Critical Mistake in FAFSA Could Cost Students Thousands in Financial Aid

Washington, D.C. – College students applying for financial aid this year are not only experiencing delays, but also facing a major error in the Free Application for Federal Student Aid (FAFSA) that could result in lower funding. The U.S. Department of Education is grappling with whether to address the mistake, which could further postpone aid offers but potentially increase the amount of assistance available to students.

The rollout of the FAFSA has been fraught with challenges. Typically released on October 1, this year’s form was delayed, causing difficulties for applicants who struggled to access and complete it online. Despite these issues, more than a million students have managed to submit the FAFSA, which is now available 24 hours a day. However, a spokesperson for the Education Department stated that they are still considering how to rectify the error that may negatively impact applicants.

The mistake revolves around the failure to adjust the “income protection allowance” for inflation, a requirement mandated by Congress. This adjustment would protect more of a family’s income and consequently result in increased financial aid eligibility. Without this adjustment, students and families may appear to have more income available than they actually do, leading to reduced aid.

The consequences of this error are significant. Many students who would have qualified for Pell Grants, a form of aid that does not need to be repaid, may either receive less assistance or not qualify at all. Furthermore, the absence of an inflation adjustment will affect eligibility for other federal aid programs as well as aid provided by states and schools.

The National Association of Student Financial Aid Administrators (NASFAA) expressed concerns about the Department’s failure to follow the law in an October letter. The NASFAA urged the department to address the oversight due to the substantial inflation that has occurred since the legislation was passed.

Although potential solutions exist, implementing the inflation adjustment presents its own set of challenges. If the correction is made, students would receive the aid levels intended for the 2024-25 school year, but this could further delay aid offers or necessitate offering revisions to schools and families after the fact.

The Education Department has yet to confirm whether it will proceed with the inflation adjustment this year. The department is currently evaluating its options and the potential impact on students and families.

The compressed timeline for FAFSA data distribution has already caused disruption for colleges and universities, who rely on this information to make financial aid offers. Schools will not receive FAFSA data until late January, four months later than in previous years. This delay hampers the ability of students and families to make timely decisions regarding college costs and enrollment.

As the Education Department weighs its options, it faces a difficult decision between preventing further delays by providing incomplete aid or following the law and potentially exacerbating FAFSA-related confusion.