When a student submits the Free Application for Federal Student Aid (FAFSA), the form generates an SAI (Student Aid Index), formerly called the EFC (Expected Family Contribution). This number is used by colleges to determine how much federal, state, and institutional aid a student may qualify for.
Here’s what FAFSA looks at:
1. Parent Income (Primarily from Tax Return)
Most influential factor
Based on adjusted gross income (AGI) from your prior-prior year tax return (e.g., 2023 income for 2025–26 FAFSA)
FAFSA protects a portion of income for basic living expenses (Income Protection Allowance)
Additional allowances are subtracted for taxes paid, retirement contributions, and number of college-bound children
2. Parent Assets
Includes bank accounts, investment accounts, and 529 plans
Home equity, retirement accounts (401(k), IRAs), and life insurance are excluded
Roughly 5.64% of assessed parent assets are expected to be used toward college annually
3. Student Income & Assets
Student income above a certain threshold (~$7,000) is assessed at 50%
Student-owned assets (UTMAs, checking accounts) are also assessed at 20%–25%
4. Household Size & Number in College
Larger households and multiple students in college significantly reduce the SAI
Each additional student enrolled in college can cut the family’s share almost in half (though some colleges are backing away from this formula)
Positioning Tip (for your business):
Many of my clients don’t realize they can — and should — plan two years in advance for FAFSA. I specialize in helping families structure their finances for the best possible aid outcomes.