Q: What’s wrong with the changes made to the federal student aid program?
A: Iowans across the state are preparing for the annual rite of passage as seniors prepare to graduate from high school and look ahead to the next chapter in their lives. It’s a time of celebration to take stock of one’s achievements and an important moment to set goals for the future. Climbing the ladder of opportunity may include entering the workforce, seeking higher education in an apprenticeship, trade school or four-year institution, joining the military or volunteer service. A smaller pool of kids in America belongs to a shrinking demographic, the family farmer. Only two percent of the U.S. population works on farms and ranches that grow the commodities that help feed the 98 percent of Americans who earn their living elsewhere. As a lifelong family farmer, I know that farming is a way of life central to Rural America and existential to our nation’s food security. And food security is national security. As a U.S. Senator, I bring the values and views of Rural America to the policymaking tables on a range of issues, from taxes, to trade, agriculture, immigration, infrastructure, banking, crime, education and more. For example, as work continues on renewing the Farm Bill, I am pushing to strengthen the farm safety net for our producers and restore fiscal discipline for the taxpayer. As a former chairman of the tax-writing Senate Finance Committee, I’ve led efforts to kill the death tax and stop efforts to eliminate step-up in basis that would have a devastating impact on Americans passing on the family farm from one generation to the next.
Most recently, there’s a misguided education policy that would harm farm kids who apply for federal student aid. The FAFSA Simplification Act was meant to simplify the financial aid process for students and families. Instead, the implementation of the revised Free Application for Federal Student Aid (FAFSA) may pull the rug out underneath students whose families operate a farm or small business.
Q: How does the new FAFSA formula unfairly treat family farmers?
A: The new formula effectively creates a financial penalty for farm assets. As Iowa farm families are well aware, investments in farm machinery, land and inputs swallow up the cash flow from one season to the next. Gross receipts are used to manage debt, finance next year’s crop, pay taxes and keep a roof over the family’s heads. From one season to the next, there’s typically a huge disparity between net farm income and gross farm income and a wide variation in levels of debt, influenced by natural disasters, cyclical markets and market-ready herds. Therein lies the rub with the revamped FAFSA guidelines.
According to a recent analysis by Iowa College Aid, a farm family with a parent-adjusted gross income (AGI) of $60,000 currently receives an expected family contribution of $7,246 per year. Specifically, the current FAFSA excludes the net worth of small businesses and family farms from asset calculations. This number is used to determine eligibility for financial aid, including Pell Grants. The revamped guidelines would change how farm assets and income are measured, effectively putting farm families in a financial pickle. Borrowing against or selling off these assets would harm the financial health of the business. Indeed, selling off a tractor or parcel of land to help send one’s child off to college would hamstring a farm’s productivity. Consider that under the new formula guidelines, a farm with a net worth of $1 million would be expected to contribute more than $41,000 annually—even if the family’s income is only $60,000. Counting a farm’s assets could cut many farm kids out of financial assistance altogether and prevent some from pursuing an advanced degree. I’ve teamed up with Sens. Joni Ernst and Jon Tester on a bipartisan effort to restore fairness to federal student aid programs. What’s more, I’ve shared the feedback that I’m hearing from Iowa colleges and farm families with the Biden administration to ensure these concerns are heard loud and clear.
