Iowa lawmaker’s bill to exempt family farms from FAFSA change gains ground

Support is growing for U.S. Sen. Joni Ernst’s (R-IA) bipartisan Family Farm and Small Business Exemption Act, which would restore an exemption for certain family farms and small businesses under the Free Application for Federal Student Aid (FAFSA).

“As students across the country filled up their backpacks and picked up their pencils to head back to school this fall, too many families were left out of accessing financial aid,” Sen. Ernst said recently.

The bill, S. 1237, has received endorsements from 24 education and agriculture groups that oppose a new FAFSA asset calculation that changed a farm family’s expected annual contribution to their child’s education from $7,626 to $41,056.

If enacted, Ernst’s bill would reverse those changes, which she said could end up reducing or even eliminating access to need-based student aid for farm families.

“There can be no more delay for fixing the Biden-Harris FAFSA fiasco for next year,” said Ernst. “My solution would support farm families trying to responsibly finance their child’s education, instead of forcing them to sell off the farm.”

A new Government Accountability Office (GAO) report revealed that it will take the U.S. Department of Education well into 2027 to complete the implementation of the new FAFSA. The Sept. 24 report revealed major errors made during the so-called “simplified” FAFSA rollout that led to a 9 percent decrease in 2024 FAFSA submissions for high school seniors, among other issues.

“On the heels of a year where FAFSA was neither better nor simpler, Iowa families are bracing for more delays, disruptions, and unintended consequences as a result of the 25-26 financial aid processing season,” said Rob Miller, president of Iowa College Access Network. “Federal student aid and Congress have failed to address key issues — such as how assets related to small business ownership and family farms are counted on the FAFSA — leaving many hard-working Iowans unsure if they’ll have the resources needed to pursue education and training after high school.”

Jim Kersten, vice president of government affairs at Iowa Central Community College in Fort Dodge, Iowa, said that students decided not to attend the college this year due to the newly imposed family asset in the Student Aid Index used for financial aid.

“If they have to take out loans for their education, many of our students will go right into the workplace or start working on their family farm instead of pursuing a degree,” said Kersten. “We faced many challenges following these changes, including FAFSA completion delays, students not having FAFSA results in time to make their college decision, schools unable to make financial aid offers, and FAFSA corrections not made until August.”

In addition, Kersten said some parents with multiple children reached out to ask why their aid was so different from what their older children had received in years past.

“Their income was basically the same, but they no longer qualified for need-based aid, which includes work-study jobs and subsidized loan funds,” he said. “I am so pleased Sen. Ernst is working… to get this important legislation approved as soon as possible.”

Dustin Sherer, director of government affairs at the American Farm Bureau Federation (AFBF), pointed out that this is the second straight year of declining farm income, which highlights the problems with changes that were made to asset calculations in the FAFSA Simplification Act.

“There are land rich, cash poor farmers who made no money this past year, yet their children won’t qualify for federal financial student aid,” said Sherer. “AFBF appreciates Sen. Ernst’s focus on trying to correct this problem.”

The Farm Credit Council also commended Sen. Ernst for her bipartisan work to rectify what it calls “an unintended consequence” of prior legislation impacting agricultural families.

“It’s essential that we provide our farm and ranch families with the financial aid and resources they need to support the next generation of agricultural leaders,” said Todd Van Hoose, the council’s president and CEO.

Ernst’s bill, which she sponsored in April 2023 with six original cosponsors, including U.S. Sen. Jon Tester (D-MT), would apply to the net worth of a family farm on which the family resides, or a small business with not more than 100 full-time or full-time equivalent employees that is owned and controlled by the family.

Prior to recent changes made to FAFSA, the net worth of these family farms and small businesses were excluded as assets when calculating a student’s financial need to determine federal student aid eligibility. Beginning with the 2024-2025 academic year, the net worth of these farms and businesses will be treated as an asset and therefore included in the calculation. This bill restores the exemption to exclude such net worth from the calculation, according to the congressional record bill summary.

“Class is back in session,” Ernst said, “and the Department of Education must turn their homework in on time so students don’t miss out due to bureaucratic bungling.”

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