New FAFSA comes with a big mistake that could lower students' financial aid

The U.S. Department of Education is debating whether to make an enormous and potentially disruptive change to this year’s FAFSA process to help borrowers and remedy a department mistake.

More than 17 million people are expected to fill out the Free Application for Federal Student Aid this year, hoping to get help from the U.S. government to pay for college.

But the form arrived three months late — just before New Year’s. And in addition to that rocky rollout, there’s a big problem with the form, one that could end up costing students.

Transcript:

NPR Host Sacha Pfeiffer: I have several friends whose kids are high school seniors and have been talking about this bumpy process. But you're actually talking about an additional issue. So set the scene for us.

NPR’s Cory Turner: Yeah. So it’s all tied together into this massive FAFSA overhaul that the Ed Department has had to do, because several years ago, Congress passed this big bipartisan — believe it or not — law requiring a bunch of important changes.

Lawmakers wanted the form to be shorter, easier to fill out, which it is, and more generous for lower-income Americans in particular. And these changes took a ton of work, which is why the Ed Department delayed the form’s release nearly three months — from Oct. 1 to Dec. 30.

The hiccups we saw last week, Sacha, as part of what they were calling a soft launch — like, limited availability of the form, long wait times — those problems do seem to have been ironed out. But there is, as you said, an even bigger problem that has not been fixed that the department somehow missed during this big overhaul.

Pfeiffer: Yeah, tell us about that. How did that happen?

Turner: Well, it was first reported last month by The Washington Post. And remember when I said this new FAFSA is more generous for lower-income Americans? Well, one way it does that is by protecting more of a student’s or family’s income from being considered in the overall student aid math.

Not only that, Congress told the department they need to adjust these income protections so they keep up with inflation, which is a big deal considering the last couple of years. The problem is the department never made that inflation adjustment. Now, without a fix, many families are now going to appear like they have a lot more income than they really do. And that means they’re going to get less federal student aid.

It won’t hurt the lowest-income families, but it is going to hit hundreds of thousands of students just above them. And keep in mind one more thing here, Sacha — this formula, this math the department uses, it affects federal work study, student loans, even scholarships offered by states and schools.

Pfeiffer: But, Cory, you said Congress mandated this inflation adjustment in the law. It told the department to do it. So why doesn’t the department just fix it, do it, change the calculation and correct the problem?

Turner: That is the question. Until recently, the department’s plan seemed to be to wait until the 2025-26 FAFSA and try to make these big adjustments retroactively. But I have been hearing from sources that it’s now leaning in the opposite direction — towards doing it now, this year. Officially, a spokesperson says they’re still assessing their options.

The problem is waiting till next year — it’s going to hurt a lot of students this year. Because of this mistake, they’re going to miss out on really important federal grant money. Waiting till next year also, as you point out, doesn’t follow the law.

I think the fact that the department hasn’t just gone ahead and done this says a lot about how difficult and disruptive they worry this fix could be. I mean, I’m oversimplifying things here, but it would involve rewriting a ton of code and human hours the department just doesn’t have.

You know, keep in mind, this form is already delayed from October to December. The timeline for schools to make aid offers to students is way behind. I think the department just feels torn here between getting students all the aid they’re entitled to by law and not further disrupting what’s already been a pretty messy financial aid process.

Pfeiffer: Huge ripple effects on families and kids. That’s NPR’s Cory Turner. Cory, thank you.

Turner: You’re welcome.

• States sue over Trump administration's halt of pandemic relief aid for schools
• ‘What did I say in class today?’: Teachers feel watched under Trump’s anti-DEI push
• U of M student’s bid for freedom from ICE detention draws crowd to courthouse
• To boost kids’ reading, Minnesota schools start to shift the way they teach