As noted in a recent post, the U.S. Education Department (ED) announced in December that the revised FAFSA would be initially released as a “soft launch” on January 1 and that it would only perform a data store-and-forward operation for data processing by the ED at some future point. This announcement was a huge disappointment for people looking forward to the accurate and timely disbursement of the $240 billion in Federal student aid for the 2024-25 academic year. There had already been several delays in releasing the new FAFSA since the enactment of the FAFSA Simplification Act (the Act) in 2020 that overhauled the FAFSA process and the form itself.

Exacerbating the problem is the fact that the FAFSA being released by the ED has a major defect that would cost students up to $1.8 billion in forgone Federal aid. Specifically, the new FAFSA does not take into account the impact of inflation since the Act was passed in 2020 even though it is required to do so under the terms of the ACT. This would cause families to have a higher Student Aid Index (SAI) than they should have. The SAI is the amount that ED considers a family to be able to pay toward college costs.

Failure to account for inflation will cause students to be awarded less Federal aid than the amount to which they are entitled. This would collectively cost students up to $1.8 billion in Federal student aid. It would also reduce students eligibility for those state and institutional financial aid programs that are tied to the FAFSA formula., the ED website intended to assist students by guiding and facilitating their completion of the FAFSA, does not currently have any information on it to guide students and parents through the confusing FAFSA procedures for 2024-25.

Corrective Action Announced By ED

Recently, on January 23, the ED confirmed to NPR that they will correct the defect in time for the 2024-2025 academic year, though the department didn’t provide details regarding when or how this correction will occur. “The Biden-Harris Administration is committed to making higher education possible for more students, including through ensuring students qualify for as much financial aid as possible.“, a spokesperson told NPR.

The conundrum underlying a correction is that any action implemented by the ED will further delay the receipt by colleges of the FAFSA data that they need to prepare offer letters. In years prior to 2023, the FAFSA was available at on October 1 for the following academic year. Yet the form for 2024-25 is not yet available in February 2024. Without FAFSA data, colleges can’t prepare financial aid packages for admitted students.

There is an alternate approach that the ED could implement, but it too has drawbacks.  In this scenario, ED would calculate applicant eligibility for aid based on the incorrect SAI formula in the soon-to-be-released version of the FAFSA. Then they would send that data to colleges. Colleges would understand that correct FAFSA data would be distributed by the ED when it is available. Colleges would at least be able to provide admitted students with a provisional offer in the same time frame as in previous years — late March through early April. Colleges are under time pressure to receive FAFSA data because they need to know how many students will enroll as freshman so they can prepare for them. class. Therefore, they need admittees to notify them by May 1.

Critics of this approach argue that, for many lower-income students, the preliminary award letters would be too low for them to be able to attend college and this would discourage them from subsequently pursuing a college education at all. It also imposes additional administrative burdens on colleges by requiring them to formulate and send offer letters twice. Of course, another glaring problem is that the FAFSA has still not been released for 2024-25 and the ED’s promises of its availability can’t be relied upon.

Republicans Call for Investigation

Some Republican lawmakers have called for an investigation into the ED’s rollout of the new FAFSA, calling it a botched effort. According to the January 24 edition of The Hill, a group of Republican Senators and Representatives stated that “The rollout experienced difficulties for some time after the new program was launched, delaying the period colleges had to make financial aid offers and potential students had to decide which school to attend. They pointed out that the Act was passed in 2020, so the ED has had three years to implement the changes.

A letter has been sent from Congressional Republicans to the Government Accountability Office requesting that an investigation be conducted. It states that, “Repeated delays from the Department of Education in rolling out the new FAFSA have left students and schools in limbo for the upcoming school year. All these challenges and delays may cause some students—particularly low-income students who are most dependent on Federal aid—to give up and not pursue postsecondary education.”    

The Republicans are also seeking information on problems that students and colleges have experienced with the new FAFSA . They want to know what the ED is doing to ensure that problems are resolved. The letter states, “Beyond the initial delays, it is also unclear whether Education is providing students and schools with sufficient information and guidance on the new FAFSA form and process. The goal of FAFSA simplification was in part to make the whole process easier for students and their families. … However, initial feedback from students and schools indicates that Education’s current outreach efforts are falling short.”