The FAFSA rollout has been rough on students. The biggest problem is yet to come
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.
More than 17 million students are expected to fill out the FAFSA this year in hopes of getting help paying for college. The form had a shaky, first-week "soft launch." 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, though a spokesperson said the department is still assessing how to handle the big mistake that will hurt many of these applicants unless it's fixed.
The big mistake has to do with inflation
This year's FAFSA is the result of a sweeping (and labor-intensive) update from prior versions of the form that was mandated by Congress three years ago.
Lawmakers wanted the form to be shorter and easier, with the IRS helping the Education Department automatically fill out some of the form's toughest financial questions. Check!
Congress wanted to expand the number of lower-income students who qualify for a federal Pell Grant, a form of aid that does not need to be repaid. Check!
And lawmakers told the Education Department to use a new, more generous formula to protect more of a family's income from being used to determine financial aid eligibility. They also told the department to adjust its math for inflation.
Let's call this one partially checked ... because the department didn't do that last bit, adjusting for inflation — a failure first reported by The Washington Post.
That's a problem because protecting more of a student's or family's income allows them to qualify for more financial aid. And failing to adjust this "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.
"Because salaries go up every year and expenses go up every year with inflation, you need to make sure that that's taken into account," says Bryce McKibben, senior director of policy and advocacy at the Hope Center at Temple University. McKibben also helped craft the FAFSA update legislation as a congressional staffer.
"If you don't adjust for inflation, that means more of your income is being calculated to apply toward financial aid. You're being asked to pay more for college when you haven't actually made more in real terms."
Without this inflation adjustment, according to McKibben, a single parent with two children who is trying to go to college would have more than $10,000 of income considered in the student aid math that should instead, he says, be protected.
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.
"It is critical the Department comply with the law, especially given the significant inflation that has taken place since the legislation was passed," wrote the heads of the National Association of Student Financial Aid Administrators, or NASFAA, in an October letter to the department.
The problem now is that all of the potential remedies come with a host of complications.
The potential paths to a fix
The path of least resistance — albeit for the department, not for students — would be to simply ignore the failure and allow colleges and universities to make aid offers this year knowing that many students won't be getting the full help they're entitled to. In December, The Washington Post reported that the department would be doing just that — not making the change imminently "because of timing and data constraints but will make updates for the 2025-2026 aid cycle."
That position may be changing.
The department now appears to be leaning toward making the inflation adjustment sooner rather than later. That's according to two sources with access to internal deliberations, who requested anonymity because they were not authorized to speak publicly.
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.
The Education Department would not confirm or deny that it has decided to move forward with the inflation adjustment this year. A spokesperson told NPR that the department is still assessing its options.
"Doing it now would certainly be good for a good number of students and families," says Justin Draeger, president and CEO of NASFAA. "The downside is that it introduces several new complexities into an already disjointed rollout."
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 was forwarded on to their schools of choice within just a few days of completing the FAFSA, beginning in October.
That means by the time schools can respond to the first round of students who fill out the FAFSA, they will already be nearly four months behind the normal financial aid schedule. And the longer students and families have to wait to know what a given college will cost them, the longer colleges will have to wait for students and families to make that life-altering decision.
The department now faces a painful choice: Prevent further delays by denying students the full aid Congress envisioned, or exacerbate FAFSA delays and confusion in order to follow the law and save families money.
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Transcript
STEVE INSKEEP, HOST:
An effort to make federal student aid easier seems instead to have made it harder.
MICHEL MARTIN, HOST:
The federal government updated a form that some 17 million people fill out to see if they qualify for help paying for college. But the form arrived three months late, and a problem with it puts students at risk of getting less financial aid than they should.
INSKEEP: NPR's Cory Turner joins us now. Cory, good morning.
CORY TURNER, BYLINE: Good morning, Steve.
INSKEEP: What went wrong?
TURNER: Well, so first we're talking about the Free Application for Federal Student Aid, which is better known as FAFSA. After the form opened on December 30, lots of students complained about not being able to access it or having to spend long stretches in a waiting room because it was only open to a limited number of people for a few hours at a time. I will say the Education Department just announced the form is now open 24 hours a day, seven days a week, and they've had more than a million applicants fill it out, which is roughly on pace with previous years.
INSKEEP: OK, so that part stabilized. But is the form itself correct?
TURNER: So bear with me here, Steve.
INSKEEP: OK.
TURNER: The form is correct. What's wrong is the math the Education Department plans to use to determine how much financial aid a student should get. So the problem was first reported last month by The Washington Post, and it came up as the department was making big changes to the form that were required by Congress, you know, like you said, making it easier to fill out. This year's FAFSA is also more generous than in previous years. And that's because the math behind it protects more of a student's or family's income from being considered in the overall student aid equation. Here's the problem. Congress told the department to adjust these income protections so they keep up with inflation. But the department didn't do that. We don't really know why. They just didn't do it.
INSKEEP: Although it sounds like a big deal, given that in the last couple of years there was a good deal of inflation.
TURNER: There was a lot of inflation. And so if you don't adjust for inflation, families applying for aid are going to appear like they have a lot more income than they really do, and that then means they're going to get less federal student aid. So it won't hurt the lowest-income families, but it will hurt hundreds of thousands of students in the income ranges just above them.
INSKEEP: Cory, you said this is just a math problem. And I'm just thinking back - you know, when you get a math problem wrong in school, which I certainly did plenty of times, I mean, the teacher marks it up with a red pencil, puts a frowny face there, and then you correct it. Why don't they just fix the math?
TURNER: The problem is, it is a huge fix to make, you know, that would require retrofitting the coding beneath the entire system, among other things, and basically a new logistical nightmare just as the FAFSA rollout was starting to calm down. And time is not on the department's side, Steve. They and schools are under enormous pressure to hurry financial aid offers to students because we're already months behind. The FAFSA process normally starts in October. This year, colleges won't be able to start sending out offers until February at the earliest. I am hearing from sources that in spite of all that, the department is leaning towards fixing this now. A spokesperson would only say they're still assessing their options. Ultimately, the department has two ugly options here. They can keep things moving by denying students the full aid that Congress envisioned, or they can risk exacerbating FAFSA delays and confusion in order to follow the law and save families money.
INSKEEP: Cory, thanks so much.
TURNER: You're welcome.
INSKEEP: That's NPR's Cory Turner. Transcript provided by NPR, Copyright NPR.
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