Family Farm and Small Business Exemption Act
- Sponsor
- Rep. Mann, Tracey [R-KS-1]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Feb 7, 2025
Bottom line
The bill restores exemptions for family farms and small businesses from federal student aid asset calculations, potentially increasing aid eligibility for students from these families.
What it actually does
This bill amends the Higher Education Act of 1965 to exclude the value of family farms where the family resides and small businesses with up to 100 full-time or full-time equivalent employees, owned and controlled by the family, from being counted as assets when determining a student's eligibility for federal financial aid. This change aims to prevent families from being penalized in financial aid calculations due to the value of their primary farm or business, which often represents illiquid wealth.
Proponents argue
Supporters argue that including the value of family farms and small businesses as assets for financial aid purposes unfairly penalizes families whose wealth is tied up in illiquid assets essential for their livelihood. They contend that these assets do not represent disposable income for college expenses and that counting them forces families to consider selling their businesses or farms to afford higher education, undermining generational transfers and rural economies. This bill would ensure that students from these families have a fairer chance at receiving federal financial aid.
Opponents contend
Critics might argue that exempting these assets could disproportionately benefit wealthier families who own valuable farms or businesses, potentially shifting financial aid resources away from students from lower-income backgrounds without significant assets. They might also contend that a comprehensive review of asset definitions is needed rather than piecemeal exemptions, to ensure equity across all types of family assets.
The bill is very short and easy to read, allowing ample time for a thorough understanding of its provisions.
Section 2(a) of the bill, amending 20 U.S.C. 1087vv
Exemption of Family Farms and Small Businesses from Federal Student Aid Asset Calculations
This provision modifies the Higher Education Act to ensure that the net value of a family farm where the family lives, and the net value of a small business (with 100 or fewer full-time or full-time equivalent employees) that is owned and controlled by the family, are not considered when calculating a student's assets for federal financial aid eligibility. This means that the equity in these assets will not reduce the amount of federal student aid a student is eligible to receive, making it potentially easier for students from these families to qualify for assistance.
Supporters argue
Supporters argue that this exemption is crucial for fairness, as the value of a family farm or small business often represents the family's primary source of income and livelihood, not liquid assets available for college tuition. They contend that without this exemption, families are forced to choose between their generational business/farm and their children's education, or face significant debt, which undermines the stability of these vital economic units.
Critics contend
Critics might argue that while the intent is good, this exemption could be seen as a carve-out that benefits specific types of asset holders, potentially at the expense of other families whose assets are not similarly exempted. They may also raise concerns about the potential for some high-value farms or businesses to be exempted, leading to less aid for truly needy students if the overall aid budget is fixed.
Tradeoffs
The bill balances the desire to support family farms and small businesses and ensure their children have access to higher education, against concerns about equitable distribution of financial aid and the potential for some wealthier families to benefit from the exemption. It also highlights the tension between asset-based and income-based assessments of financial need.