Option 1: An institution may treat all negative SAIs (down to -1500) as equal to an SAI of zero in its selection criteria for FSEOG.
Option 2: An institution may use the negative SAI to identify the students with the most need in its selection criteria for FSEOG.
Dear Colleague:
This letter provides information for institutions that participate in the Campus-Based Programs on the use of a negative Student Aid Index (SAI) for the identification and selection of eligible students to receive a Federal Supplemental Educational Opportunity Grant (FSEOG).
The FSEOG program provides assistance to exceptionally needy undergraduate students who are enrolled at participating title IV institutions. Section 413C of the Higher Education Act of 1965 (HEA), as amended, requires institutions to prioritize awarding of funds to students who both demonstrate exceptional need and are eligible to receive a Federal Pell Grant award.
The law further defines “exceptional need” as students with the lowest Expected Family Contribution (EFC). Historically, the lowest EFC has been zero (0), with priority going to students receiving Pell Grants. Within these parameters, institutions have flexibility to establish policies regarding who they make awards to and in what amounts (subject to need and annual maximums).
The Consolidated Appropriations Act of 2021 (P.L. 116-260) amended the HEA under the provisions of the FAFSA Simplification Act, replacing the EFC with the Student Aid Index (SAI) as a measure of need and allowing for an SAI as low as negative 1,500. Prior to the FAFSA Simplification Act amendments to the HEA, a student’s EFC could not be less than zero. The amended HEA does not specifically address the treatment of a negative SAI for purposes of the Campus-Based Programs. However, the amended HEA in Sec. 401(b)(1)(B)(ii) provides, with respect to Pell Grant calculations, that a negative SAI shall be treated as zero.
With the switch from EFC to SAI, and given that the regulations in 34 CFR 676.10 require institutions to prioritize students with the lowest EFCs who will also receive Pell Grants, institutions have asked how to interpret the threshold for “exceptional need” for purposes of awarding FSEOG. Specifically, institutions have asked whether they are permitted or required to consider students with a negative SAI to have the greatest need and prioritize those students when selecting students for FSEOG awards.
Effective with the 2024-25 award year, in identifying students with exceptional need, as required under the award selection procedures for FSEOG, institutions may, but are not required to, treat all negative SAIs (down to –1500) as equal to an SAI of zero in their selection criteria. Alternatively, institutions may elect to use negative SAIs to further distinguish among their neediest students. In applying their award selection procedures, institutions must take a consistent approach to negative SAIs.
The Department believes that allowing institutions to treat all negative SAIs as equal to an EFC of zero is consistent with how Congress has treated automatic maximum Pell Grant determinations. Specifically, under the Simplification Act [see HEA Sec. 401(b)(1)(A)], automatic maximum Pell Grants are awarded in two situations: when the student or parents, as applicable, are not required to file a U.S. tax return, and when the student or parents have adjusted gross income that falls within specific poverty line thresholds. In the first case the student receives a negative 1,500 SAI, and in the second case the student receives a zero SAI, unless the calculated SAI is negative (down to 1,500), in which case the SAI is that negative number. Accordingly, students with automatic maximum Pell Grants will have SAIs ranging from zero to negative 1,500. This guidance permits institutions to award FSEOG grants to students within this range of SAIs similarly, or they may use negative SAIs to further distinguish between the neediest students. We believe that this approach will help ensure consistency between institutional selection of FSEOG recipients and policies for awarding and packaging Title IV funds and allow institutions the flexibility to ensure continued eligibility for students who are current recipients of FSEOG funding.
However, we remind institutions, as previously described in Dear Colleague Letter (GEN-23-11) that any negative SAI should be converted to and treated as 0 when awarding and packaging need-based Title IV aid (the Pell Grant, FSEOG, Federal Work-Study (FWS), and Direct Subsidized Loan programs). Note that a negative SAI converted to 0 will also not increase a student’s eligibility for non-need-based aid.
Resources and Contact Information
Additional resources are available on the FAFSA Simplification Information page on Federal Student Aid’s Knowledge Center. Further information on the administration of the Campus-Based Programs may be found in the Federal Student Aid Handbook. To further assist the community with implementation of the FAFSA Simplification changes, the Department will continue to provide additional operational guidance and technical resources.
You may refer additional questions to the Department using the Contact Customer Support form in FSA’s Partner Connect Help Center. To submit a question, please enter your name, email address, topic, and question. When submitting a question related to this DCL, please select the topic “Policy Guidance.”
We appreciate your continued partnership as we implement these changes.
Sincerely,
Dr. Nasser Paydar
Assistant Secretary
Office of Postsecondary Education
