A new FAFSA problem could keep families waiting longer for financial aid awards

The Department of Education has found another problem impacting some college financial aid forms that could further delay students’ aid awards, leaving them in limbo as they decide where to enroll next year.

The problem involves tax data transferred from the Internal Revenue Service and impacts “fewer than 20%” – or potentially about 1 million – of the FAFSA (Free Application for Federal Student Aid) forms previously submitted by students and families this year, the department said Saturday.

It’s possible that colleges received inaccurate information about some families’ finances after those applicants submitted the FAFSA to the Department of Education.

The new error is the latest complication with this year’s FAFSA process, which has been marked with delays and glitches after a long-awaited, updated version of the financial aid form was released. Just over a week ago, the department identified a separate calculation error impacting several hundred thousand forms.

Students and families typically receive information from colleges in March about how much financial help they’ll receive the following academic year, but many are still waiting to receive that information.

Colleges and universities usually request students to make a decision to enroll and pay a deposit by May 1. Many schools, but not all, have already pushed back that date.

That leaves students awaiting important information about how much college will cost next year and whether they can afford to attend their school of choice.

“We recognize how important it is for schools and families to have the information they need to package and receive aid offers,” the Education Department said in the notice posted Saturday.

“Accordingly, we will continue our joint efforts with IRS to resolve these issues and implement updates to resolve data inaccuracies as expeditiously as possible,” it said.

Problems with this year’s FAFSA

Late last year, the Department of Education unveiled major changes to the FAFSA, as required by law. The new version is shorter, simpler and is expected to make more students eligible for financial aid – like federal Pell grants and loans, as well as college grants and scholarships.

The Department of Education was required to release the new version by the end of 2023, and while it met that deadline, the form was only available sporadically, for about 30 minutes at a time, for the first two days. It was not made available 24 hours a day, seven days a week until January 8.

Usually, the form is available on October 1, so this year’s application process was delayed from the start.

Later in January, the Department of Education made a last-minute fix to tie the new financial aid calculation to the latest inflation data. The adjustment made $1.8 billion more in financial aid available to students but also slowed down FAFSA processing.

At that point, the department said that it wouldn’t start sending students’ FAFSA information to colleges until the first half of March – more than a month later than expected and about the same time schools already want to have financial aid letters out the door to students.

Meanwhile, students and families have experienced a number of glitches with the new form. At first, parents who don’t have Social Security numbers had problems starting a form for a student or contributing to one their child already started – even though they should be allowed to create an account with Federal Student Aid and access the form.

Applicants who need to make a change or correction to a FAFSA form they already submitted have not been able to do so yet, which could further delay the correct financial information getting to the school of their choice.

The Department of Education has been facing criticism from lawmakers on both sides of the aisle for the delays, and the Government Accountability Office has started an investigation into the new form’s implementation.

In February, the department announced several new steps it was taking to help colleges process the new FAFSA forms and develop student aid awards.

How the FAFSA has changed

The FAFSA has long been due for an update, and the new version released at the end of last year is a culmination of changes approved by Congress in 2019 and 2020.

In previous years, the FAFSA could be as long as 108 questions. With the new form, some applicants have to answer as few as 18 questions, which takes less than 10 minutes to complete, according to the Department of Education. Some information is now directly taken from a filer’s tax return so that the applicant doesn’t have to hunt down numbers on old tax returns.

The Department of Education estimates that 610,000 more students will qualify for a Pell grant on an annual basis. The Pell grant program is a key way the federal government helps students from low-income families go to college by providing eligible students with money they don’t have to pay back.

And an estimated 1.5 million more students will be eligible for the maximum Pell grant amount, which typically changes each year. The Pell grant is worth up to $7,395 for the 2024-25 school year.

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