FAFSA Changed Again For 2027. Some Families Will Get Less Aid Without Ever Knowing Why.
Co-Founder and Chief Data Scientist
The 2027-28 FAFSA, expected to open by October 1, 2026, carries forward a rule that didn't exist before the current award cycle: any applicant whose Student Aid Index is equal to or greater than twice the maximum Federal Pell Grant award is now automatically ineligible for a Pell Grant, no matter how the rest of their finances look. The rule comes from the One Big Beautiful Bill Act, Public Law 119-21, signed July 4, 2025, and first applied to the 2026-27 FAFSA cycle. For 2026-27, that cutoff sits at $14,790, twice the $7,395 maximum Pell award confirmed by the Department of Education in a January 2026 letter to colleges. The 2027-28 Student Aid Index and Pell Grant Eligibility Guide, published by Federal Student Aid in June 2026, keeps this same cliff in place for the coming cycle, with the exact dollar threshold to follow once Congress sets the 2027-28 maximum award.
Before this rule, a family with a high Student Aid Index could still sometimes qualify for the $740 minimum Pell Grant. Now they can't, and nothing on the FAFSA form itself flags that a family has crossed this specific line.
Small Business And Farm Owners Gain Ground
Not every change under the new law cuts aid. Starting with the 2026-27 cycle, the net worth of a family-owned business with 100 or fewer full-time employees, a farm the family lives on, and a family-run commercial fishing operation no longer counts as a reportable asset on the FAFSA at all, according to Federal Student Aid's official guidance on the law. Previously, these businesses and farms were assessed like any other investment, which could inflate a family's Student Aid Index and shrink their aid package even when the business generated little liquid income. For families who qualify, this change lowers their SAI and can restore or increase eligibility for need-based aid, including Pell Grants. This is the rare FAFSA change that only helps.
The Line Item Most Families Won't Notice
A separate, smaller change works in the opposite direction. Under the new rules, any foreign earned income exclusion a tax filer claims is now added back into adjusted gross income specifically when the FAFSA formula checks eligibility for an automatic maximum Pell Grant, according to Federal Student Aid guidance and the 2027-28 eligibility guide's own worksheets, which define Pell-qualifying income as "AGI plus Foreign Income Exclusion Amount" throughout. Previously, that exclusion sat outside the calculation, meaning some families with income earned abroad looked poorer on paper than the new formula now shows them to be. A family that qualified for an automatic maximum Pell Grant under the old rule can lose that status under the new one without any change in their actual income, and without a clear prompt on the form itself explaining that a single line, reported the same way as always, is now read differently.
What's Different, And What Isn't, Going Into 2027-28
The 2027-28 cycle doesn't introduce a new formula from scratch; it continues the framework the OBBBA put in place for 2026-27, with updated dollar figures for income protection allowances, asset protection tables and poverty guidelines pulled from more recent government data, including the April 2026 Consumer Price Index. The maximum and minimum Pell Grant award amounts for 2027-28 have not yet been set. Federal Student Aid says they'll be announced in early 2027, meaning families completing the form this fall won't know the exact dollar value of their eventual award, or the exact SAI cutoff that disqualifies them from Pell entirely, until months after they've submitted their FAFSA and, in many cases, committed to a school.
The Deadlines That Actually Decide How Much A Family Gets
The federal deadline for the 2027-28 FAFSA is expected to be June 30, 2028, nearly two years after the form opens. That date is almost irrelevant to most families' actual outcomes. State grant programs and individual colleges set their own, far earlier priority deadlines, and much of that aid, unlike the federal Pell Grant, is awarded on a first-come, first-served basis until the money runs out. A family that waits until spring to file, even well before the federal deadline, can lose access to state or institutional aid that has nothing to do with their SAI and everything to do with when they hit submit.
