The Free Application for Federal Student Aid (FAFSA) is required for Federal aid eligibility consideration. The One Big Beautiful Bill Act (H.R.1), signed into law on July 4, 2025, introduces significant changes to the 2026-2027 FAFSA application and Pell Grants. These updates will take effect on July 1, 2026.
FAFSA & Financial Aid Eligibility Changes
Family farms and family-owned small businesses will no longer be counted as assets (reverting to rules before FAFSA Simplification).
Family Farm - A family farm on which the family resides
Small Business - A family-controlled small business with not more than 100 full-time or full-time equivalent employees
Family-owned commercial fisheries are now also exempt from asset reporting. This includes fishing vessels and permits owned and controlled by the family.
Foreign Income Pell Grant calculation formula is modified to incorporate foreign earned income for Pell Grant eligibility purposes.
Pell Grant & High Student Aid Index (SAI)
Students with a Student Aid Index greater than twice the maximum Pell Grant amount will be ineligible for the Pell Grant. Example: If the max Pell Grant is $7,395, students with an SAI over $14,790 will not qualify.
This does not apply to special Pell Grant rules (formerly known as the Iraq Afghanistan Service Grant [IASG] and the Children of Fallen Heroes [CFH] Scholarship).
Pell Grant & Scholarships
Students whose Cost of Attendance (COA) is fully covered by non-federal scholarships and grants will be ineligible for a Federal Pell Grant. Example: A Pell-eligible student with a scholarship or state grant covering the full Cost of Attendance will no longer receive both the scholarship and the Pell Grant.