FAFSA Glitches Leave Students, Colleges in Limbo


​​​​​​​​​​​​​​Aired February 29, 2024

Hosts Jon and Mushtaq are joined by special repeat guest Justin Draeger, president and CEO of NASFAA, to talk about the Education Department’s flawed rollout of the new FAFSA form and the implications for students and colleges as well as what happens next. They also dive into the proposed legislation that would extend Pell Grants to short-term career training programs.

Here are some of the links and references from this week’s show:

House Committee Approves Bills on Short-Term Pell, WIOA Reauthorization
American Council on Education | Dec. 18, 2023

Department of Education Announces Steps to Make Better FAFSA® More Readily Accessible
Diverse: Issues In Higher Education | Feb. 13, 2024

Education Department Says FAFSA Fix Is Coming for Social Security Issue
USA Today | Feb. 20, 2024

OPINION: Every FAFSA Delay Puts College Further Out of Reach
The New York Times (sub. req.) | Feb. 8, 2024

Extending Enrollment and Financial Aid Deadlines
American Council on Education


 Read this episode's transcript

Jon Fansmith: Hello, and welcome to dotEDU, the higher education policy podcast from the American Council on Education. This week, I am joined by my perpetual and always appreciated co-host, Mushtaq Gunja, and new honorary, but maybe permanent, like we’ll see how this works out, repeat guest, possible new co-host, Justin Draeger, the president and CEO of the National Association of Student Financial Aid Administrators. A great group of people to have, Justin already very casual and into this podcast, so I think we’re going to have a lot of fun today, guys. How are you doing?

Mushtaq Gunja: I’m doing great. Justin, it’s nice to see you. My 12-year-old had to memorize a very extended version of Little Red Riding Hood.

Justin Draeger: Uh huh.

Mushtaq Gunja: And there’s a whole thing about the wolf is there and she’s... Or I guess Little Red Riding Hood is looking at the wolf and thinks that maybe it’s Grandma. There’s a joke in there about you replacing Sarah somewhere, and I can’t quite get it, but I’m workshopping it. What do you think, Justin?

Justin Draeger: If I’m the wolf in this story, then I’m all about it, so I’ll take it. I’m glad to be... This is my fourth time, right, Jon?

Jon Fansmith: Number four. This is number four. You have actually now surpassed our president, Ted Mitchell, in terms of appearances on this podcast, so-

Justin Draeger: Well-

Jon Fansmith: ...it’s a true landmark event. Yeah.

Justin Draeger: What does that come with?

Jon Fansmith: Uh... Our great appreciation. Oh, no, wait, Justin, I did promise you a tote bag.

Justin Draeger: Yeah, that’s right.

Jon Fansmith: Admittedly, right, a tote bag that I think dates from the 1980s and has been stored in a garage for a while, so it’s a little musty smelling, but you know what? Nothing but the best for you, buddy.

Justin Draeger: I am a big collector of tote bags, so this is actually something that I’m very interested in, and I really want you to make good on this promise, Jon.

Jon Fansmith: I will do that. Actually, this prompts a question I always like to ask people. When you go, and you both do this a lot, you go and you speak on campuses and to audiences... What is your favorite speaker gift to get?

Justin Draeger: Yeah, that is a good question because sometimes you get gifts that are a little impractical to take back on a plane with you, or if you’re on a diet or you’re working out or something, they’re not really practical to... I’m a collector of tote bags, so I do like a good tote bag. I mean, that’s legit.

Jon Fansmith: Mhmm.

Justin Draeger: Especially where we live, like they charge you for bags and stuff that you use-

Jon Fansmith: Right.

Justin Draeger: ...and whatever, I’m conscientious, blah, blah, blah, but it’s mostly I get charged for the bags. And two, I like a good mug, so I actually do collect mugs of places I travel. How about you?

Mushtaq Gunja: I really like... I like those campus pennants. They’re easy to bring back, and then you can put them on a little flag and wave them around. I like those.

Justin Draeger: Okay.

Mushtaq Gunja: Yeah, it’s hard to go wrong with a good mug, and the only problem now is that we do not have any cabinet space for the mugs, and I can’t-

Justin Draeger: Uh huh, that’s true.

Mushtaq Gunja: ...quite get rid of them. I’m going to have to start bringing them into the office. Fansmith, maybe I’ll leave them on your desk.

Jon Fansmith: Yeah, I’m a mug guy too. I actually used to love getting stuffed animals. You get those little, the mascot stuffed animals, you ever get that? And I would give them to my kids, and that was great because then I didn’t have to remember to buy them something.

Justin Draeger: Oh.

Jon Fansmith: But then the problem is you’d usually get one, and I have two kids, so you have to sort of decide who gets what, and now they’re also both too old for stuffed animals, so.

Mushtaq Gunja: It’s okay. The second one is your favorite anyway. You told me that the other day, right?

Jon Fansmith: Yeah, neither of them listen, so you can say everything. I mean, we can go into great depth about my feelings about my children here. But we probably shouldn’t-

Mushtaq Gunja: Hey, how do we segue from that?

Jon Fansmith: Yeah.

Mushtaq Gunja: Yeah, how do we segue from that to short-term Pell?Because, Fansmith, I had a question to you about what’s happening with short-term Pell these days.

Jon Fansmith: If you could figure out a natural segue there, I’d be very impressed, but of course it would illustrate how good you are at this job, Mushtaq. But since we didn’t have that segue, I’m just going to launch into it, and, Justin, feel free to jump in too.

I know you guys have been paying attention to this, but the House Education and Workforce Committee a few weeks ago, about a month ago at this point, passed a bill out of committee called the Bipartisan Workforce Pell Act. It does something, actually, that ACE has been supportive of for a long time, which is extending Pell eligibility to short-term programs. That’s something we think is valuable. We think a lot of institutions are offering that. We think it serves a portion of the population that is not necessarily as well served by traditional postsecondary options and getting Pell eligibility to allow for a lot of especially low-income students to access those skills and improve their workforce outcomes is something that’s valuable.

There’s always been concerns about who will be the providers and the possibility of fraud or abuse, and this bill has pretty stringent guidelines, requirements around the programs that will be eligible. So from those standards, we tend to be supportive of the base bill.

The problem is that alongside the base bill, the committee put together, and for people who don’t follow these things so closely, Congress has these PAYGO rules that essentially say if you’re going to do something that will cost money when you make a legislative proposal, you have to figure out a way to pay for it either by generating new revenue or cutting spending in some other area. And the original pay-for that the committee put together for this bill was to say that schools subject to the endowment excise tax, which is a kind of complicated formula that says essentially institutions that have endowments that are large relative to their student bodies, there’s about 40 or 50 of those institutions, and they tend to be the most selective, well-resourced institutions, those schools can’t participate in the federal student lending program. So Stafford Loans, PLUS loans, parent PLUS loans, their students wouldn’t be able to borrow through any of those programs.

There was a lot of concern about this that essentially we’re setting a new precedent federal policy, something that we’ve never done before, that says we’re going to take one group of institutions that, frankly, in the moment are politically unpopular and subject them to differential treatment under the federal financial aid programs. It’s a bad precedent to set regardless of what you think of those institutions. It was just a bad idea, and the committee heard that. They heard that from other members; they heard that from the public.

So they revised their offset, and the new offset says it’s those same institutions, but those same institutions will be subject to a risk-sharing scheme that essentially puts them on the hook for any of their students’ unpaid student loans. So instead of saying they can’t borrow the loans, they’re saying now the institutions have to pay back to the government on an annual basis the unpaid loan volume from their students.

In a lot of ways, frankly, this is one that is even worse than the original proposal. You’ve moved from one bad precedent to another. We’re putting risk-sharing, especially, frankly, a risk-sharing program that’s not particularly well targeted, you’re aiming it at this handful of institutions, but the general concept more broadly applied would have a lot of really negative repercussions, and you’re putting that forward.

So despite all that, the bill does have bipartisan support. The chair and ranking member of the committee were both original sponsors of it. It moved out of the committee with some Democratic support. Lost some Republican support, but gained some democratic support.
And it is being brought to the floor as early as tomorrow in the House under suspension, which, again, people may not follow this that closely, but suspension votes are essentially votes where it’s something that’s thought to be so popular that they can do a simple measure, say two thirds of the chamber votes in favor of it. They don’t have to go through the formal process of going through rules and these other things. It’s kind of like an expedited process. It gets used a lot for things like renaming post offices where there’s not a lot of controversy about what’s being done. It’s a way to sort of clear the calendar.

We are certainly hopeful that a number of members of the House have heard the concerns about this. We’ve gotten a lot of very positive feedback. We will be sending up a letter—we may have sent it as I record this, actually—up to the full House, identifying the concerns we have with the offset itself. A number of other associations and groups have done that as well. So we will see.

The vote’s going to take place tomorrow. Again, you need at least two thirds of the votes to be in favor, so it’s a pretty rigorous bar for anything to get that level of support in this Congress, but we’ll keep following for it.

The other thing about it, of course, is even if it passes the House floor, it’s dead on arrival in the Senate, so it won’t be picked up. But obviously a very frustrating position to be put in where we support the underlying policy, but it’s paired with something that’s a clear poison pill that makes it impossible to support the bill’s progress, where we would love to be in favor of it, and I think our members would love to be full-throated in their support of the underlying policy.

Mushtaq Gunja: Both the items on the PAYGO that target that set of institutions I feel like are shortsighted. I mean, one, the risk-sharing is tricky because I think we are really hoping, I think as a sector and probably as a country, we’re sort of hoping that those sets of institutions that might be subject to the endowment tax will actually do more to take low-income students, folks that might be at a little bit more of a risk of defaulting, and this sort of risk-sharing might incentivize those institutions to take fewer students that we might think about.

The other thing I guess I might say is that, looking at all this from a Carnegie Classification lens, increasingly we are seeing that all institutions are trying to serve all sorts of different types of students, and I think that the Harvards of the world have been dipping their toe into the certificate world for some time, some things that might lend themselves to short-term Pell, and I worry a little bit about really classifying a certain type of institution as serving a certain type of student or doing a certain type of work.

I think what we’re really seeing is a whole mix of types of institutions doing all sorts of different work, from our associates colleges now offering some baccalaureate degrees and some of our doctoral institutions offering certificates, and everything’s a mix. And I worry that the PAYGO is like a little bit of a 1980s, 1990s sort of way of looking at the world that doesn’t exactly feel like it’s what’s happening today in 2024. Justin, what do you think?

Justin Draeger: Well, I have a question and a comment. The comment I’ll make is built off yours, Mushtaq, which is with the new gainful employment and financial value transparency regulations, a lot of four-year schools moved away from things like certificates because they just didn’t want to mesh themselves in gainful employment regulations. Remember, those were only applicable to non-degree programs. So a lot of schools moved away from non-degree programs, certificate programs because they didn’t want to have to be subject to gainful employment.

Now they’re going to have to be reporting on all programs to meet financial value transparency regulations, so there’s really no reason why they have to move away from non-degree programs. I think a lot of four-year schools will be moving back towards, look, if we’re going to have to report on all programs, why shouldn’t we just be doing all programs including non-degree programs? So I think we are going to see this mashing up, this meshing of different schools doing all sorts of different things to meet student needs.

Two, Jon, do we know, do these PAYGOs, either of them that they proposed, the previous one or this one, do they even pay for the short-term program? Has anybody even run a score on this to see if they’re even paying for what they’re proposing?

Jon Fansmith: It gets a little complicated, but it’s a great question, in part because we focus so much on what we think are really just the bad policy choices that are made here. But it’s also, in terms of federal scoring, it’s a bad outcome. The Pell money falls under two pots of money—won’t go into great detail—mandatory and discretionary. Discretionary, think of that as that’s the money every year Congress decides how much a program gets. Mandatory sort of rolls forward automatically. A lot more complicated than that, obviously.

This bill, these offsets would actually pay for the mandatory piece, which is only a small portion of the overall cost. So about 135 million dollars a year additional cost to the Pell program. Not a huge amount relative to the overall size of Pell Grants, right? Or to federal spending. But it’s money that every year appropriators will now need to find and increase what they spend on the Pell Grant program to meet the cost of these changes. So it’s an offset that not only is horribly problematic on the policy grounds, but it doesn’t actually really address the majority of the costs of the change. So it fails on a couple of levels.

The one other thing I want to come back to Mushtaq’s point too at the beginning about the financial implications, will this make admitting those students more risky, I think there’s actually a bigger step here, which is if you are—and to Justin’s point, you have GE and financial value transparency reporting being layered on—if you are one of these institutions, and they are, they do have significant resources. They can look at this. If you are a institution, a lot of community colleges actually do this, you don’t have to participate in the federal lending programs to stay within the Title IV programs. You can award your students Pell Grants and not allow them to borrow loans.

If you are on the hook for repaying all unpaid loans by your students, these are the kinds of institutions that could partner with private lenders. They could leave the federal lending system altogether, which, to Justin, your point, means as an offset, that money disappears too. It undercuts the value of it as an offset. You’re providing a pretty reasonable financial incentive for schools that have the means to do it to leave the federal lending system. That’s a big, big step, obviously, but when you’re introducing an unpredictable annual financial risk to how you calculate what you’re going to do going forward, it’s not an unreasonable decision to make. They say, “We’ll simply just step out of this. You’ve made it so onerous for us. Why would we continue to participate?”

Justin Draeger: Yup. And this has downstream effects too. I saw even community colleges speaking out against the risk-sharing portion because even though this specific provision doesn’t impact them, the downstream effects of risk-sharing will ultimately, you open the door, it will ultimately then spread to potentially community colleges. You talk about schools who will step out of the loan programs when that ultimately hits them, it’ll be community colleges. They’ll say, “We’ll stop participating in loan programs that shuts down access.”

Jon Fansmith: So speaking of things shutting down, though, Mushtaq.

Mushtaq Gunja: Yeah.

Jon Fansmith: How’s that for a segue? We are heading into a deadline on Friday for the federal government to fund at least a handful of agencies.

Mushtaq Gunja: We have a tradition on this podcast about predicting whether or not shutdowns are going to happen and then being wrong with our predictions. So Justin, this is always fun. It’s nice to be on the record and being wrong on the record.

But I’ll put my flag in the ground here. I think we’re going to have this partial shutdown. So we’re only a few days away. It’s a partial and not a full shutdown. I think the speaker of the House is caught—again, it’s Groundhog’s Day—a little bit caught between a little bit of a rock and a hard place. The most conservative members of his caucus I think are probably happy with the shutdown and want to see him fighting a little bit and maybe think that he hasn’t been fighting quite as hard as he should be. He’s not going to be able to avoid the shutdown without cutting a deal with Democrats. I don’t know that he wants to do that right away. I think we’re headed to a partial shutdown.

That’s where I am. Justin, where are you?

Justin Draeger: I feel a lot of peer pressure to make a prediction because I’m on your podcast. But I will say, personally, I stopped predicting these sorts of things because they are just so unpredictable, and I feel like I am always wrong, so I’ve stopped predicting. But I’m forced because of the peer pressure of being on such a high-profile podcast like yours.

I’m going to take the opposite bet, and I’m going to say no shutdown. At some point the speaker is going to have to face the music, but I think Democrats gave him a lifeline over the weekend. Whether he’ll take it, I don’t know. Whether he can rally his own base, I don’t know. But I think Republicans have more to lose from a shutdown than Democrats. So I’m going to go with no shutdown.

Mushtaq Gunja: Justin, you are smart to take the opposite side. No matter what I said, blindly taking the opposite side was the smart way to go. Fansmith, break the tie.

Jon Fansmith: I want to actually break down Justin’s prediction too, because saying no shutdown, is that a CR? Do they do the bills? There’s a couple different ways to avoid a shutdown, and I’m curious what you think the outcome is. Because as you would imagine, I have a very nuanced and probably uninteresting take.

Justin Draeger: Even if they buy themselves just a little bit more time, I think they avoid just a shutdown, just because I think Republicans have more to lose politically if it appears they’re in the majority and in the House and can’t govern. So I just think... They’ve had too many political losses with the immigration bill, they shut down immigration, I just think they have to avoid the appearance of being ungovernable.

Jon Fansmith: Yeah, and I’m with you there. I think there’s almost zero leverage for the Freedom Caucus here. These bills will only ever pass the House with Democratic votes. Democrats control the majority; they control the White House; there’s just no path forward of saying one faction of the Republican caucus in the House gets to dictate the terms here because there’s no path forward.

And the shutdown rhetoric... You do have some extremists on one side who are saying the shutdown will politically benefit, will give us that leverage. But, to your point, everybody else understands that this feeds the narrative that they’re struggling to govern in the House right now, that shutdowns always fall at the feet of the party in Congress that’s seen as driving them, and they’re politically disastrous.

And this is an election year that’s... I say this all the time, but Speaker Johnson has a two-vote margin right now in the House. There’s a two-vote margin in the Senate for the Democrats. The presidency by most polls is a tossup at this point. A big blunder already this far into the election season that just, I think Speaker Johnson will have enough voices around him pushing him that, let’s avoid the bigger catastrophe. Or even if this puts you at risk of, frankly, being vacated like Kevin McCarthy was, the downside is so much worse.

So I think we’ll get a CR in the short term. I think we’ll eventually get some funding bills done. We know they’re drafting the bills now based on the levels they have. Those are ultimately what we’ll see. It might take a little longer, but they’ll eventually get sorted out. That’s my guess.

Mushtaq Gunja: I like that we’re on the record, and I guess we will revisit this the next time that we are together.

Now, Justin, all joking aside, we are thrilled to have you on the podcast right now and at this moment because one of the two or three biggest topics in higher education right now are the problems with the FAFSA that the administration has had. I have a whole set of questions about how we got here, what’s next, how our campuses are going to be able to deal with this, what this means for students, but maybe just a couple of minutes on how we found ourselves in this moment and the immediate what comes next. That would be... I think would be really helpful for our listeners who probably don’t spend as much time thinking about the FAFSA as you and Jon do.

Justin Draeger: Well, I’m happy to talk about it. It’s something that over on the financial side, financial aid office side, we’ve been living day in, day out, and you all at ACE have been great partners on all of this. So you all help me and pull me out if I go a little too deep on some of these issues.

But obviously the FAFSA has been around for a lot of years, and this is the biggest overhaul of the Free Application for Federal Student Aid that we’ve had maybe ever in its lifetime. Congress mandated the FAFSA. I think it’s important, though, to back out and just remember why we have a FAFSA.

So if we even start at a very basic level, and I imagine there are a lot of college presidents out there who maybe have never filled out a FAFSA, they’re aware of it, maybe have never even seen their financial aid offer that the college sends out that’s based on the FAFSA. I’m not here castigating or judging anyone for it; College presidents have a lot on their plate.

But the whole reason that we have a FAFSA that, Congress mandated it back in ‘92 and then it was created later in ‘98, was it was supposed to be a unifying form. It was supposed to be the form that colleges used, that states used, that scholarship providers used, because before this we had all sorts of financial aid forms. And this was supposed to be the unifying form that utilized federal methodology so that a student or family could use one form, and it would determine their financial need and calculate their eligibility for the federal Pell Grant, Federal Work-Study, supplemental grants, external scholarships, state aid, and student loans. Now, understandably, there are still some external forms that people use, and some schools use institutional methodology; we understand that. But by and large, it has successfully been this unifying form.

But in doing that it created this tension. And the tension is, because so many entities utilize this form, the tension is between how many questions we ask without making it so complicated that it wards off the very students that we most want to apply for financial aid. So it’s this tension between complexity and access.

So Congress got together after a lot of debate, and this was bipartisan. So this was Democrats and Republicans got together and decided we are going to simplify the form, rely on technology that would allow people, not to import but just basically it would be automatic. Tax information would automatically be shared with the Department of Education and we would overhaul federal methodology to make the form much simpler. And that has been a three-year process that’s culminated in today. As you said Mushtaq, it has been a long time coming, but very bumpy this year.

Mushtaq Gunja: What accounts for the bumpiness? So that’s a really helpful history of why we have a FAFSA. When I was in the department, we knew that whenever we saw Senator Alexander, he was going to pull out a little index card that was going to say that we should have the FAFSA on an index card; that’s all we should be asking for. So we’ve been talking about a simplified FAFSA for some time. What got us to this position today where the changes have been so difficult to implement?

Justin Draeger: So Senator Alexander’s dream was like the FAFSA on a postcard, and to some extent half his dream was realized. So the Pell Grant is largely based today on the new FAFSA. The one for ‘24-’25 is based on basically a family’s adjusted gross income and their family size. And that is how we will determine a Pell Grant going forward.

However, Senator Alexander also came to understand, and he came to the NASFAA conference back in, I think, 2014. He shared his vision for FAFSA on a postcard, and he was met with a lot of resistance because aid administrators said, “We need a lot more information than just AGI and family size to determine all other aid eligibility besides Pell.” So he came up with this compromise, working with Senator Murray and folks on the House side. And so we still ask a bunch of questions, mostly imported from the IRS. So Pell is AGI and family size, but we still ask other questions that are mostly derived from the tax return. Some are not from the tax return, but still shortens the FAFSA considerably to determine all other forms of need-based aid.
But this completely, form follows formula. So underneath the form is all of this formula that’s still doing calculating, that gives families now a student aid index, which is now... It used to be the EFC but now is this new number. The Department of Education has had to update all of their systems, build this conduit between the IRS and the Department of Education, and really build out all of this new methodology.

I think, Mushtaq and Jon, there will be, I mean there’s no doubt, it’s already started, there will be congressional oversight hearings, probably bipartisan, that will figure out where things went awry. And I don’t know if it behooves us now to dig into all of that because I think there will be important lessons learned. I really do. I don’t think it’s just politics.

But we started to notice that things were going off track last year in 2023 when the FAFSA wasn’t going to come out on October 1. And then in December we learned that the back end wasn’t totally built and that schools wouldn’t start receiving FAFSA applicant data till the end of January. Then the end of January came, and we learned that schools actually wouldn’t start to receive FAFSA applicant data until March.

And here it is the end of February and schools still do not have FAFSA applicant data, and not all applicants can even apply using the online FAFSA today. So things are very, when we say bumpy, I mean, that’s putting it pretty lightly.

Jon Fansmith: I was going to say, that’s far more mild than you usually put it, Justin.

Justin Draeger: I think it’s your presence that’s really taking the blood pressure down a level. So Jon, if you could just be with me at all times, you and Mushtaq, I think it would really help.

But no, our members have sort of been letting out primal screams about every week. But I will say we are making progress. After several steps backwards, I think we are making progress. The department does seem to be making now forward progress.

This week we are starting to see signs of light. The department is releasing about a hundred test information records that schools can actually test. That’s good news.

They’ve announced a permanent fix for people who couldn’t apply for the FAFSA, students with parents without Social Security numbers. That’s good news.

And they keep telling us that they are on track to release FAFSA applicant data to schools in the next two weeks. They said that timeline is holding. That’s good news.

So we are hoping that all of this continues to hold through March because if it goes any later, I think we’re already going to have negative impacts. But we are, as Ted Mitchell and I wrote in The New York Times, this is already going to negatively impact our most vulnerable students, and any more delays will be downright catastrophic for those students.

Mushtaq Gunja: And Jon, Justin-

Jon Fansmith: Yeah, and-

Mushtaq Gunja: Oh, go ahead, Jon.

Jon Fansmith: No, I was just going to add two things on what Justin said. One, I think the op-ed, one of the other things it did was it called on institutions where possible to think very clearly about what their deadlines were for application and decision. And to give students, especially low-income students, the maximum amount of time to weigh offers and make decisions and give them as informed a choice as they make these decisions. Because these delays are pushing back those decision points for those students, the ones that, as Justin pointed out, this process is really meant to serve most of all and the ones we worry most of all about getting into college, understanding the process. So what schools can do in their power as we wait on the department to sort a lot of things out is think about how they’re serving those students and what they can do.

So Justin, the op-ed was great. You and Ted I thought articulated really well where the challenges were and how institutions can at least control some piece of this. And ACE is keeping a record on our website of schools that have chosen to do that. So if your institution is one and we don’t have you, please let us know. We’d love to include you. And if you’re listening to this and your institution hasn’t made those decisions, certainly encourage you to think about what you can do for those students.

Justin Draeger: Jon, can I say one thing on that?

Jon Fansmith: Yeah, of course.

Justin Draeger: I think it’s really helpful because even schools that could lock in their class by May 1... One of the conversations we’ve had with enrollment managers on the NASFAA side is, it still is worth waiting just because even if you could lock in your class with students who have committed, there might be students who just get their aid offers so late that it’s worth giving them the time. So even if you’re in a position where you could lock in your class, it might still be helpful, charitable, and a part of in keeping with your values, to still give the time.

So, look, I understand that institutions are all over the map. They have bills to pay; they have their own commitments they have to think about on their side. I can’t... I’m not here to pass judgment on every institution and their individual issues that they’re facing. So I’m not here to do that. I’m just saying there are other considerations besides, look, we can lock in our class, why shouldn’t we? There’s a larger scope perspective we’re asking institutions to take as they think about... That might not be the only consideration that schools should weigh as they think about their commitment dates.

Mushtaq Gunja: I was certainly in that position. I needed my financial aid award letter to be able to decide which institution to go to. Then not only did we get the letter, but then we went back to the school and asked for a little bit more, and we were able to negotiate something. So I am all for it, and I hope... How many institutions now have signed on to moving the deadline, Jon?

Jon Fansmith: That is a wonderful question. I wish I had an answer for you. I don’t know what the number is. It is updated on a daily basis, and we’ve been really happy to see especially institutions like the ones Justin was talking about who are really making that commitment to serve those students. So encourage you to check it out. But yeah, I wish I had it off the top of my head. It’s a good number of schools.

Mushtaq Gunja: We’ll post the link to that signup in the show notes. Justin, I’m curious, so if the department holds and they’re able to transmit that data in mid-March, in a couple of weeks, when does it look like institutions are going to be able to get those awards out to students? In the best case, when is it going to be that the students will have an award letter in their hands?
Justin Draeger: It’s going to depend on two to three things. So first, when the department starts transmitting aid offers to schools, it’s not like turning on a light switch and the lights turn on. So it’s not moving as quickly as electricity.

It’s more like what we have right now are millions of FAFSA filers who are building up in a reservoir held up behind a dam, and the back end isn’t completely built out by the department yet. So at some point the department is going to open up this dam and the backlog of FAFSA filers are going to start flowing to institutions.

We do know that when they start to flow out, they’ll flow out slowly at first, and that’s for good reason. The department is going to slowly start to turn up that dial because they’re going to watch to see if there are any errors that are happening, and they don’t want to just open up the floodgates. And if there are a bunch of errors that have to be reprocessed, they don’t want to reprocess a whole bunch at once. So they’ll watch them flow out slowly at first. This is the likely scenario. Then if they don’t have any errors, they don’t see any issues, then they’ll slowly start to ramp that up.

But what happens on the back end is as those FAFSAs start getting processed, they go through several other federal database matches. And those other federal database matches, like with the Social Security administration and others, can only accept so many files on a given day. So there’s really just a bandwidth issue as to how many can flow through on any given day. So it might take, by the time we get to mid-March, we might have 6 million FAFSA filers in this reservoir. So it’s going to take several days, if not maybe a few weeks, for this backlog to actually file out. So that’s the first component. Schools are going to have to wait for a critical mass of their backlogged ISIRs, or FAFSA applicant data, to reach their systems.

Then number two is whether their financial aid management system, their technology system is set up to receive and process all of these files. That means that their information gateway system is actually set up to receive them. Most are, but we know, the department has told all of us, ACE and NASFAA, that there are roughly 500 schools that still don’t have their mailbox set up. That means that their systems, their financial aid management system has all the latest patches and is ready to go.

So some of the test ISIRs that schools—I’m talking some technical speak here—but some of the test files we’re getting this week will help schools with that testing and hopefully get them ready to go for mid-March. But it’ll depend largely on those two things.

And then number three, some schools will want to remodel. They’ve been modeling their data, but they’re going to want to rerun their numbers to make sure that they’ve got enough institutional funds to meet the need now that they have actual files and data. So they don’t want to start sending out eight offers with institutional money attached if they don’t actually have the money to match what they’ve been modeling. So I would say, Mushtaq, best-case scenario, best case, everything works, everything’s good, if they get files by mid-March, you’re probably looking at early to mid-April for financial aid offers to be out the door.

Mushtaq Gunja: Not to add a complication, Jon, but I know that you have been tracking and talking to institutions about the ways in which we might have some data issues and some technological problems on campus as well. Do you want to talk a little bit about that?

Jon Fansmith: Yeah, and there’s two parts to it, and I think Justin kind of hit on the one that I think is the immediate concern, those 500 or so schools where it’s just not clear their systems are set up yet to deal with the... When that water comes through the dam, they’re ready to receive it and route it the right way. So the department’s doing outreach. We’ve been doing outreach for members. I’m sure Justin and NASFAA has been doing that as well. Trying to get the word out. You need to look at those test files. You need to run them through your system. You need to make sure you are up to date because you don’t want to be trying to figure that out when the data is actually arriving. You need to be doing that in advance. So that’s a big piece.

I think the other piece is the data itself, and one of the things Justin talked about is simplifying the process for students here was you get the information directly from the IRS, and that’s great. It makes it easier for applicants. The information’s pre-provided.

The problem we’re hearing about from campuses, though, is that information that a individual downloads from the IRS and then gives to the department, under the old system, the Department of Education could share that with schools and say, “This is your FAFSA data, and you can use that for all the allowed legal purposes that are covered under the Higher Education Act and under the Federal Education Privacy Act.” IRS data is different. It’s federal taxpayer information. FTI, the shorthand, is treated with a degree of privacy and care and security that’s far stricter. So this data in the law that allowed the IRS to share it with the Department of Education can only be used for determinations around the actual determination and awarding of aid.

So there’s a lot of things that institutions used to use their FAFSA data for. One example we hear a lot about is you would get student information, they would be determined to be Pell-eligible students, and you would let your enrollment office know, look, here’s the pool of Pell applicants we have. And there would be outreach efforts. There’d be things to show them, this is an affordable institution for you, there’s supports on campus for low-income students, here are other ways we can address the needs and the concerns you might have about attending our institution, to support those students.

Now, because of these restrictions on the data itself, your financial aid office can’t share them. That information is not being used for the purpose of awarding aid, even if it is something that is ultimately beneficial for those students. There’s implications around research and filing our IPEDS reports and things that were built into a lot of institutional processes are understood to be either beneficial to the students or to be necessary for compliance with federal requirements that now are up in the air.

And there’s even things like other federal programs like the TRIO programs that relies on some financial aid determinations to see if a student is eligible. They’re meant to serve low-income students. Without being able to actually share that data with those program operators, you are in a very different place in terms of how you identify those services, how you enroll students and see that they’re eligible.

And then finally, one of the things that we would love to see more of, Congress is moving in this direction, is figuring out ways to seamlessly integrate low-income students into other federal benefits programs that have nothing to do with education. SNAP benefits, child care services, all sorts of things that we know those kind of wraparound supports that are so critical for low-income students in not just getting into school but staying in school. These data limitations will make it really hard. Before, an institution would have some ability to cross-reference and provide information on students. Now they can’t because, again, that data is limited.

So we are hopeful this is something Congress may pick up. I don’t think it was anyone’s intended consequence. It’s one of those things that I think certainly people here in DC had been debating this, thinking about this, but as it’s rolling out, we’re beginning to see the actual implications. There’s some things to navigate here that, again, looking to serve those students, just things that need to be fixed. So something we’re paying a lot of attention to and certainly want to let our members know we’re hearing you and we’re working on it.

Justin Draeger: Yeah, there will be definitely a technical amendments package that’s needed on the other side of all of this. So we’re keeping a list, I’m sure the department is as well, of just changes. And federal tax information sharing, we do expect the department to release some guidance on this, but I think it’s on the other side of getting all the fixes that need to be fixed right now just so that we have a normally operating FAFSA process. But we do need clarification on how schools can actually use this federal tax information. It falls under a completely different jurisdiction than FERPA and normal Department of Ed privacy law.

Mushtaq Gunja: Well, I’ve been trying to get my hands on some of that information for Carnegie purposes because I’m trying to create a Social and Economic Mobility Classification, so I feel everybody’s pain. I’d love to be able to get at it, but I know how difficult it can be to access some of that data and what the restrictions are.

Hey, as we wrap, can I ask both of you for a piece of advice? So we have a whole set of presidents, other senior administration leaders on campus listening to this podcast. Justin, if you had a thing or two that you wanted them to pay attention to or do over the course of the next couple of weeks before hopefully they get that first tranche of FAFSA data, what would you advise them to do?

Justin Draeger: My advice would be to stay in close contact with your financial aid office. If you want to be able to hit the ground running, I would check in with the aid office to make sure that they have the training and the resources they need, because this is going to be an entirely different year. Everybody’s focused on FAFSA, but FAFSA becomes sort of the headline, but underneath all of that, remember, is the formula. There’s new financial aid packaging rules that go along with this. And there is a whole new, besides the expected family contribution, a whole new student aid index, and some new uses for that index, that the school’s going to need to follow. So I would be checking in with your aid office and making sure that they have the resources they need to pull all of this off.

And one final note. I would just say, I’ve had the chance to actually fill out a FAFSA with a few students. It is easier. The promise of this is real. So it was so easy the first time I did it that... I did it with a student. We got it done in less than 10 minutes. It was so easy that I actually clicked backwards through the form with the student. I was like, “Is that really it?” We went backwards. We probably added to the department’s average time to completion number, because I was like, “This can’t be it.” But we went all the way through it. And I’ve done it a couple times now, helped students through it. The promise of all of this is legit, so we’re going to get this ironed out. I’m confident that it’ll be better on the other side. I’m sorry for all of the challenges, really, legitimately, because I think there’s going to be real harm here, but the promise of this act I do believe is real.

Jon Fansmith: Justin basically just stole my answers. Thanks a lot for that, Justin. I was going to say, it’s hard in the moment to focus on this, but what we will have is a process that’s not just easier for students but that will provide more students with more aid. And, frankly, making it easier will mean there’s more students who are able to access the system than we’ve had before. So it is worth the pains, even though, and no way minimizing the significant pains campuses are experiencing.

And I would urge presidents, as Justin said, check in with your financial aid office, provide some emotional support, maybe not just material support. These are people who are working very, very hard under very difficult and constantly shifting circumstances to serve your students.
I think Mushtaq and Justin, that probably wraps what we, maybe not everything we have to say about FAFSA. I’m sure we’ll be keeping people updated as things develop.

But, Justin, you did great. Sarah is actually in London right now, so we might be able to make a formal offer replacing her any day now. This was a great audition

Justin Draeger: Thanks.

Jon Fansmith: And Mushtaq, you’d agree, right? He’s kind of earned the job.

Justin Draeger: If you pay in totes, I’m all in.

Jon Fansmith: We might have to recommission some new lines of ACE totes to keep you on the team, but we’ll see what we can do.

Justin Draeger: All right. Well, I appreciate it. Thanks for having me.

Jon Fansmith: Thank you for joining us on dotEDU. If you enjoyed the show, please consider subscribing, rating, and leaving a review on your favorite podcast platform. Your feedback is important to us, and it helps other policy wonks discover our show. Don’t forget to follow ACE on social media to stay updated on upcoming episodes and other higher education content. You can find us on X, LinkedIn, and Instagram. And of course, if you have any questions, comments, or suggestions for future episodes, please feel free to reach out to us at podcast@acenet.edu. We love hearing from our listeners, and who knows, your input might inspire a future episode.

About the Podcast

​Each episode of dotEDU presents a deep dive into a major public policy issue impacting college campuses and students across the country. Hosts from ACE are joined by guest experts to lead you through thought-provoking conversations on topics such as campus free speech, diversity in admissions, college costs and affordability, and more. Find all episodes of the podcast at the dotEDU page.

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