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On Tuesday, Jan. 31, the Department of Education (DOE) announced that colleges and universities won’t receive Free Application for Federal Student Aid (FAFSA) information until mid-March. Originally estimated to arrive by late January, this delay may have been caused by a recent update to the new financial aid formula.
The update is slated to bring in an additional $1.8 billion in need-based student aid, but the timing may impact the federal financial aid timeline.
Most recent update to the new FAFSA was a “factor” in delays
The Education Department stated last week that it needed to update its aid formula to reflect current inflation rates to increase aid for students. This update, the Department stated, would mean an additional $1.8 billion in need-based aid for qualifying students.
That update was completed as of today. However, since colleges were expecting to receive the FAFSA information within the week, many wondered if the delays were caused by the mishap.
A senior Education Department official confirmed this to reporters on a call, stating that the recent inflationary updates did in fact, play a part on the timeline.
“I want to emphasize that this is not just a new form. It’s an entirely new formula, process and software – not just on our part, but on the part of schools as well. These are really unprecedented changes,” the official added.
Inflationary data update to bring in more aid for qualifying borrowers
The Student Aid Index (SAI) is what the FASFA uses to calculate how much a student can afford to pay that academic year. However, the Education Department announced that the SAI calculations weren’t updated to account for the most recent inflationary numbers.
Prior to this update, many students may not have gotten the aid they were entitled to, as the calculations relied on the Consumer Price Index (CPI) from 2020. However, the newly-updated tables will “allow students to benefit from an additional 1.8 billion in aid and ensure that all students can access the maximum financial aid they are eligible for,” the press release reads.
How and when the aid updates will be made remains unclear
Because schools were originally told that they would receive the applicant data by January, they will now have to reprocess the applications as they undergo the necessary corrections.
However, how and when these adjustments will be made has yet to be publicly announced. While the increased need-based aid is a major benefit to those who qualify, the seemingly last-minute updates could impact the 2024-25 aid timeline.
“Either FAFSA applicant data will be held even longer before being delivered to institutions, or incorrect applicant data will be given to schools before a reprocessing occurs in the future,” the National Association of Student Financial Aid Administration’s (NASFAA) press release states.
Pressure mounts on Education Department to roll out operational updates
As of now, institutions have yet to receive operational updates on what the FAFSA revision process will look like.
“[It’s concerning] that institutions haven’t received any operational updates about when they will receive FAFSA applicant information,” says Justin Draeger, president of the National Association of Student Financial Aid Administrators, in a statement.
Dreager notes that this has been preventing financial aid practitioners from moving forward with processing and packaging financial aid offers, and calls on the DOE to act immediately on the matter.
“We call on the Department of Education to provide institutions, as soon as possible, with operational guidance on how and when these inflationary adjustments will be made, how and when they will impact FAFSA applicant data being delivered to schools, and whether these updates will result in any FAFSA reprocessing,” his statement reads.
Low-income students most likely to be impacted
The FAFSA opens to students for the next academic year on Oct. 1 of each year. After it’s submitted, it typically takes anywhere from a few days to a few weeks for the school’s financial aid office to receive and process the information.
While the distribution of financial aid award letters will depend on the school, students are expected to commit to a school and accept the aid package by May 1. However, it’s possible that some colleges may not be able to stick to this deadline with shorter March turnaround time.
Those who rely on need-based financial aid and lower-income families are likely to be hit hardest by the delays. If the original commitment date isn’t extended, there is no guarantee that every school will have corrected and processed every student’s financial aid award package.
That said, students who are relying on financial aid to commit to a school could be unable to make an aid-informed decision. With updates being made so late in the financial aid processing cycle, Draeger asserts that financial aid offers will be delayed and that students will have compressed decision-making timelines.
Should students take further action right now?
As of now, students do not need to take any further action. Colleges and universities are currently waiting on the necessary FAFSA information to create the 2024-25 academic year award packages.
However, if you have yet to fill out the FAFSA, it’s recommended that you do so as soon as possible. Federal and institutional student aid is disbursed on a first come, first serve basis. Applying as close to application opening date as possible is key to maximizing your potential need-based federal aid.