May 28, 2024

FAFSA Formulas Out Of Date, Could Reduce Financial Aid For Millions – Forbes Advisor

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Families and students already frustrated with the bumpy launch of the just-overhauled Free Application for Federal Student Aid, or FAFSA, now have another worry: They might not qualify for enough financial aid to cover the costs of their college education.

The reason? The Department of Education failed to include the sharp rise in inflation in its aid calculations on the new form. The department was expected to adjust its calculations on the basis of the government’s consumer price index from April 2020 to April 2023. But it didn’t.

Instead, the 2024-25 FAFSA uses tables that are three years old to assess college affordability. It has not updated the amount of family income that’s shielded from consideration when determining a student’s financial aid. Meanwhile, consumer prices have risen 19% since January 2020.

Universities and other organizations, including the National Association of Student Financial Aid Administrators, sounded the alarm late last year when preliminary drafts of the 2024-25 FAFSA showed inflationary adjustments still had not been made.

In October, Kun Mullan, Public Records Act coordinator at Temple University’s Hope Center, sent a letter to the Department of Education, stating that the income tables were outdated and did not include the inflationary changes required by the Higher Education Act, or HEA.

“If the tables are not updated, many students will receive less federal financial aid than they are eligible to receive under the HEA,” Mullan wrote.

It’s not clear whether this year’s form will be altered to address the problem. According to a Department of Education spokesperson, “The Department continues to assess this issue and will provide more information when it is available.”

The FAFSA determines a student’s eligibility for federal grants, such as Pell Grants, work-study programs and student loans that can make it possible to afford college. Many state-level higher education agencies and schools use the FAFSA to distribute financial aid.

Introduction of New Form Hindered by Site Downtime

The so-called soft launch of the new FAFSA has already had a rocky start. The online form did not become available until December 30, even though October 1 is the date when parents and students usually begin applying for financial aid. When it was launched, the FAFSA was inaccessible—or applicants were unable to complete the form—for long periods of time during its first few days.

“The form is now available for students and families to access 24 hours a day, seven days a week,” the department said in a January 8 news release.

Tuition Is Getting More Affordable–But Student Housing Isn’t

While the cost of many goods and services have spiked over the past couple of years, college tuition has stayed relatively stable. So after accounting for inflation, according to a report by the Brookings Institution, college prices are now effectively dropping.

“In the last three years, the cost of attendance and average net price at public and private four-year institutions have actually fallen by around 10%,” according to the report.

However, other expenses associated with college—particularly student housing—have increased. In a recent study, the Bipartisan Policy Center found that the costs linked to room and board at four-year public colleges and universities have risen 32% over the last two decades, nearly two and a half times faster than the 13% uptick in median family income.

“Federal student aid assistance has failed to keep pace with growing costs, putting major strains on students’ budgets,” the report said.

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