FAFSA Rollout Has a Major Flaw
I just heard this story on NPR this morning and for families who are just above low-income or are middle income, this problem is troubling. As NPR says, "The big mistake has to do with inflation." But:
The problem now is, all the potential remedies come with a host of complications.
In a nutshell:
College hopefuls are already waiting longer than usual for their financial aid offers this year, due to the delayed release of the Free Application for Federal Student Aid (FAFSA). But what applicants may not realize is that this year's FAFSA also comes with a big mistake – one that will lower the amount of federal financial aid many receive unless it's remedied soon.
The U.S. Department of Education is wrestling with whether to fix this mistake in time for this year's financial aid applicants. A last-minute FAFSA change of this magnitude could further delay college aid offers, but it would also mean many students would qualify for more help.
What the situation was three months ago versus now:
Normally released on Oct. 1, the latest FAFSA was repeatedly delayed, and many applicants have struggled to access or complete the form online since it was intermittently opened to the public, three months late, on Dec. 30.
On Monday, in spite of those problems, the Education Department said more than a million applicants have successfully submitted the form – and that the FAFSA is now available 24 hours a day.
Congress told the Ed Department that they needed to make the form shorter and easier and the IRS would be able to fill in some numbers. Plus, they wanted more low-income students to be able to access a federal Pell Grant.
Congress also wanted a more "generous" formula so that a family's entire income might not need to be considered (given mitigating factors).
And, the Department was supposed to "adjust its math for inflation." That part? It did not get done.
Failing to adjust this so-called "income protection allowance" for inflation, especially given the past couple years of rampant inflation, will make it look as though students and families have more income at their disposal than they really do. And that will mean they qualify for less student aid.
Without adjusting families' incomes for inflation, McKibben warns, hundreds of thousands of students could either get less Pell Grant aid than they otherwise would have – or not qualify for Pell at all. The lack of an inflation adjustment will also impact a student's ability to qualify for other federal aid, including work-study as well as financial aid offered by states and schools.
The Department had said they wouldn't be doing an adjustment but that may be changing.
This path would pose a Herculean challenge for the department. Students would get the aid levels Congress had intended in the 2024-25 school year, but the change would either further delay aid offers from schools to families or potentially force schools to revise and adjust those offers (increasing aid for students) after the fact.
Even without this inflation adjustment, schools have been complaining of a compressed timeline, with the department saying it will not be sending them any FAFSA data – which schools need to make financial aid offers – until late January.
In previous years, Draeger says, students' data were forwarded on to their schools of choice within just a few days of completing the FAFSA, beginning in October.
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