Published: December 3, 2025
Your household income hasn’t moved in three years.
You are still earning $85,000, the same amount you made when your oldest started college.
Back then, you received $12,000 in need-based grants.
This year, with your second child enrolling, you expected more help because you are paying two tuitions at the same time.
Instead, the award letter arrived with only $3,000 in grants.
Same income. Same family situation. $9,000 less in aid.
You didn’t get a raise. The rules changed under you.
The Sibling Discount That Disappeared
Beginning with the 2024-25 aid year, the Student Aid Index (SAI) no longer divides your expected contribution by the number of enrolled students. This change comes from the FAFSA Simplification Act and is documented on StudentAid.gov.
This was not a small update. It reshaped how families with multiple college students are treated.
How the Old Formula Worked
Previously, your Expected Family Contribution (EFC) was divided by the number of enrolled students.
If your EFC was $30,000 and you had two children in college, each student’s calculation assessed your contribution as $15,000.
That lower figure increased grant eligibility.
The logic reflected real life. A family supporting two students has less available per student than a family supporting only one.
What Changed in 2024
The new formula removed the division entirely. Your $30,000 contribution now applies to each student individually, even if you are paying for two.
Two students. Two full contributions.
StudentAid.gov and congressional summaries confirm that this change was intentional.
The Middle-Class Squeeze Behind the Numbers
Federal data from the National Center for Education Statistics shows that a significant share of undergraduates come from households with multiple college-age children.
All of those families just lost an aid benefit previous generations relied on.
The Income Range Hit Hardest
Families earning between $60,000 and $100,000 are seeing reduced Pell Grant eligibility and declines in need-based institutional aid. This pattern appears across multiple university financial aid updates published after the formula shift.
Knowing the maximum Pell Grant for 2025–26 helps families understand how much federal grant aid is now realistically available after the sibling discount was removed.
- A family making $150,000 with two students may lose $15,000 to $30,000 in combined annual grants.
- A family earning $75,000 may see Pell eligibility shrink or disappear.
The rules moved. Families didn’t.
The Small Business Shock Inside the New Formula
The Student Aid Index now requires families to report the net value of all businesses and farms. Under the old FAFSA, small family businesses with fewer than 100 employees were excluded.
StudentAid.gov confirms that exclusion has been removed.
What This Means for Self-Employed Families
If your business is valued at $200,000 but produces $60,000 a year in income, the old formula ignored that asset.
The new formula counts all of it.
Your income didn’t rise. Your cash flow didn’t change. Yet your Student Aid Index jumps because the formula assumes you can liquidate your business to pay tuition.
Why These Changes Happened
The FAFSA Simplification Act was promoted as a way to make aid easier to access. Simpler questions. More Pell eligibility for low-income families. A faster form.
For many low-income and first-generation students, those benefits are real.
But simplification also meant removing variables that required verification. The sibling discount was one of them. The business exclusion was another.
The form became simpler. Middle-class families became the tradeoff.
Who Benefits and Who Doesn’t
Families with one child in college and straightforward W-2 income often saw aid improve.
Families with multiple students or business assets often saw the opposite.
This is not about fairness. It is redistribution.
Why Schools Aren’t Fixing the Gap
A few well-financed private colleges have introduced institutional awards to offset the lost sibling discount.
Most institutions can’t. Public universities depend heavily on federal formulas and state budgets, giving them limited room to compensate when federal aid tightens.
The Appeal Process Is Real But Limited
Financial aid offices encourage families to appeal. However, parents navigating the 2025 FAFSA meltdown have found the process increasingly rigid.
The Department of Education defines special circumstances narrowly: Job loss. Divorce. Death of a parent. Major medical expenses.
Multiple students enrolled does not qualify because the rule change was deliberate.
You can appeal, but without an additional qualifying factor, most awards will remain unchanged.
Strategies That No Longer Work
Families once timed children’s educational spacing to maximize overlap years for aid. Those strategies are now irrelevant.
Two students in college no longer triggers additional help.
One Strategy That Still Works
Retirement contributions still reduce Adjusted Gross Income (AGI), the starting point for aid calculations. While families are also exploring scholarship stacking tricks to bridge the gap, tax planning remains the most reliable lever.
Increasing retirement contributions by $10,000 can reduce your Student Aid Index by $5,000 to $7,000 depending on income. That may raise grant eligibility by $2,000 to $4,000 per year.
It will not replace the sibling discount, but it remains one of the few practical levers families still control.
The Brutal Reality for Families Already Midstream
If one child is partway through college and the second is just starting, you cannot rewrite your finances to undo the new formula.
You cannot retroactively change income from two years ago. You cannot liquidate retirement accounts without penalties. You cannot undo congressional rulemaking.
Families are switching from private to public colleges. Encouraging students to graduate in three years. Taking larger Parent PLUS loans and carrying debt into their fifties and sixties. Many are anxiously watching 2026 student loan repayment changes to see if relief is coming.
Why This Won’t Be Fixed Soon
Changing federal aid formulas requires congressional action. The previous overhaul took years.
Even if lawmakers reversed the sibling decision immediately, implementation would likely not take effect until 2027.
By then, an entire cohort will have graduated under the tighter rules.
What Families Can Still Do
If you have not yet filed for an upcoming academic year, focus on what can still be controlled.
Lower taxable income. Increase retirement contributions. Pay down consumer debt. Understand which assets are reportable. Some families are even considering workforce Pell Grants for trade schools as a more cost-effective path.
FAFSA uses income from two years prior. Understanding which year counts for your child’s start year is essential.
The Fairness Question No One Wants to Address
A family earning $85,000 with one student is treated the same as a family earning $85,000 with three.
Both have the same Student Aid Index. Both are expected to contribute the same amount per student.
Real life does not work like that.
This is not a mistake. It is policy.
What This Means for Families Planning Ahead
If you have younger children, assume no sibling benefit will exist by the time they enroll.
Save accordingly. Plan accordingly.
If you are already facing these changes, optimize what remains under your control. Ask schools directly whether they recognize multiple enrollments in their institutional aid decisions.
School Aid Specialists is an independent news platform providing accurate information about federal student aid programs. We are not affiliated with the U.S. Department of Education. Consult StudentAid.gov or a qualified financial advisor for individualized guidance.
Sarah Johnson is an education policy researcher and student-aid specialist who writes clear, practical guides on financial assistance programs, grants, and career opportunities. She focuses on simplifying complex information for parents, students, and families.
