April 21, 2023

Ricketts among sponsors of bill to change how farms, businesses are considered on FAFSA

Lincoln Journal Star

A handful of U.S. senators including Nebraska’s Sen. Pete Ricketts are pushing to change how family farms and small businesses are considered as part of the federal student aid formula.

On Thursday, Sen. Joni Ernst of Iowa, Sen. Jon Tester of Montana and five others introduced the Family Farm and Small Business Exemption Act to reverse recent changes made to the Free Application for Federal Student Aid.

The bill takes aim at a 2020 change to FAFSA passed by Congress and signed into law by former President Donald Trump that required families with an adjusted gross income of $60,000 to report the net worth of their family farms or businesses with fewer than 100 employees in their application for student aid.

Under the current FAFSA formula, a family with that amount of reported income would be expected to contribute roughly $7,600 to their child’s college education each year, a study by the Iowa Student Aid Commission found.

If that same family lived on a farm with a net worth of $1 million — an asset opponents of the change say is not something that can be easily liquidated — the new formula would increase the expected family contribution to more than $41,000 annually.

Increasing the expected family contribution, which is now known as the Student Aid Index in the new formula, could potentially make the student ineligible for federal and state aid programs, which in turn could force students and the families to rely more upon loans.

The change, which is scheduled to go into effect later this year, has raised concerns among state and federal lawmakers, as well as leaders in higher education, which said it could force some college-going students, particularly those from rural areas, to withdraw.

Forty-five Nebraska state senators signed onto a March 31 letter from Education Committee Chairman Sen. Dave Murman of Glenvil asking the U.S. Department of Education and members of Nebraska’s federal delegation to adjust the formula.

The legislation is backed by the National Association of State Student Grant and Aid Programs, which said it keeps pathways “to student financial aid open for children of hardworking family farmers and small business owners.”
Ricketts said the earlier change to FAFSA was “just another example of out-of-touch” federal mandates that ignored the reality for many living in rural states like Nebraska.

“Excluding farm families from federal student loan assistance is unacceptable,” Ricketts said. “I’m proud to support Sen. Ernst’s bill to make sure agriculture families that need federal financial aid can still access it.”

Ernst said parents should not be forced to leverage their businesses to access financial student aid.

“Small businesses and family farms are vital to rural America, and this legislation ensures the next generation will have the opportunity to pursue higher education should they choose to do so,” she said.


Article Linked Here.