Ongoing FAFSA Issues Threaten to Derail Financial Aid Awards

Many FAFSA corrections won't be processed until mid-August, which could delay when students see their student loan money.
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Updated on June 28, 2024
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  • Batch corrections to student FAFSA forms won't be processed until the first half of August.
  • This may have a direct impact on students' ability to receive federal financial aid in time for the start of the academic year.
  • The delayed rollout of the Simplified FAFSA and the resulting completion deficit may harm fall enrollments.
  • Uncertainty surrounds the release of next year's FAFSA, too.

The clumsy rollout of the 2024-25 Free Application for Federal Student Aid (FAFSA) now threatens to impact students' ability to pay rent and other expenses when classes resume in August.

The Department of Education (ED) announced June 17 that colleges and universities won't be able to make batch corrections to student FAFSA forms until the first half of August. This is yet another issue associated with the recent rollout of the so-called Simplified FAFSA form ED released nearly three months later than usual on Dec. 30.

ED also won't process paper FAFSA corrections until August.

Jill Desjean, director of policy analysis at the National Association of Student Financial Aid Administrators (NASFAA), told BestColleges that this issue could have a direct impact on students' finances.

Students with errors in their FAFSAs can't receive some forms of federal financial aid until ED reprocesses the corrected form, she explained. Financial aid offices would typically request corrections in batches, a process that has been standard fare for many years.

Now, offices can't utilize this function until August.

The academic year begins in mid-August for many schools across the country. That means students with incorrect FAFSAs won't qualify for federal financial student loans until their forms are corrected. The reprocessing could take time, meaning they won't see deposits in their bank accounts when they'd normally expect those funds.

They're all steps, and they're not always seamless, Desjean said. There's a lot of work involved.

The result: Students may be left with rent due in August or September, but no funds to make a payment.

Corrections Issue Latest Obstacle for Students, Colleges

FAFSA corrections are fairly standard.

Students, many of whom are filing a FAFSA for the first time, may incorrectly enter information into a form. Perhaps they listed income that they didn't need to when completing an application, or they listed themselves as a dependent student when they should have been categorized as independent.

Typically, financial aid administrators would catch these errors and send applications back for reprocessing through batch corrections.

ED's latest announcement throws a wrench into these plans, Desjean said.

Now, financial aid administrators have two primary options. One is to wait until August and hope the forms are corrected and reprocessed quickly so students can get the aid they need when they need it. The other is for financial aid offices to send manual corrections one at a time to ED over the coming weeks and months.

She said manual corrections may ensure money reaches students on time, but they are not always feasible.

For example, large public institutions may have to process many corrections. Moreover, it can be difficult to track what changes need to be made at an individual student level — something ED can do much more easily, Desjean said.

NASFAA President and CEO Justin Draeger called the announcement unacceptable in a statement.

While the department has provided workarounds for schools to make corrections on a student-by-student basis, these processes are impractical for large schools and impossible for under-resourced schools, all while asking institutions to take on an unacceptable amount of risk, he said. In the end, it's the most vulnerable students who will once again be harmed by this delay.

Desjean added that schools and ED typically don't tell students if their FAFSA is being corrected.

I'm sure most students don't realize, she said.

This means they may show up to classes in August unaware that they aren't yet in line to receive their student loan.

Worst-case scenario, these students will attempt to pay their rent in September and realize they don't have the money to do so. Or they may head to the grocery store on a very strict budget until their FAFSA is corrected.

Desjean advises students to call or email their financial aid office to confirm whether their form is being corrected. If it is being corrected, students might ask whether it'll be a manual or batch correction so they can prepare accordingly.

An Enrollment Downturn Imminent?

Experts told BestColleges in mid-April that subpar FAFSA completion data means colleges should brace for an enrollment decline.

Two months later, those fears hold true.

MorraLee Keller, senior director of strategic programming at the National College Attainment Network (NCAN), told BestColleges that there was a lot of solid progress made in April, May, and June toward reaching last year's FAFSA completion rate.

However, high schoolers have now graduated and the class of 2024 still lags last year's completion rate by 12.4% compared to the same period last year.

Keller said in a typical year, approximately 4% of total FAFSA filings come over the summer.

She expects this to be more this year, thanks in part to ED's $50 million investment in FAFSA completions. Ideally, a push throughout the summer can get completions to mirror last year's.

That outcome, however, is becoming increasingly unlikely. Keller said it's now about avoiding the worst-case scenario, which would be for FAFSA completions to remain more than 10% behind last year by the time classes start.

For comparison, FAFSA completions following the COVID-19 pandemic were down 4.8% from the year prior, she said. A 10% decrease for 2024-25 may lead to a historic downturn in fall enrollments.

That far behind should be sending up red flags, Keller said. I'm hoping our gain is no less than the 4% that we usually see, and hopefully higher with all this extra support.

There is also worry that returning students are not re-filing the FAFSA at appropriate rates. The actual number of returning student completions is unknown, and ED has repeatedly delayed releasing this data, she said.

That is our biggest question mark right now, Keller said. We don't have the renewal data, but I think we're concerned that the renewal [students] are at least as far behind as the graduating high schoolers, if not farther.

Desjean shared those concerns about the number of returning students who have completed their FAFSA. However, she added that it's easier for colleges and universities to contact these students to remind them to submit their form, so she expects this group of students to continue to file FAFSAs over the summer.

Still, the FAFSA submission process isn't working for 100% of students, adding further complications, Keller said.

A small percentage of students are still experiencing technical glitches when trying to submit an application. Some are being spun in circles as error messages send them from screen to screen without a clear path to submitting the form, while others are still having trouble adding collaborators.

There will be some students who will hang in there ... but we are hearing stories that we don't want to hear of students and families who have given up on the process, Keller said. If [students] give up on the process, I'm guessing that's going to have a direct impact on the enrollment numbers.

She encouraged students and families to keep trying, as it's not too late to submit a FAFSA.

Looking Ahead to Next Year's FAFSA

Uncertainty already surrounds the launch of the 2025-26 FAFSA.

Keller explained that ED typically releases a draft version of next year's FAFSA early in the year for public comment. However, Richard Cordray, chief operating officer of Federal Student Aid (FSA), has since said that the department doesn't plan to make substantial changes to the form for next year, so there will be no public comment.

FSA announced that Cordray will step down as COO at the end of June.

This still leaves the question: Will ED launch next year's FAFSA by the traditional Oct. 1 date?

The department is working toward this goal and will share updates about additional functionalities as we learn more, FSA shared in mid-June.

Desjean said meeting the Oct. 1 deadline isn't make-or-break for the department. Instead, many financial aid administrators are asking ED to prioritize a fully functioning FAFSA at launch, even if that means delaying the release until November or December.

Many in the industry would sacrifice a later start date if it means financial aid offices will get student data within a week after the FAFSA is filed.

It's a hard balance to achieve, especially given this year. I understand [ED officials] want to save face and get the FAFSA out on time this year, Desjean said. But I'm not sure how much they would be saving face if schools don't get all the information they need.