The Sibling Discount Ends for College Financial Aid

Parents paying tuition for two or more children in college stand to lose some financial aid under new government rules.

For years, the calculation for federal financial aid took into account a family’s income and assets, as well as the number of children attending school. The information, which parents plugged into the Free Application for Federal Student Aid form, or Fafsa, was used to determine how much a family could afford to pay annually, a number called the expected family contribution.

The Education Department divided that number by the number of college students in the family to estimate how much parents could contribute for each child. That per-child number determines each child’s eligibility for need-based federal financial aid.

Changes to the formula for the 2024-25 academic year intend to make more students eligible for federal aid like Pell grants. But that means parents won’t get a break for having multiple children in college since the new formula looks at family members individually instead of as a family unit, said Dana Kelly, vice president of professional development and institutional compliance at the National Association of Student Financial Aid Administrators.

Roughly one-third of dependent college students have a sibling in college, according to Phillip Levine, who studies the cost of higher education at the Brookings Institution, a nonprofit public-policy organization. Financial-aid experts say many families could now receive less government aid, or have to take out loans.

“The college-pricing system is going to change dramatically,” Levine said. “The majority of students are going to be eligible for a different amount of financial aid next year than they were last year,” he said, referring to the school year beginning fall of 2024.

New formula

The new Fafsa replaces the expected family contribution with a new calculation called the “Student Aid Index,” or SAI, to estimate how much a family can afford to pay. The new formula will no longer consider the number of siblings attending college when measuring a family’s ability to pay, said a spokesperson for the Education Department.

As an example, the current formula might determine that a family with one child in college could afford to pay $10,000 a year. If that same family had two children in college, the expected contribution would be cut in half to $5,000, increasing each student’s financial-aid eligibility.

Under the new Fafsa system, a family’s ability to pay isn’t divided per child, meaning that each student might be on the hook for more tuition, depending on the family’s income.

“They have adjusted things on the back end such that it is very student-specific,” said Kelly at the National Association of Student Financial Aid Administrators. “Rather than looking at the family as a whole, they are looking at each student individually.”

Indie Pereira’s oldest child, Madeira Davis, is a 20-year-old junior at the University of Tennessee at Chattanooga. Because she and her wife, Pari Bhatt, make a combined household income above $100,000, Madeira doesn’t qualify for federal financial aid. The couple was able to get a discount for Davis’s college education, since Bhatt works in the state school system. But Pereira was banking on the sibling discount when her other two children attend college.

Pereira’s other daughter, Eliza, has already told her that she would like to attend a community college, which is free for all adults in Tennessee. But she says her son, Xandre, wants to go to college out of state and she is bracing for the cost.

“If the expected family contribution is doubling, I’m not sure how we could afford to pay that without loans,” Pereira said.

Eligibility boost

Many students will have more access to federal financial-aid grants in the new system. The overhauled Fafsa will raise the family income threshold to qualify for the maximum Pell grant, making more students eligible, according to a report from the Brookings Institution.

For example, a family earning $70,000 a year with one child in college could get Pell money and qualify for additional college-specific aid under the new rules, the report said.

Financial-aid officers say they are expecting calls from confused parents and students once the new Fafsa rolls out in December. They have started to make calculations of their own to anticipate how financial-aid eligibility might change for current students.

Brad Barnett, associate vice president for access and enrollment management and financial aid director at James Madison University, said the new Fafsa will make college aid more predictable in the long run.

“As long as a family’s income stays relatively the same, then any need-based financial aid that a student is offered in the new world will likely remain pretty stable during the student’s school career,” he said.

Write to Oyin Adedoyin at [email protected]