What impact will the DOE's 2025–2026 criteria have on federal student aid eligibility for affected programs?
Executive summary
The Department of Education’s 2025–2026 Federal Student Aid Handbook and related guides primarily implement the Student Aid Index (SAI) and updated Pell Grant eligibility rules that affect Title IV aid packaging and eligibility; the Handbook explains SAI calculations, income protection allowances, and packaging rules that can change which programs or amounts a student receives [1] [2]. Practical effects include possible changes to Pell Grant qualification and to eligibility for need‑based vs. non‑need aid depending on a student’s SAI relative to cost of attendance (COA) [1] [2].
1. What the DOE changed: SAI replaces EFC and new Pell criteria
The 2025–2026 materials continue the switch from the Expected Family Contribution (EFC) to the Student Aid Index (SAI) and provide the SAI worksheets, tables (payroll tax allowance, income protection allowance) and formulas schools must use when packaging aid [1] [3]. The Department also documented revisions to Pell Grant flag logic and eligibility thresholds in later guidance (for 2026–27), indicating the SAI must meet specific numerical relationships to the maximum Pell award in some cases [4].
2. How SAI affects Pell Grant eligibility specifically
Under the Handbook, Pell Grant eligibility is now tied to SAI calculations and separate "maximum" and "minimum" Pell criteria; a student’s SAI can make them eligible for a maximum, calculated, or minimum Pell award even if their SAI produces little or no financial need for other Title IV programs [5] [2]. The Handbook gives examples where a student with an SAI higher than COA might still qualify for a calculated or minimum Pell Grant, but would not qualify for other need‑based Title IV aid [2].
3. Packaging and other Title IV aid: SAI can change who gets need‑based aid
Volume 3 of the Handbook clarifies that schools must use the calculated SAI to package a student regardless of enrollment period length, and that a negative SAI does not increase the quantities of need‑based or non‑need‑based aid beyond regulatory limits [1] [2]. Thus, changes in how SAI is computed (for example allowances and exclusions in the SAI worksheets) can shift whether a student shows "financial need" for campus‑based programs or subsidized loans even if Pell rules treat them differently [1] [2].
4. Administrative and reporting consequences for schools and students
The Handbook is addressed to financial aid administrators and updates institutional obligations—verification processes, state determinations for distance education, and packaging rules—so schools must adapt systems and counseling to reflect SAI and new Pell logic [3] [6]. The FAFSA form itself includes updated demographic and eligibility questions that interact with Pell eligibility (e.g., homeless/unaccompanied youth, parent‑killed‑in‑line‑of‑duty) and must be completed to determine Title IV eligibility [7] [3].
5. What the guidance does not say (limits of current documents)
Available sources do not mention specific aggregate numbers of students who will gain or lose eligibility nationwide under the 2025–2026 criteria; they lay out formulas, thresholds, and examples but do not provide an overall impact estimate (not found in current reporting). Likewise, while later guidance for 2026–27 added foreign income exclusion and further Pell logic changes, the 2025–26 Handbook itself does not quantify how many students these formula changes will affect [4].
6. Competing perspectives and practical advice
Some observers and campus offices have reported that SAI and FAFSA simplification can increase Pell eligibility for more students (CollegeData noted the simplification increased Pell‑eligible students in 2024–25) while other campus guides warn some families may see reduced aid because the SAI removes the prior "number in college" adjustment and treats assets differently [8] [9]. Financial aid administrators must therefore communicate that a lower SAI may increase the chance of federal grants, but SAI alone does not guarantee institutional aid and packaging rules may limit other need‑based awards [2] [9].
7. Bottom line for an affected student or program
If a student’s recalculated SAI under the 2025–26 rules falls below Pell thresholds, they may qualify for a Pell Grant even when little other financial need exists; conversely, a higher SAI relative to COA can eliminate eligibility for campus‑based or other need‑based programs while leaving possible Pell eligibility unaffected [2] [5]. Students and schools must rely on the new SAI worksheets/tables and updated FAFSA items to determine eligibility and should consult institutional financial aid offices for case‑by‑case effects [1] [7].