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What Actually Changed on This Year's FAFSA — and Who Just Lost Pell Grant Eligibility

The 2026-27 form stops counting family farms and small businesses as assets, but a new income ceiling cuts off Pell Grants entirely for some applicants for the first time.

Meridians Life Desk

Published 21 August 2026 · Updated 21 August 2026 · 5 min read

What Actually Changed on This Year's FAFSA — and Who Just Lost Pell Grant EligibilityEducation
Photo: Photo by RDNE Stock project / Pexels (Pexels License — free to use, no attribution legally required (credited above as good practice).)

The short answer

  • The 2026-27 FAFSA launched on time, October 1, 2025 — the first on-schedule launch in three years under a new Congressional mandate.
  • Family-owned businesses with 100 or fewer employees, family farms where the household lives, and family commercial fishing businesses no longer count as assets on the form.
  • A new hard income ceiling makes applicants ineligible for a Pell Grant if their Student Aid Index is at or above twice the maximum award — $14,790 for 2026-27.
  • Foreign earned income is now added back into the eligibility calculation, reversing a previous exclusion.

Families filling out the FAFSA for the 2026-27 school year are working from a meaningfully different form than a year ago. Some changes make it easier to qualify for aid; a new Pell Grant income ceiling makes it harder — and for some applicants, cuts eligibility off completely for the first time.

Assets that no longer count

  • Family-owned businesses with 100 or fewer full-time-equivalent employees
  • Farms where the family resides
  • Family-owned and controlled commercial fishing businesses

These assets are excluded from the Student Aid Index calculation entirely, following changes tied to the One Big Beautiful Bill Act signed in July 2025.

Pell Grants got a new hard ceiling

Two changes tighten Pell Grant eligibility. Income earned abroad is now added back into adjusted gross income for eligibility purposes, reversing a prior exclusion. And applicants whose Student Aid Index is at or above twice the maximum Pell award are now ineligible outright — for the 2026-27 award year, that threshold is $14,790. The rule carves out an exception for dependents of deceased servicemembers and Public Safety Officers.

What's actually improved

  • The form launched on time, October 1, 2025 — the first on-schedule launch in three years
  • Students now see their Student Aid Index, Pell eligibility and any error codes immediately after submitting
  • Up to four corrections get instant feedback; a fifth triggers a 24-hour processing hold
  • Beta-test submissions made in August-September count as official applications and don't need resubmitting

Sources

Every factual claim above is traceable to these documents. Check them — that is why they are here.

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Meridians Life Desk is an editorial desk at Meridians, not an individual. A desk byline means the article was produced and fact-checked to that desk's published standards. Read our editorial standards and corrections policy.

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