FAFSA 2026-2027: Avoid Mistakes That Cost Thousands
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Information sourced as of November 2025, covering the 2026 to 2027 FAFSA. These figures match our companion PDF. Allowances and loan caps change each cycle, so confirm current details at studentaid.gov before filing.
The change that costs families the most
Having more than one child in college no longer reduces what each is expected to contribute. The old Expected Family Contribution divided across siblings. The new Student Aid Index does not.
A family earning $75,000 with two children in college saw roughly $4,250 expected per student under the old formula. Under the new one it is about $8,500 each. With three students, the figure went from around $8,000 each to $24,000 each.
Nothing about the family changed. Only the formula did.
What is genuinely better
- Opened September 24, 2025, the earliest launch ever, giving families more time and states more room to process first come, first served aid.
- Down from 108 questions to about 36.
- Instant identity verification for students with a valid Social Security number, where it previously took 3 to 5 days.
- Direct Data Exchange imports your IRS tax information automatically, removing manual entry errors. Every contributor must give explicit consent.
- Works properly on a phone or tablet.
And it is always free. Anyone charging you to file a FAFSA is selling you something you can do yourself for nothing.
Deadlines
The federal deadline is June 30, 2027. That is not the one that matters.
State and institutional deadlines are far earlier, and much state aid is first come, first served. Filing in September rather than March can be the difference between receiving a grant and being told the money has run out. Check your state’s deadline the day you start.
One number worth knowing: high school seniors who complete the FAFSA are 84% more likely to enroll in college immediately.
From EFC to SAI, and why it matters
The Expected Family Contribution has been replaced by the Student Aid Index. This is not a rename. The formula is fundamentally different.
- The SAI can go as low as minus $1,500, indicating maximum need, where the old EFC stopped at zero
- It uses a simplified income assessment
- It eliminates the division among multiple students in college at the same time
| Family situation | Old EFC | New SAI | Effect |
|---|---|---|---|
| $15,000 contribution, 1 student | $15,000 | $15,000 | No change |
| $15,000, 2 students | $7,500 each | $15,000 each | Double |
| $15,000, 3 students | $5,000 each | $15,000 each | Triple |
What counts as an asset
You must report: checking and savings accounts, investment accounts, 529 plans, trusts, and real estate other than your primary residence. This applies to both student and parent.
You do not report: your primary residence, retirement accounts including 401(k), IRA and pensions, life insurance cash value, and qualified small businesses or farms with 100 or fewer employees.
The small business and farm exemption
Federal policy now excludes the net worth of certain illiquid operational assets: a small family owned business with 100 or fewer employees, a family farm where the family resides, and a family owned commercial fishing operation.
Income from those operations is never excluded. You must still report owner salaries, net business profits, S-Corp distributions, crop and livestock sales, agricultural programme payments, catch proceeds, contract payments and charter fees. The exemption covers the value of the asset, not what it earns.
How the SAI is calculated
Step 1, available income. Parent adjusted gross income from 2024, plus untaxed income, minus the Income Protection Allowance, minus employment expenses, minus federal taxes paid.
| Family size | Income Protection Allowance, 2026 to 2027 |
|---|---|
| 2, with 1 in college | $19,690 |
| 3 | $24,520 |
| 4 | $30,340 |
| 5 | $35,800 |
Step 2, asset contribution. Total assets minus the Asset Protection Allowance gives your discretionary net worth, and 12% of that is counted.
| Older parent’s age | Asset Protection Allowance |
|---|---|
| 40 to 44 | $5,400 |
| 45 to 49 | $9,100 |
| 50 to 54 | $12,800 |
| 55 and over | $16,200 |
Step 3. Available income multiplied by an assessment rate between 22% and 47%, plus the asset contribution, gives your SAI.
Parent PLUS loans just became riskier
From July 1, 2026, new Parent PLUS loans carry an annual cap of $20,000 per dependent student and a lifetime cap of $65,000 per dependent student. Borrowers before that date are grandfathered under the old rules.
The bigger change is repayment. New Parent PLUS loans lose all access to Income-Driven Repayment plans. There is no safety net if your circumstances change, and you are locked into the Standard Repayment Plan.
If a parent is considering one of these loans, that single change should weigh heavily. A job loss or illness no longer comes with a way to lower the payment.
If you are a veteran or the dependent of one, check your VA education benefits before borrowing anything. Filing a FAFSA alongside them can still qualify you for Pell Grants that never need repaying.
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Frequently asked questions
Does the FAFSA cost anything?
No. It is free, always. The first F stands for Free. Any service charging a fee is unnecessary.
Why is my aid lower with two children in college?
Because the Student Aid Index no longer divides the family contribution among siblings. Each student is now assessed the full amount, which can double or triple what your family is expected to pay.
What is the deadline?
The federal deadline is June 30, 2027, but state and college deadlines are much earlier and much aid is first come, first served. File as early as you can.
Do I report my house or retirement accounts?
No. Your primary residence, retirement accounts, life insurance cash value and qualified small businesses or farms are all excluded.
Is my family business exempt?
Its net worth is, if it has 100 or fewer employees. All income from it must still be reported, including salaries and profits.
Can the SAI be negative?
Yes, down to minus $1,500, which signals maximum need. The old EFC could not go below zero.
Should parents take a PLUS loan?
Consider it carefully. From July 1, 2026 new Parent PLUS loans are capped at $20,000 a year and $65,000 lifetime per student, and lose access to Income-Driven Repayment entirely.
Official resources
- File your FAFSA: studentaid.gov
- Federal Student Aid Information Center: 1-800-433-3243
- State deadlines: studentaid.gov/apply-for-aid/fafsa/fafsa-deadlines
Details as of November 2025 for the 2026 to 2027 FAFSA. Allowances, caps and deadlines change each cycle, so verify at studentaid.gov. GovClarity is not a government agency and does not provide financial advice.
