Why changes are coming to FAFSA and how it will affect financial aid for college

John Yang:

Paying for college can be costly and confusing. The road to financial aid usually begins with what's called the Free Application for Federal Student Aid or FAFSA. It helps determine which federal grants and loans a student qualifies for, and schools use the information on the forum to make their financial aid decisions.

Now after years of delays, a new version of the form is to be released at the end of the month. And while it promises increased access to financial aid, the delays are likely to be putting universities and students in a bind, giving them less time to crunch the numbers and comb over the details of financial aid packages.

Danielle Douglas-Gabriel covers the economics and finances of higher education for The Washington Post. Danielle, what are the big changes in this form? There was significant changes and why are they being made.

Danielle Douglas-Gabriel, The Washington Post:

So there are a lot of really important changes to this form. One being fewer questions instead of 106 are down to 36 questions, which is great for families.

Also, there are far more people who will qualify for the maximum amount of the Pell Grant Award. This is a form of federal aid that goes to low and middle income students. Now instead of only a few million, being able to qualify for the max, another 1.5 million students will get the full max, which at this year stands at over $7,000.

And then also it'll be a whole lot easier for families to get their financial information from the IRS automatically populated onto the FAFSA form, which also really saves you time skip a bunch of questions make the whole process go by a lot faster.

John Yang:

bringing up this new form revising the form. Why is this taking so long?

Danielle Douglas-Gabriel:

Well, the Education Department says that it has been a monumental undertaking, I think they've used that exact phrase several times in talking to them. And in part because you have to overhaul the existing system systems that haven't been updated for 30, 40 years. In some instances, they have to meet new security standards set by the IRS to make sure that information that they're populating onto the forum is secure.

All of these moving parts and pieces are happening at the same time, as the department has a laundry list of policy projects to try to get done, including making it easier for public servants to get loan forgiveness to make it easier for people who have been paying back their loans for 20, 25 years to get some loan forgiveness as well, in addition to lots of other policy priorities, and there are only but so many people at the department and they're all working on all these very important policies.

So as a result, the department says there has been some delays.

John Yang:

This is a whole new system, it's going to be brand new. Are there advocates for students who for financial aid who worry that there are going to be some glitches unforeseen problems that will screw up the whole process?

Danielle Douglas-Gabriel:

I mean, that's always a possibility when you are standing up a new system, and when you're making such big changes to an existing system. I think right now a lot of advocates are more concerned with what the delays will mean for students and their families in terms of making informed decisions about financial aid and where to attend college.

As you remember, John, this form not only is used by the federal government to determine aid, but also states to determine state aid for college students as well as the schools of which they attend. So all of those pieces have to come together in order for families to figure out where could they can afford to go to college.

John Yang:

And it's becoming available sort of in the middle of the college application process. It used to be available at the beginning in October what effect is that delay have?

Danielle Douglas-Gabriel:

So the issue here is for a lot of the states that rely on the facet to make their student aid determinations. Some states have those forms out in January, some states have them out at the end of December.

So having delays on the federal end could delay student's ability to take advantage of state aid. And without the federal government saying, hey, states, were a little bit behind. Can you please cut students a little slack?

I think a lot of advocates are worried that students may miss out on aid that they otherwise would have qualified for. Because so many instances it's first come, first serve. And if there's a delay on one end, then it kind of sets everything else back.

John Yang:

What are the other changes I understand wanting to make was to adjust the numbers automatically in the form to consider for inflation. But that hasn't worked out quite as well has it?

Danielle Douglas-Gabriel:

Not exactly. So, one of the components of the two laws that Congress passed in order to make all these changes possible was that there'd be a greater amount of income protection. So for parents an increase of 20 percent, students an increase of 35 percent, and students who have children on their own, an increase of 60 percent of your income would be protected in the formula.

In addition to that protection, all of that would be adjusted for inflation. Now, the department accidentally forgot to input that inflation adjustment. And it happened to be at one of the periods of the highest level of inflation, inflation records that we haven't seen for generations. So as a result of that, it creates an artificially high calculation of what people should be paying, or what they actually should receive in federal student aid, and state and institutional aid. So that's a huge concern.

The Department says they're aware of it, they're going to fix it for the next cycle. But for this upcoming cycle, the '24, '25 academic year, there are a lot of students who may not get as much aid as they are actually entitled to.

John Yang:

This is, as we've been talking a very complicated, very complex process, sort of daunting for parents and students to go through what advice do you have for parents and students who are doing this, perhaps for the first time?

Danielle Douglas-Gabriel:

Don't be frightened, I have to say this forum is a lot simpler and a lot easier to access than what I filled it out many, many moons ago. And I think that's a great thing, right? It's a lot shorter. It's a lot more intuitive. And it should be really helpful for parents to get through this with ease.

I would also advise to get it done as quickly as you can, again, a lot of states are first come, first serve with their scholarships and grants. A lot of institutions in some instances also think about it in that way. But all that really matters is getting the form filled out and don't think because you are a you know, upper middle income family that you shouldn't fill it out there is aid available for everyone. And it's not just need based aid for this. It's also merit based in some instances.

So please make sure to take advantage of this form in order to get as much money as your student could qualify for.

John Yang:

Good advice from Danielle Douglas-Gabriel with the Washington Post. Thank you very much.

Danielle Douglas-Gabriel:

Thank you.