The Department of Education’s FAFSA Fiasco

I f, like me, you have a college-bound high-school senior in your family, you’ve likely been on the receiving end of yet another colossal screw-up by our federal government: the overhaul of the Free Application for Federal Student Aid, commonly known as the FAFSA. Every year, students (or more commonly their parents) need to fill out the FAFSA with information about their income, assets, and expenses in order to qualify for federal student aid. Many colleges require the FAFSA before awarding other forms of need-based aid, and some require it to be filed even by people without need before they can qualify for scholarship aid. There’s a more detailed and onerous form, the CSS, operated by the College Board and required by some schools. Filling these out is like doing your taxes, only more so. Typically, the forms are available in October, and schools may set filing deadlines in the fall so that they can deliver financial-aid awards at or near the time they send out acceptances.

Not this year. The FAFSA wasn’t even fully available until January 8, after the Department of Education briefly flicked on the lights on the form on December 30 just so it could claim that it launched in 2023. I was on two college visits over the weekend; one school said that it was just starting to receive the first batch of FAFSA need assessments for its accepted students, and the other had decided in the fall that this was going to be a disaster and pushed its date for students to commit to the school back from May 1 to June 1. For schools with rolling deadlines, that means that students who are ready to commit now will have a leg up on those whose decisions hinge on available aid. It also means that undecided students may end up wasting time visiting campuses they would otherwise have crossed off their lists by now. On Monday, Gavin Newsom signed an emergency law extending by a month the deadline for California students to apply for scholarships, and the state has already pushed back the commitment date to May 15.

Ted Mitchell of the American Council on Education, a veteran of the Obama-era Department of Education, told PBS NewsHour:

This is a rolling catastrophe. And as we have just heard, it’s rolling over students who are waiting to hear about their aid, so that they can make the right decision for them and their families. This is unprecedented. The — as your reporting said at the beginning, the delay has been a long time coming, three, four months now. . . . We have 175 institutions that have moved their deadline either to the middle of May or to June, and they’re giant institutions, about 5 million students represented, in the University of California, California State university system, the SUNY system, the University of North Carolina system.

The Department of Education aimed to revamp the FAFSA for students filing for the 2024–25 academic year. It did so at the direction of Congress, which passed the FAFSA Simplification Act in 2020. The theory was that the form could be simplified, in part by directly incorporating data from the IRS into the department’s calculations, while at the same time the amount of aid being awarded could be increased by liberalizing the criteria. The reality: FAFSA applications are down 33 percent this year, shutting more students out of receiving aid or, perhaps, going to college at all. As Katherine Knott and Liam Knox at Inside Higher Ed explain:

The legislation reduced the number of questions on the form from 100 to fewer than 40 and changed the underlying formula that determines students’ aid eligibility. The new law also significantly expanded Pell Grant eligibility. . . . President Biden’s incoming Education Department would have until October 2022 to get it all done. By the time Education Secretary Miguel Cardona was confirmed in March 2021, it was already clear to department officials that the task would require more time. That June, they were granted an extra year, pushing the deadline to Jan. 1, 2024, though they did opt to implement some provisions early—such as Pell for incarcerated students.

Inside Higher Ed’s comprehensive report notes that the Education Department was consumed with other priorities — distributing Covid relief, suspending collection of student loans during the pandemic, managing President Biden’s debt-forgiveness fights, implementing the new gainful-employment rule for colleges (especially for-profit institutions) disclosing more about the employment status of their graduates — and failed to prioritize the FAFSA:

A source familiar with the project said they thought the department underestimated the work involved in the FAFSA overhaul from the get-go and viewed the project primarily as a system issue—one that wasn’t as high-profile as their other ambitious plans. Besides, there always seemed to be something more urgent, or more politically salient, that required attention.

The department, in time-tested Washington fashion, blamed Congress for not giving it more money. Congress, in its own fashion, didn’t realize what it was asking the department to do:

Early on, the department decided that the most efficient way to implement the new FAFSA was to replace the decades-old central processing system, which used an outdated coding language and ran on an IBM mainframe, with a cloud-based system that would also administer some student loan programs. [Mark] Kantrowitz, who worked on the last major changes to the FAFSA in 1996, said revamping the code system was destined to be a massive undertaking. “The underlying infrastructure was written in COBOL,” he said. “I haven’t written code in COBOL in 40 years. That’s an ancient language, not a modern database. . . .”

Bryce McKibben, senior director of policy and advocacy at Temple University’s Hope Center, worked with Washington senator Patty Murray, a Democrat, to help shape the FAFSA Simplification Act. He said that at the time they didn’t anticipate the complete technical remodel that the department ended up pursuing. “When we were negotiating the law, we did not know that the Department of Education would make that synonymous with overhauling all of its legacy systems,” he said.

That overhaul hasn’t gone well. As Danielle Douglas-Gabriel at the Washington Post summarized the state of play two weeks ago:

The financial aid form . . . contains technical errors that make it impossible for some families to complete the application. Submissions are piling up at the Education Department, where officials are behind in processing applications, preventing colleges from issuing financial aid awards. A federal watchdog has launched two investigations and lawmakers are furious.

On Friday, the department had to admit that even after it finally got the system running, an error resulted in incorrect data for about 200,000 of the 1.3 million forms processed so far:

The Federal Student Aid office . . . announced . . . that its system failed to incorporate all necessary data fields to accurately compute aid based on students’ reported assets. Consequently, applicants must have their submissions reprocessed and presented to educational institutions. . . . The Department of Education stated that the miscalculation has been rectified without specifying the time frame for reprocessing the impacted applications. However, it acknowledged that the agency had disseminated inaccurate information. . . . The current issue arises amidst a significantly delayed system as officials rush to address technical malfunctions in the online form, handle application processing, and expedite the distribution of financial aid packages.

And the Biden administration hasn’t made it a priority. As Inside Higher Ed notes:

Biden appointed Rich Cordray—a former director of the Consumer Financial Protection Bureau with no experience in administering federal student aid—as head of Federal Student Aid in May 2021. Another possible indicator was that the Education Department didn’t start holding press calls about the new FAFSA until 2024; by contrast, it held regular calls about student loan relief, often featuring high-ranking White House officials.

Douglas-Gabriel reports:

When the Biden administration took over in 2021, former student aid staffers said the FAFSA update was treated as a purely technocratic venture that civil servants could manage on their own. Meanwhile, senior leaders at the department were also focused on other priorities, including a litany of new regulations and cleaning up poorly run student loan forgiveness programs. . . . When the vendors flagged problems in developing the system or missed deadlines, student aid staff said they felt like it was sometimes difficult to get political leadership to pay attention.

The department had been overconfident as far back as the tail end of the Trump years, when it told Congress that its deadlines were workable. But it also didn’t give Congress the information it needed to reassess the deadlines and the department’s funding needs, according to Douglas-Gabriel: “As the release date neared, lawmakers, colleges and other stakeholders say the Education Department kept them in the dark. Despite regular briefings to Congress on the FAFSA, congressional aides say the department did not divulge the problems it was contending with.” The result has been chaos that looks like the offspring of the Obamacare rollout and the ORCA system.

Even so, in late 2022, Republicans were willing to pony up more funding for the project, but with one condition: Not a penny of the money could be spent on Biden’s illegal student-loan-forgiveness program. Biden chose to turn down the money and let the FAFSA burn rather than accept that condition, and then the Supreme Court struck down his loan-forgiveness scheme anyway. Now, the bill for that brinksmanship is coming due, and college applicants and their parents are the ones who’ve been stuck with it.