Federal Financial Aid Eliminates Sibling Discount in 2024-2025

A change to the federal financial aid formula arising from The Consolidated Appropriations Act of 2021 is set to eliminate a break that previously helped parents with two or more children in college. Currently, the Education Department divides the expected family contribution by the number of students attending college per family to determine student aid eligibility. Beginning in 2024-2025, however, a family’s assets and income will not change regardless of the number of children enrolled in higher education.

Previously, as an illustration, a family with one child in college determined to afford $16,000 annually would be expected to contribute $8,000 per child were two siblings in that household attending college. With this change, however, a family’s ability to pay is no longer divided by the number of children in college.

Applicants will notice this change along with fewer overall questions on their application when they complete their 2024-2025 Free Application for Federal Student Aid (FAFSA) form, where expected family contributions will be replaced with the Student Aid Index. This change aims to expand student eligibility for federal financial aid grants, raising a family’s income threshold to qualify for maximum Pell grant benefits. In short, aid will be increasing but consideration of the number of students enrolled will be decreasing.

The greatest benefit will likely be realized by lower income households, while middle- to higher-income households may pay more. AAFCPAs advises that clients revisit their financial education plan and coordinate as appropriate.

If you have questions, please contact Andrew Hammond, CFP®, Wealth Advisor & Co-Managing Partner at 774.512.4143 or ahammond@nullaafwealth.com—or your AAFCPAs Partner.