Exempts family farms and small businesses from being considered as assets when calculating eligibility for federal financial aid.
Joni Ernst
Senator
IA
The "Family Farm and Small Business Exemption Act" exempts family farms and small businesses from being considered as assets when calculating eligibility for federal financial aid under the Higher Education Act of 1965. This exemption applies to family farms where the family resides and small businesses with 100 or fewer employees that the family owns and controls. These changes will apply to financial aid award years starting after the enactment of this Act.
Family Farm and Small Business Aid Exemption Passes: College Just Got More Affordable
The "Family Farm and Small Business Exemption Act" just changed the game for families applying for federal student aid. Starting now, the value of a family farm or a small business with 100 or fewer employees won't count against you when you're filling out the FAFSA.
Unpacking the Aid Changes
This bill directly amends the Higher Education Act of 1965, specifically targeting how assets are calculated in financial aid eligibility. Before this, owning a farm or a small business could significantly reduce the aid a student could get, because those assets were counted the same as cash in the bank. Now, if you live on the farm, it's exempt. If your family owns and runs a business with 100 or fewer full-time (or equivalent) employees, that's exempt too. (SEC. 2)
Real-World Rollout
So, what does this look like in practice? Imagine a family in Iowa running a 200-acre farm. Previously, the farm's value would have been factored into their assets, potentially pushing them out of the running for a lot of federal aid. Now, that farm doesn’t count against them. Same goes for a family in a city, who owns a small restaurant or a local construction company. If they meet the employee cap, the business value is off the table for FAFSA.
Who Benefits, and How?
This is a big win for families who've poured their savings into a farm or a business. It means their kids might qualify for more grants and loans, making college more affordable. It could also encourage families to hold onto these businesses, knowing they won't be penalized when it's time for college applications.
Keeping It Real: Potential Challenges
Of course, there's always the chance some folks might try to game the system. Think: transferring assets into a "family business" just to get the exemption. The Department of Education will need to keep a close eye on this to make sure the benefits go to the families who genuinely need them. But overall, this bill is a solid step toward leveling the playing field for students from family farms and small businesses.