Family Farm and Small Business Exemption Act
Key claim: The bill restores the pre-2024-2025 FAFSA exemption that excludes the net worth of a family-resident farm or a family-owned small business (≤100 FTEs) from federal student aid need calculations.
Abstract
(HR1131 · 119th Congress) Family Farm and Small Business Exemption Act This bill restores an exemption for certain family farms and small businesses on the Free Application for Federal Student Aid (FAFSA) form. The bill applies to the net worth of (1) a family farm on which the family resides, or (2) 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 the 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 are treated as an asset and therefore included in the calculation. This bill restores the exemption to exclude such net worth from the calculation. Latest action (2025-02-07): Referred to the House Committee on Education and Workforce.
Why this matters
The 2024-2025 FAFSA overhaul began counting family farm and small business net worth as assessable assets, which sharply reduced federal student aid eligibility for children of farm households whose land value is high but liquidity is low. Restoring the prior exemption would lower the effective cost of higher education for farm families and small-business owners without changing overall aid appropriations, making it a targeted rural-affordability measure rather than a broad aid expansion.