beginning with the 2026–27 award year, the OBBBA updates the Student Aid Index (SAI) asset calculation to exclude, the following from current net worth of business and farms and should not be reported as assets on the FAFSA form:
- The net worth of a family-owned business with 100 or fewer full-time (or full-time equivalent) employees.
- The net worth of a farms on which the family resides.
- The net worth of a commercial fishing business and related expenses, owned and controlled by a family.
What is the FAFSA?
The FAFSA, otherwise known as the Free Application for Federal Student Aid, is a form that college students must fill out online in order to receive federal financial aid. Some types of federal aid include: The Pell Grant, interest deferred loans, low interest loans, and work-study grants.
One of the main changes affecting farm families on the 2024/2025 FAFSA was that dependent students from farm families had to claim the total net worth of the farm as an asset. This is no longer the case.
How Aid is Determined
How much federal financial aid a student receives is calculated by the FAFSA score, now known as the SAI, Student Aid Index. (Previously, it was called the Expected Family Contribution or EFC.) This score is derived from parent income and assets and student income and assets.
The higher the income and assets, the higher the score, and the higher the score, the less aid a student may receive. If income and assets are above the maximum allowable amount for the number of members in the household, the student is no longer eligible for aid. And, on the other end of the spectrum, students below the income threshold, which is based on a percentage above poverty level, qualify for the full amount of the Pell Grant.
In other words, once income and assets are calculated, if the amount is above the maximum allowable, the student will not qualify for any aid. But if the student and parents have an Adjusted Gross Income (from their tax forms) below the stated amount for the number in the household (called the threshold), even though they have to fill in the net value of the farm, neither that or the income are counted, and the student automatically gets the full amount of aid available for the year.
On the 2024/2025 FAFSA students had to list the net worth of the farm as an asset, which meant that the SAI was be higher, qualifying the student for less aid, or possibly no aid. There were some exceptions, with this explanation being a rough over-view. Not all farm kids were adversely affected.
The No Asset Rule - Not Available if Filing Schedule F
Parents of dependent students who make less than $60,000 in income who do not file Schedules A, B, D, E, F, or H do not have to include assets. But since most family farm owners do file a schedule F, it means that even if a farm family makes less than $60,000, they have to list the farm’s net worth as an asset. And yes, to clarify, they also have to list the farm’s net worth if they are above $60,000.