This guidance is specific to the 2024-25 award year and later.
Starting with the 2024-25 award year, under Section 480(f) of the Higher Education Act of 1965 (HEA), as amended [20 USC 1087vv(f)], net worth of a farm now includes the value of a family farm. However, the value of a family’s primary residence is still excluded from need analysis. According to Dear Colleague Letter GEN-23-11, "The net worth of a farm may include the fair market value of land, buildings, livestock, unharvested crops, and machinery actively used in investment farms or agricultural or commercial activities, minus any debts held against those assets."
According to U.S. Department of Education's (ED's) FAFSA Simplification Questions and Answers:
"SAI-Q4: How should applicants and their families report the net value of a farm on which their principal place of residence also sits?
SAI-A4: Applicants should determine the total net value of all farm assets and subtract the net value of their principal residence to determine the final value of their farm assets. The principal residence may include the family’s home, as well as structures and land adjacent to the home that are not being used, stored, or sold for farming or other commercial activities. Property values are generally assessed at a rate that considers the use of the property and the value of the land. Applicants and their families may refer to their property tax assessments from municipal, county, or state governments to help determine and separate the value of their principal residence from other property. Debts owed against the principal residence—such as a mortgage—should also be subtracted from the assessed value of the residence to determine the net value."
Professional Judgment (PJ) Note: HEA Section 479A(d) [20 USC 1087TT] includes a provision that specifically notes that a financial aid administrator (FAA) shall be considered to be making a necessary PJ adjustment if the FAA excludes from family income or assets any proceeds or losses from a sale of farm or business assets of a family if such sale results from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or a voluntary or involuntary liquidation. Beyond that specific provision, any additional PJ adjustments are entirely up to the FAA, as the statute gives PJ authority to the FAA alone. The FAA should be careful to remember that the inclusion of a family farm in need analysis is statutory and that an across-the-board removal of family farms is not allowed. As with any PJ decision, the decision must be made on a case-by-case basis and based on special circumstances beyond just having to include the family farm due to a statutory change.
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