First, remember that your SAI is just a number. It’s not a bill or an amount you have to pay. Schools use it alongside your cost of attendance (COA), which includes things like tuition, fees, housing, meals, books, transportation, and other personal expenses.
Here’s how SAI works: After you fill out your FAFSA, the Department of Education reviews your (and often your parents’ or spouse’s, if you’re married) financial information, such as your/your family’s income and assets. Based on that, they calculate your SAI by subtracting the amount needed for your family’s normal living expenses from your reported income and assets.
Here’s the basic formula colleges use to figure out your financial need:
Cost of Attendance – Student Aid Index = Financial Need
To illustrate: Let’s say your school’s annual cost of attendance is $40,000, and your SAI is 0. That means, according to the FAFSA calculations, you have $40,000 of financial need. If your SAI is $5,000, then your financial need would be $35,000.
This number helps colleges decide how much need-based aid you may qualify for, including grants, scholarships, work-study jobs, and loans.
The SAI also plays a big role in determining your eligibility for federal aid, especially the Pell Grant (Speaking of, here’s a guide to Pell Grants). Pell Grants are designed for students with significant financial need. If your SAI is 0 or negative (the lowest possible SAI is -1,500), you’ll likely qualify for the maximum Pell Grant award. As your SAI gets higher, the amount of Pell Grant money you qualify for may go down.
Important to note: Even if you have a high financial need, colleges aren’t always required to meet 100% of it. Some schools cover the full gap between what you can afford and their cost, but many offer a mix of grants, loans, and work-study opportunities to help bridge the difference.
There are some schools that offer complete financial aidthough some do so with loans, and some without, so check that guide for more.
How SAI is calculated
The Student Aid Index is calculated using the information you (and your parents or spouse, if applicable) report on your FAFSA. Most of the time, your financial details (i.e., income and tax info) are pulled directly from the IRS into the FAFSA to make things easier.
Here’s what goes into the calculation:
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Your family’s income (including taxable and untaxed income)
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The net worth of any assets (like savings, investments, and real estate)
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Your household size
The formula totals your available financial resources and then subtracts an amount for basic living expenses (called the Income Protection Allowance). What’s left over is what the government thinks could potentially go toward college costs, and that becomes your SAI.
One big change to know: The number of siblings you have in college no longer reduces your SAI, a shift from the old system. Also, for the first time, your SAI can be negative, which helps identify students with the greatest financial need.
How colleges use your SAI
Colleges use your SAI to decide how much financial aid they can offer you. After determining their cost of attendance for the year, the financial aid office subtracts your SAI and any other grants or scholarships you’re receiving to calculate your remaining financial need.
From there, they put together a financial aid package that may include:
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Need-based grants
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Scholarships
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Federal student loans
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Work-study opportunities
A lower SAI usually means you’ll qualify for more need-based aid. However, not every school can meet your full financial need. Some will cover a larger percentage of your financial need than others. That’s why comparing financial aid offers is important when making your college decision.