The Department of Education has outlined specifics on how federal budget reconciliation will impact the FAFSA form and Pell Grant eligibility.
In an August 15 Electronic Announcement, the Department provided information about the key changes to the 2026-27 FAFSA and Federal Pell Grant eligibility that were part of the Budget Reconciliation Bill signed into law on July 4, 2025.
2026-27 FAFSA form changes
The Student Aid Index (SAI) asset calculation will exclude the following from the net worth of business and farms and should not be reported as assets on the FAFSA:
- The net worth of a family-owned business with 100 or fewer full-time (or full-time equivalent) employees.
- The net worth of a farm on which the family resides.
- The net worth of a commercial fishing business and related expenses, owned and controlled by a family.
The changes will be implemented when the 2026-27 FAFSA form officially launches by October 1 and are reflected in the 2026-27 FAFSA form that is being used for beta testing.
Federal Pell Grant eligibility changes
Pell Grant eligibility changes starting with the 2026-27 award year include:
- The foreign earned income exclusion amount reported on the FAFSA form will be added to the adjusted gross income (AGI) when determining Pell Grant eligibility.
- An applicant with an SAI equal to or greater than twice the maximum Pell Grant award amount for the award year is ineligible for a Pell Grant.
- For the 2026–27 award year, this threshold is $14,790.
- Note, this limit does not apply to students who qualify for a Pell Grant under the Special Rule (dependents of certain deceased servicemembers and Public Safety Officers).
The Pell Grant eligibility changes will be implemented with the official launch of the 2026–27 FAFSA form by October 1.
Beta testing participants impacted by the Pell Gant eligibility changes will have their application reprocessed by the Department after the changes are implemented and do not need to resubmit their 2026-27 FAFSA.
Questions about the FAFSA form changes can be directed to the Federal Student Aid Information Center at 1-800-433-3243 (1-800-4 FED AID).
Questions about FAFSA processing should be directed to the FPS Help Desk at 1-800-330-5947 or by email at support@fps.ed.gov.
