HR-1131-119
Referred to the House Committee on Education and Workforce.
Sponsored by Tracey Mann (R-KS)
What it does
This bill would amend the Higher Education Act of 1965 to restore an exemption for family farms and small businesses from the definition of "assets" used in federal student financial aid need analysis. Specifically, it would exclude from asset calculations: (1) a family farm on which the family resides, and (2) a small business with 100 or fewer full-time equivalent employees that is owned and controlled by the family. The change would apply to financial aid award years beginning on or after the bill's enactment.
Who benefits
Families who own and operate small businesses (up to 100 employees) or live on family farms and have college-age children — these families would no longer have those assets counted against them when the federal government calculates how much financial aid they qualify for. Students from these families who might otherwise be deemed ineligible for, or receive reduced, federal grants and loans. Rural and agricultural communities where farm ownership is common. Small business owners in any sector with fewer than 100 employees.
Who is hurt
Students from families without farms or small businesses who compete for the same finite pool of need-based aid — if more families qualify for aid, the effective competition for limited grant funds could increase. Federal taxpayers who fund need-based aid programs, as expanded eligibility may increase program costs. Students from families with other types of assets of comparable value (e.g., investment portfolios or rental properties) who do not receive a similar exemption, creating an uneven treatment of wealth.
Supporters argue
Supporters argue that family farms and small businesses are illiquid, working assets — not savings — and that forcing families to count them as financial resources creates an unfair choice between selling or mortgaging a going concern to pay for college or forgoing aid entirely. They contend this exemption existed prior to recent changes and that its removal penalized asset-rich but cash-poor families who reinvest earnings back into their operations, effectively treating a farm or shop the same as a stock portfolio despite fundamental differences in liquidity and function.
Opponents argue
Opponents argue that family farms and small businesses represent real, transferable wealth that the financial aid system is designed to account for, and that exempting them allows high-asset families to shield substantial net worth from need calculations — directing limited aid dollars away from genuinely low-income students. They contend the 100-employee threshold is broad enough to include businesses with millions of dollars in equity, and that the bill creates an inequity between families whose wealth is held in exempt business assets versus those whose equivalent wealth is held in non-exempt forms like savings or real estate.
Constitutional context
No significant constitutional issue is presented. Congress has broad authority under the Spending Clause (Art. I, §8, cl. 1) to set the terms and conditions of federal student aid programs. Under South Dakota v. Dole (1987), Congress may attach conditions to federal education funding so long as those conditions meet a five-part test; modifying the asset definition used in need analysis is a straightforward exercise of that same spending authority.
Checks and balances
Congress gains authority to narrow the asset definition used in federal aid calculations; the Department of Education implements the change administratively, and courts could review any challenge to the aid formula under the Spending Clause, though such a challenge would be unlikely given the narrow scope of the change.
Historical precedent
Prior to the FAFSA Simplification Act (enacted as part of the Consolidated Appropriations Act of 2021), small businesses with fewer than 100 employees and family farms were already exempt from federal student aid asset calculations; this bill would restore that prior exemption, which was removed when the simplified aid formula took effect.