How will the FAFSA debacle impact colleges and universities this fall?

Over the past year the United States federal government has been revising its FAFSA (Free Application for Federal Student Aid) system.  Unfortunately, its rollout over the past few months has been chaotic.  Delays, errors, more delays, having to redo applications, and other problems have beset the effort.

My question today is, how will FAFSA problems impact student enrollment this fall semester?

“a rolling catastrophe,” according to Ted Mitchell of ACE

A botched FAFSA rollout from DALL-E

Naturally DALL-E had a hard time spelling the name.

To quickly summarize: the key problem is that financial aid information is working its way through a complex system whose well-intentioned redesign is far behind schedule.  A good number of students, especially poorer ones, can’t commit to a college without getting aid awards.  Similarly, currently enrolled students might not know their financial aid supply for the upcoming year.  Remember than, ironically, Congress launched the current FAFSA iteration to be easier to use.

As a result, the number of completed FAFSA forms from high school students is down 27.1% compared to last year, according to the National College Attainment Network (NCAN).  The Department of Education advised states to delay budgeting their financial aid funds, given the system’s slowdown.

For more information, I recommend Liz Willen’s typically sharp article at Hechinger, Rose Horowitch’s Atlantic column, this New York Times overview, or this PBS short video:

What might this debacle mean?

First, there’s the human cost of growing stress, added to a population already historically burdened with mental health issues.  One source of that stress is the possibility of missing college. Along with this is the pressure suffered by campus financial aid staff, along with staff and faculty who work in advising.

Next, what happens to enrollment?  That is, how many students with choose not to attend college this year as a result?  This is a question of time, as Horowitch observes:

[E]ven if schools change their deadlines and the department gets through its FAFSA backlog, that still leaves 2.6 million fewer students who have submitted applications compared with this time last year. Education experts are skeptical that all or even most of them will fill out the FAFSA in time to start college this fall, although technically there’s still time. The biggest worry is the 600,000 high-school seniors who have never applied for aid before. Kevin Carey, Laitinen’s colleague at New America, points out that most young people aren’t on a fixed path to college. They’re weighing whether to go to school or take a job. “If you don’t even know what the cost is in your cost-benefit analysis, you just go with the benefit” of getting a job, Carey told me.

Some number of students may decide to put off college for a year.  Remember that the labor market beckons, sweetened by the excellent 3.8% unemployment rate.

Third, how many institutions will suffer financially as a result?  Fitch Ratings called this problem last month:

The U.S. Department of Education (DOE)’s delayed processing of Free Application for Federal Student Aid (FAFSA) data for the fall 2024 enrollment cycle is the latest blow to colleges that rely heavily on low-income and minority enrollment. The delay is forcing most colleges to postpone sending financial aid packages to students until late March or April at the earliest. This puts colleges at risk of losing admitted students to competitors with lower sticker prices or to colleges that can afford to commit financial aid or merit funds to students before knowing FAFSA results.


In turn, deposit rates are down as some students postpone college decisions pending receipt of their aid offers, while some may consider foregoing college altogether. For colleges that are almost solely dependent on student-generated revenues, this enrollment uncertainty is wreaking havoc on their already tight budget planning for the upcoming fiscal year.

Again, it’s the logic of modern American higher education, which depends fundamentally on student fees to sustain itself.  Fewer incoming students pressures that system.

Yet perhaps this will fizzle.  I haven’t said enough good words about the hard-working Department of Education staff, who’ve been striving mightily – and arguably without sufficient resources – to fix FAFSA.  The percentage of students who haven’t returned the form has been declining incrementally over the past few weeks.  Maybe we’ll see a last-minute flood of forms as the system corrects.

Looking further out, I want to add some more thoughts.

Start with what a mess this FAFSA update has been.  It’s not a good look for academic institutions trying to build trust and belonging with students. Moreover, it’s a real problem for the Biden administration, especially as it has made expanding government operations a keystone of its record.  It’s harder to make the case to increased public services when one of those services is badly botched.

Unfortunately, we should anticipate this becoming an election issue.  It’s easy to see Republicans attacking Democrats for incompetence. We could also see the FAFSA story as a stick with which to beat higher education as a whole.  Think of the arguments and memes.  “Democrats can’t even get paperwork right!” “Universities lock students into lifetimes of soul-crushing debt and somehow manage to mangle the process!”  “Pointy-headed bureaucrats in government/college can’t get basic jobs done!”

Moving on to enrollment: after more than a decade of decline, student numbers actually ticked up 1% last fall (2023). I know a lot of people are invested in an enrollment rebound. Might the FAFSA story quash that reality?  And, if enrollment ticks down, will many  blame the form fiasco rather than other forces?

Right now I wouldn’t be surprised to see total US post-secondary enrollment down 1-2% in fall 2024.

My heart goes out to the students and their families, trying to work through this.  And my sympathies for every professional working in financial aid, trying to right this wreck.

What are you seeing of FAFSA in your world?  What’s your estimate of its impact?


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9 Responses to How will the FAFSA debacle impact colleges and universities this fall?

  1. Patricia Soares says:

    I absolutely agree that the DOE leadership did not start working on the transition of the Simplification Act on day one as they should have to ensure the debacles students, families, and colleges are experiencing would have been minimal.

    What has gotten lost is that the Simplification Act was simple in name only. People got caught up in the fact that the Trump Administration DOE pared down the number of questions families had to answer. Still, behind the scenes, they made the process more complicated. They designed it so that more FGLI students, especially those with non-US-born parents, would almost eliminate themselves from filing as the number baring out. Many students with parents with no SSNs are too afraid to apply because they do not want their families to potentially have ICE show up at their door, even if they are here legally.

    Also, you have families with multiple children in college who get ZERO benefits from most colleges, and each student’s FA package does not consider their other siblings in school. Although many colleges can afford to provide similar aid packages as they did previously, many colleges lack financial stability. The Trump Administration’s goal was never to provide access to higher education for all, as this Simplicifaction Act illustrates. The sad part of all this is that Biden’s Admin will be blamed for all of this when they should take the hit for the execution and not the Act itself. From the first week, I knew Sec. Cardona was the wrong man for the job when he badmouthed a particular higher education segment(the Ivies/Elites) in his first week.

    I fully agree that the Department of Education (DOE) leadership should have prioritized the transition to the Simplification Act from day one. This lack of attention has led to unfortunate consequences for students, families, and colleges.

    Many people misunderstood the Simplification Act as being simple only in name. While the Trump Administration DOE reduced the number of questions families had to answer, they made the process more complicated behind the scenes. They designed it so that more students from low-income families, especially those with non-US-born parents, would find it difficult to file their applications. As a result, many students with parents who have no Social Security Numbers are afraid to apply because they do not want their families to face potential immigration issues.

    In addition, families with multiple children in college do not receive any benefits from most colleges, and each student’s financial aid package does not consider their siblings who are also in school. While many colleges can afford to provide similar aid packages as they did previously, others lack financial stability. The Trump Administration’s goal was never to provide access to higher education for all, as this Simplication Act demonstrates. Unfortunately, Biden’s Administration will be blamed for the execution of the Act rather than the Act itself. From the first week, I knew Secretary Cardona was the wrong person for the job when he criticized a particular segment of higher education (the Ivies/Elites) in his first week.

    • Glen McGhee says:

      Thanks, Patricia — I had no idea that FAFSA f-up had its origins in Trump’s Simplification Act! It is NOT far-fetched to read into the Act evil intentions to crush the colleges and universities by starving them of Title IV funds.
      The FAFSA Simplification Act, which was incorporated into the Consolidated Appropriations Act of 2021 signed into law by President Trump in December 2020, made several significant changes to simplify the FAFSA process for students and families applying for federal financial aid.
      It eliminates the need for families to provide detailed tax information by having the IRS securely share tax data directly with the Department of Education, reducing the possibility of errors. LOL!

    • Bryan Alexander says:

      Very good details to add, Patricia. Thank you.

  2. Glen McGhee says:

    There’s a lot more in the details here.
    To begin with, it was delusional for the US ED to base their new system on IRS data downloads using third-party contracted software. Think of the OBAMACARE roll-out if you need a comparison. This is WORSE!
    The lack of accountability at the department level only adds to the anger of those shut out and short-changed by the system. Apparently, inaccurate IRS earnings data will result in LOWER student financial aid.
    Other, additional problems are massive and irremediable. Painful to talk about, actually.

  3. Glen McGhee says:

    Let’s compare the problematic rollouts of the Obamacare website and the new FAFSA financial aid application form:
    — Both rollouts were plagued by significant technical problems and glitches that severely disrupted the intended user experience. In both cases, the issues were exacerbated by poor management and oversight of the third-party contractors responsible for developing the systems.

    In Obamacare, there was a “lack of clear leadership” at the Centers for Medicare and Medicaid Services, which caused “delays in decision-making, lack of clarity in project tasks, and the inability of CMS to recognize the magnitude of problems as the project deteriorated.” Similarly, the FAFSA rollout has been described as a “fiasco” due to technical flaws and timing issues that “flew under the radar until the rollout became a full-blown crisis.”

    But the scale and impact of the problems appear to be quite different. The Obamacare website launch was a major national initiative, and its failure was considered one of the “most embarrassing failures” of the Obama administration. People died as a result.
    In contrast, the FAFSA issues, while still highly disruptive, no one died, unless colleges are forced to close down as a result.
    Although Obamacare website was eventually largely fixed after the disastrous initial rollout, the FAFSA issues appear to be ongoing, with the Department of Education still working to reprocess affected applications and address persistent technical glitches.

    Managing large-scale technology projects, especially those involving the IRS, is always a problem. Worse yet is the total and complete lack of accountability. These failures are occurring in a protective bubble.

    • Bryan Alexander says:

      Good comparison.

      In Vermont, Obamacare rollout was a nightmare. We went back to phone calls, paper, and pencil.

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