Value of Family Farm Now Included in FAFSA Application

October 9, 2023 | Jennifer Harrington

This article was updated January 9, 2024, to include new information from the Department of Education, including a description of how to calculate the net worth of a farm business. 

The Free Application for Federal Student Aid (FAFSA) will undergo major changes for the 2024-2025 school year. One major change is that the adjusted value of a family farm or small business will be used when calculating expected financial contribution from parents. Prior to this year, the net value of a family farm or small business was not included. While the net value of the farm or business will be lowered due to an adjustment formula, the inclusion of farm assets may make receiving need-based scholarships harder for many children of farmers.[i] Because of the significant changes, , the Federal Student Aid office recently announced that the form is being "soft launched" currently. FAFSA filing generally begins October 1.

Legislative History of the Change

The FAFSA Simplification Act was enacted into law as part of the Consolidated Appropriations Act, 2021, which was passed in December 2020 by Congress and signed by President Trump. Over the past three years, the Department of Education, which is entrusted with implementation, has gradually enacted the changes since the 2021-22 Award Year. The final phase of changes will occur in the 2024-25 Award Year.

One major change to the FAFSA process in the upcoming year is the formula used to determine a student’s expected financial contribution towards higher education. Prior to this year it was called the Expected Family Contribution (EFC), but now it will be called the Student Aid Index (SAI). There are significant differences between the two formulas. These include: (1) the removal of the number of family members in college from the eligibility calculation, (2) the possibility for an SAI to be a negative number, and (3) the inclusion of the adjusted value of family farms and small businesses.[ii]

Prior to the 2024-25 Award Year, family farms and small businesses with fewer than 100 employees were specifically excluded from the definition of assets under 20 U.S.C.1087vv(f)(2)(B-C). The FAFSA Simplification Act removed those two exceptions from the term “assets.”[iii] As a result, the value of the assets of family farms and small businesses are now considered assets that are available to help pay for college.

Overview of SAI Calculation for Farm Families

The basic formula to determine SAI is parents’ contribution + student’s contribution from income + student’s contribution from assets.[iv]   Parents’ contribution is determined by taking their available income + assets.[v] There is a specific formula for calculating available income. In the calculation there are offsets and allowances, such as the Income Protection Allowance and payments received from Federal Work Study.

Asset Calculation

Except for the value of the family home,[vi] parents’ assets are considered available to be contributed towards college expenses. This includes checking and savings accounts, money market funds, investments, trusts, stocks, bonds, securities, qualified education benefits, and child support payments.[vii] Further, the net value of real estate, vacation homes, and income producing property is included. Net value is calculated by taking the fair market value of the asset at the time of application and subtracting “any outstanding liabilities or indebtedness against the assets.”[viii]

The value of the farm for FAFSA purposes is a two-step calculation. The first step is to calculate the net value of the farm. The formula to determine net value is fair market value of all farm assets, including real estate, minus any liabilities that use the farm assets as collateral. For example, the remaining balance of a farm ownership loan would be subtracted from the fair market value of the land to calculate the net value of the land. The fair market value and value of any liability is determined at the time of the application.

Farm assets include the land used for farming, buildings associated with the farm, livestock, unharvested and harvested crops, and machinery actively used in agricultural or commercial activities.[ix] Crops grown for consumption by the student or their immediate family are not considered a farm asset. Additionally, the value of the family home acreage is not included as a farm asset. The acreage includes all land adjacent to the home that is not being used for farming or other commercial activities.[x] Additionally, structures adjacent to the home that are not being used for farming or other commercial activities will also not be a countable asset. An applying family can use the assessed value of the land or home as the fair market value.[xi]

The second step is to adjust the value according to a table found in § 478(c).The values in this table are adjusted every year in accordance with a formula based on changes to the Consumer Price Index.[xii] For the upcoming application year, the adjustment table is:

If the net worth of a farm is           

Then the adjusted net worth is

Less than $1


$1 to $140,000

40% of the net worth of the farm

$140,001 to $415,000

$56,000 + 50% of the net worth over $140,000

$415,001 to $695,500

$193,500 + 60% of the net worth over $415,000

$695,501 or more

$361,500 + 100% of the net worth over $695,000

Situations Exempt from Asset Reporting

Not every farm family will need to include the adjusted net value of their farm for the SAI calculation. There are three scenarios where the FAFSA applicant is exempt from asset reporting.[xiii] If a student or one of their parents are in any of the three situations, then the adjusted net value of the farm will not be needed to have a complete FAFSA application.

The first situation is when the student qualifies for a Maximum Pell Grant. A student will qualify for a Maximum Pell Grant under three circumstances. One, their parent or parents do not need to file a tax return. This determination is based upon tax filing status.[xiv]  The other two circumstances depend on whether there are two parents or one parent. If there is one parent, then the adjusted gross income (AGI) of the parent must be less than or equal to 225% of the federal poverty guideline for their state of residence. If there are two parents, then AGI must be equal to or less than 175%. The federal poverty guideline amounts are available online through the Department of Health and Human Services.[xv]  

The second situation occurs when the parents’ combined adjusted gross income is less than $60,000 and they do not file a Schedule F.[xvi] The requirement that no Schedule F is filed makes it unlikely that a farm family will meet the second exemption.

The third exemption is that the student or one of the student’s parents received benefits from Supplemental Security Income (SSI), SNAP, Temporary Assistance for Needy Families (TANF), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Medicaid, or Title 8 housing.[xvii]

Independent Students

The two sections above review the FAFSA application criteria for students who qualify as dependent students. A dependent student is anyone who does not qualify to be an “independent student” under the Higher Education Act (HEA).[xviii]  A general rule is that an independent student can no longer qualify as dependent for federal tax purposes. Also, graduate and professional students are automatically independent students.[xix]

Independent students do not need to disclose their parents’ assets and income on the FAFSA.[xx] However, if they have any ownership in the farm or business, the adjusted net value of the farm or business will be used to calculate what aid they are eligible for unless they are exempt from asset reporting. The same three situations described above are used to determine if they are exempt, but there are different thresholds and criteria for whether the student is exempt from asset reporting. If they are not exempt, then the adjusted net value of the farm or business is calculated in the exact same manner, using the same table.

Legislative Fixes

On February 28, 2023, a bill was introduced in the House of Representatives that would reinstate the farm and small business exemption.[xxi] It was referred to the House Education and the Workforce committee. The bill is called the Family Farm and Small Business Exemption Act.  On April 20, 2023, the same bill was introduced into the Senate.[xxii]It was referred to the Senate Health, Education, Labor, and Pensions committee. Neither committee has moved on the bill since its referral.

Additional Resources

To review all the financial information the FAFSA form will require and to get an estimate of how SAI will be determined for you or your family, please see the link page to the most recent SAI and Pell Grant Eligibility Guide for 2024-25 -

There is also a Q&A page about this process available from the Department of Education.

[i] The FAFSA Simplification Act: Policy Simulations and Implications for State Aid Programs, Iowa College Aid. Found via link at:
[ii] (GEN-23-11) FAFSA Simplification Act Changes for Implementation in 2024-25, Dept. of Ed., Aug. 24, 2023.
[iii] Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (2020), Div. FF, Title VII, pg. 134, stat. 3163. Now, Higher Education Act § 480(f) (effective July 1, 2024).
[iv] Higher Education Act § 475 (effective July 1, 2024).
[vi] Higher Education Act § 480(f)(2) (effective July 1, 2024).
[vii] Higher Education Act § 480(f) (effective July 1, 2024).
[viii] Higher Education Act § 480(g) (effective July 1, 2024).
[ix] Current Net Worth of Businesses and Investment Farms, FAFSA Help Page.
[x] SAI-Q4 on  FAFSA Simplification Questions and Answers.
[xi] Id.
[xii] Higher Education Act § 478(c)(2) (effective July 1, 2024).
[xiii] Higher Education Act § 479(b)(2)(A-B,D) (effective July 1, 2024). See also, 2024-25 DRAFT Pell Eligibility and SAI guide, Aug. 24, 2023.‑11/202425DraftStudentAidIndexSAIandPellGrantEligibilityGuide.pdf.
[xv] Website also has a link to a chart with percentages of federal poverty guideline.
[xvi] Higher Education Act § 479(b)(2)(B) (effective July 1, 2024).
[xvii] Higher Education Act § 479(b)(4)(H) (effective July 1, 2024).
[xviii] Higher Education Act § 480(d) (effective July 1, 2024).
[xix] Higher Education Act § 480(d)(5) (effective July 1, 2024).
[xx] Higher Education Act §§ 476-77 (effective July 1, 2024).
[xxi] H.R.1250 — 118th Congress (2023-2024). Available at:
[xxii] S.1237 — 118th Congress (2023-2024). Available at:

National Agricultural Law Center Logo The Center for Agricultural Law and Taxation is a partner of the National Agricultural Law Center (NALC) at the University of Arkansas System Division of Agriculture, which serves as the nation’s leading source of agricultural and food law research and information. This material is provided as part of that partnership and is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.