Exclusive: The Education Department says it will fix its $1.8 billion FAFSA mistake

Families have a lot of questions right now about how much help they'll get paying for college — questions that financial aid offices can't yet answer.

That's because this year's Free Application for Federal Student Aid (FAFSA) is months behind schedule. And to make things really complicated, it includes a mistake that would have cost students $1.8 billion in federal student aid.

We covered the mistake in detail here. In a nutshell: The U.S. Education Department's FAFSA math, for deciding how much aid a student should get, is wrong.

In practice, this mistake would make some students and families appear to have more income than they really do, and that means they would get less aid than they should. And not just federal financial aid but also all sorts of state and school-based aid.

On Tuesday, a department spokesperson confirmed to NPR that the department will fix this mistake in time for the 2024-2025 award year, though the spokesperson could not provide details on how or how quickly the fix will be made. For the first time, the department also gave a sense of just how much federal student aid is at stake: $1.8 billion.

"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," the spokesperson said in a statement.

The FAFSA mistake had college financial aid offices worried

"The polite way to say it is, wow. I mean, I was shocked."

That's how Brad Barnett, the financial aid director at James Madison University in Virginia, describes learning about the mistake.

"I get that there's complexities in building and programming a new system. OK. But forgetting to put the right numbers into a table that now has created all this consternation and delays really surprised me."

The FAFSA is new this year because Congress passed a law ordering the Education Department to make sweeping changes. The idea was to make it easier to fill out and to give more lower-income families access to federal aid. Families like Myrna Aguilar's.

"I am a single parent. In addition to my son, my mom lives with us, so we're a multigenerational family, which is awesome," Aguilar told NPR.

Aguilar's son, David Thornton, is studying mechanical engineering at Cal Poly Pomona in Southern California, where he just finished his first semester.

"It was fun," Thornton says, wearing a hooded sweatshirt emblazoned with "Cal Poly Pomona College of Engineering." "There were a lot of events that I really enjoyed. My classes were very interesting. Stressful, but interesting."

Thornton got lots of help paying for college, including a $1,500 Pell Grant from the U.S. government. Pell Grants are for lower-income students and don't need to be paid back. That's important because after Thornton filled out the new FAFSA a couple of weeks ago, the Education Department sent him an email with a surprise: Next year, it says, he's going to lose that $1,500 Pell Grant, though it's unclear why.

"That actually is equivalent to an extra mortgage payment," Aguilar says. "That's, you know, inconvenient."

She insists this won't keep her son from returning to Cal Poly, which he loves. She'll save and fill the gap, if that's what it takes. But she wants to know: Why did this happen?

It could be because of the department's FAFSA mistake. Financial aid experts tell NPR it's difficult at this point to know for certain.

"We're in a situation where we really can't help students or their families," says Charles Conn, a top aid administrator at Thornton's university, Cal Poly Pomona. "They're getting some information from the Department of Ed. We're not."

Because of this year's big FAFSA overhaul, Conn says, the Education Department is really behind, and it's telling colleges they won't be getting any financial aid data for students like Thornton until the end of this month, at the earliest.

"[That] really cripples our office and our ability to fulfill our role, which is to help students and their families make sense of all of this," Conn says. That includes helping Thornton and Aguilar understand what happened to his Pell Grant.

With no details on the fix, financial aid timelines are still in the air

The Education Department says it will fix the FAFSA mistake this year, but it did not clarify how or when. And it's unclear what impact any fix would have on universities' financial aid timelines.

Before the department shared its decision, NPR spoke with a dozen financial aid experts and administrators across the U.S. — at colleges big and small, public and private — to hear how they think the department should manage a potential fix.

"I don't know what the best option is. None of them are good," says Karen Krause, the executive director of financial aid for the University of Texas at Arlington.

Option 1: The Education Department can try to fix this quickly, before it sends any student FAFSA data on to colleges.

The problem with that option is that even a quick fix will take time, further delaying the student data that universities need. Without that data, colleges can't even begin to come up with financial aid offers to send to families.

"It's nausea-inducing," says Christina Tangalakis, who manages student aid for Glendale Community College, in Glendale, California.

There's also an Option 2, she says, where the fix takes long enough that the department has to go ahead and send colleges data it knows is wrong, with a promise to update the data as soon as it can. That way, colleges can at least give families something, a kind of starting point. But Tangalakis worries that for many lower-income students, those preliminary award letters would be too low.

"How many students will be discouraged by what they see on paper and not even attend?" Tangalakis says.

We heard this fear a lot.

"Our students absolutely are relying on this," says Scott Skaro, the financial aid director at United Tribes Technical College, in North Dakota.

He says tribal colleges will be hit especially hard by this uncertainty because more than 80% of their students qualify for a federal Pell Grant.

"[Students] may just go find some low-paying job that's gonna pay the bills now, and they'll just give up on school," Skaro worries.

Robert Muhammad, director of financial aid at Howard University, shares that concern.

"Some students may truly feel defeated and decide not to pursue their education at this time."

Most of the financial aid experts told NPR that they want the department to hurry up and make this fix now, before any award letters go out.

Is that realistic? Tangalakis, of Glendale Community College, says that shouldn't matter.

"When we were headed to space, Kennedy said we do things because they're hard. This is something hard, but it's necessary."

Many students have just over three months left before they're expected to commit to a college. But colleges say that in the best case, it will still be weeks before they can begin sending out financial aid offers.

At this point, for families, universities and the Education Department, the clock isn't just ticking. It's roaring.

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