What Happened to Applying for Student Financial Aid This Year?

For some families, federal financial aid is one of the main reasons they can afford to send their children to college. Shutterstock

For some families, federal financial aid is one of the main reasons they can afford to send their children to college. In the 2021–22 school year, 70 percent of full-time, first-year undergraduate students were awarded some type of financial aid, most of which was through federal grants.

However, this year, applying for financial aid was a problem for many students. The new free application for federal student aid (FAFSA) was rolled out, and it was riddled with problems.

What were these problems, and how did they affect families with students?

FAFSA Released Late

The FAFSA was delayed three months after its usual October release. The main reason for its delay was errors in the Student Aid Index (SAI) indexing formula. This is a figure used to determine the amount of aid students qualify for.

The SAI replaced the Expected Family Contribution (EFC) and was supposed to reflect cost changes by adjusting for inflation. Unfortunately, that wasn’t the case. In its initial calculation, the Department of Education didn’t account for inflation. Without that adjustment, students didn’t qualify for as much assistance.

This calculation error and a series of other glitches impacted about one million forms and equaled about $1.8 billion.

Between the delay and glitches, admissions were affected.

Processing Issues Impact Admissions

The delay resulted in less time for college counselors to help students.

Knowing the amount of financial aid available helps students decide which colleges to attend and whether they'll need to borrow tuition money.

The Education Department processes the submitted FAFSA forms before sending offers to students and financial aid offices. Once the college admission offices receive the offers, they put together a financial aid package (which includes what the college is willing to provide) for prospective and current students. The prospective student then has the opportunity to decide on where they will attend.

But there was a glitch in the process. Because of the indexing mistake, the schools didn’t receive the processed forms in a timely manner. The schools received many of them between April and May 1, 2024.

The problem was that colleges throughout the country require a decision from the student by May 1 in any given year. This left many counselors and students scrambling.

Even those students who weren’t affected by the initial FAFSA problem suffered as college counselors sorted through the students.

The delay also hurt many students with state financial aid, which has separate deadlines and a first-come, first-served system.

FAFSA Simplification Act

The FAFSA Simplification Act was enacted by Congress. It was part of the 2021 Consolidated Appropriations Act.

The theory was sound: simplify the FAFSA form. To start, the law reduced the number of questions on the form from 108 to 36, and the language was changed to make it more comprehensible.

It also expanded Pell Grant eligibility and removed outdated restrictions, with the goal of making financial aid more accessible to students.

It was supposed to help additional low-income students. For example, the old EFC allowed a minimum estimated family contribution of zero. With the new SAI, the contribution is below zero.

It also allowed students to import tax returns and personal and parental information to improve accuracy. It reused previously collected data and documents, so students didn’t have to gather and resubmit them yearly.

Grandparents’ Contribution Not Considered Income

There was a plus for those students who had grandparents or other family members who wanted to contribute to their education. Those funds were no longer considered income and weren’t included in the aid calculation.

Families With Multiple Students in College

For all the plusses, there were some negatives. Families no longer had a break if they had multiple students in college. That meant that families with multiple college students received less aid for the 2024–25 school year.

Some also complained that the data may not be accurate because the FAFSA now uses prior-prior year income data. That means financial aid could be awarded lower than the family’s needs.

Why Did This Failure Happen?

The blame game has been going around Washington. The Biden administration said that this was a complete overhaul of the FAFSA. It says that requests for more funding from Congress were not met.

Republicans point out that the Department of Education was too focused on student loan forgiveness and let the FAFSA work slide.

Many parents state that the form shouldn’t have been released until the bugs had been worked out.

Will Next Year’s FAFSA Be Better?

It’s anyone’s guess whether the FAFSA will be fully functional for the 2025–26 school year. But the Department of Education has said the goal is to have the FAFSA up and running by Oct. 1, 2024.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.