This post is based on our recent MyCAP training for parents of high school juniors, sophomores, and freshmen. Watch the full training here.
The Mistake Most Families Make
Here’s what typically happens: Families spend the second half junior year and the first half of senior year touring campuses, building college lists, and watching their kids fall in love with schools. Then, in the fall of senior year, they submit the FAFSA and see a number they’ve never encountered before.
Their Student Aid Index.
By then, it’s too late to build a strategy around it.
After 20 years of helping families navigate college costs, I can tell you this pattern repeats constantly. Families wait until the emotional decisions are made to understand the financial reality. Not because they’re careless, but because the system is designed that way.
What Your Student Aid Index Actually Means
Your Student Aid Index (SAI) is a number calculated from your family’s financial information – income, assets, investments, and for many private schools, home equity.
The formula colleges use is pretty straightforward:
Cost of Attendance – Student Aid Index = Your Eligibility for Need-Based Aid
If your SAI is lower than a school’s cost of attendance, you demonstrate financial need. If it’s higher, you typically won’t qualify for need-based aid at that school.
But here’s what matters: knowing this number early tells you which strategy to use.
Families with lower SAIs should focus on schools that offer strong need-based aid. Families with higher SAIs should target schools generous with merit scholarships. Both paths can lead to affordable outcomes, but the approach is completely different.
The Tax Year That’s Already Counting
This catches everyone off guard.
Financial aid doesn’t look at your current tax year. It uses something called “prior-prior year” – a two-year lookback.
If your student is a current junior (Class of 2027), the tax year that matters for their college freshman financial aid just ended. Colleges will evaluate your 2025 tax return.
Sophomores, you’re in your base income year right now. What happens financially in 2026 directly impacts your freshman aid eligibility.
Freshmen parents, you’re one year out. 2027 becomes your base year.
This matters because certain financial moves can inadvertently inflate your SAI. Large IRA distributions, significant capital gains, property sales – these can all impact your aid eligibility if they happen during your base year.
I won’t tell you to avoid legitimate financial decisions just for aid purposes. But you should at least know what year the colleges are watching.
Why the $90,000 School Can Cost Less Than Your State University
Let me show you something that surprises people every single time.
We looked at a family from New Jersey with $150,000 in adjusted gross income, about $50,000 in savings, and $100,000 in home equity. Their federal SAI came out around $40,000.
At Rutgers (their in-state option), the cost is about $40,000 per year. No need-based financial aid expected. They can plan on paying full price.
At Harvard, with a sticker price over $90,000, this same family would pay around $10,000 per year.
This isn’t hypothetical. This is what the numbers show when you run them through MyCAP.
Why? Because Harvard meets 100% of demonstrated need with grants. Rutgers, like most public universities, doesn’t have the endowment to do that. For this family, the Ivy League school is genuinely more affordable than the state school.
This family may have to borrow a total of $9,000 for four years at Harvard. At Rutgers, it would be about $114,000.
Same family. Same student. Completely different financial outcomes.
When Your SAI Is “Too High”
If your Student Aid Index exceeds the cost of attendance at every school your student is interested in, that doesn’t mean you’re stuck paying full price.
It means you shift to a merit-based strategy.
Merit scholarships don’t care about your finances. They care about GPA, test scores, and what the school wants in its incoming class. Many excellent colleges use merit aid as their primary enrollment strategy – it’s how they compete for strong students.
In MyCAP, you can filter specifically for schools likely to offer your student merit aid (AKA scholarships.) Let’s look at Gettysburg College where the current cost of attendance is about $92,000 a year. A student with a 3.6 GPA and 1300 SAT could receive a $46,000 annual merit scholarship based solely on their academic accomplishments. This could bring the net cost down to around $25,000 – regardless of family income.
The point isn’t that everyone should go to Gettysburg. The point is that knowing your SAI early helps you find schools where the actual price matches what you can afford.
How to Calculate Your SAI Right Now
You don’t have to wait until senior year to see this number.
MyCAP calculates both your federal SAI (calculated when you submit your FAFSA) and your institutional SAI (calculated for schools that use the CSS Profile) as soon as you fill out your MyCAP profile.
A few things to get right when you’re entering data:
Don’t include retirement accounts. Only non-retirement assets count toward your SAI calculation. Your 401(k), IRA, and other qualified accounts are excluded.
Report 529s as parent assets, not student assets. This is a common mistake. Even though the money is earmarked for your student’s education, 529 plans are parent-owned. That matters because student assets are assessed at 20-25% while parent assets are assessed at just 5.6%.
Understand the home equity difference. Colleges and universities that only use the FAFSA for financial aid, don’t use the equity in your primary residence in their calculations. Some private schools do. That’s one of the reasons your Federal SAI (FAFSA) and Institutional SAI (CSS Profile) numbers could be different. You’ll see both of these numbers at the top of your MyCAP dashboard.
What to Do With This Information
Once you know your SAI, you can search differently.
Instead of building a list based on vague ideas about fit or rankings, you can filter for schools that are actually going to work financially for your specific family.
In MyCAP’s Advanced Search, you can set parameters like “show me ranked schools within 200 miles that will cost our family less than $25,000 per year.”
Or “show me schools where my student is likely to receive merit scholarships.”
Or “rank these results by which schools are strongest with need-based aid.”
The software is doing what we would do one-on-one with families, but making it accessible whether you’re a need-based family, a merit-focused family, or somewhere in between.
The Earlier You Start, The More Options You Have
I have an eighth grader. Even after doing this work for 20 years, I don’t want to think about him leaving for college yet.
But I’ve also seen what happens when families wait.
They fall in love with schools that were never going to be financially workable. They submit applications to reach schools without understanding aid probability. They get to April of senior year and realize the affordable options are no longer options for the fall semester.
Starting early – sophomore or even freshman year – isn’t about putting pressure on your student. It’s about giving yourself the information you need to build a realistic strategy before emotions take over.
The Bottom Line
Your Student Aid Index is not a verdict. It’s a starting point.
It tells you whether to focus on need-based aid or merit scholarships. It helps you understand which schools are likely to be affordable before your kid’s heart is set on one particular campus. It gives you a number to build your strategy around instead of guessing.
And the earlier you know it, the better decisions you can make.
If you want to calculate your SAI and see what colleges might actually cost your family, you can create a free MyCAP account. The basic version gives you access to search tools and cost estimates for three schools. Premium members get award letter comparisons, loan modeling, add unlimited schools to your dashboard, and receive ongoing support throughout the process.
We’ll be running these trainings regularly. Next time we’ll dig into merit scholarship strategy and how to identify schools where your student’s profile makes them a strong candidate for non-need-based aid.
Bill Rabbitt is co-founder of College Aid Pro and has been helping families navigate college costs for over 20 years. He’s also a stressed parent of an eighth grader who really needs to start thinking about this stuff.
