Three-Quarters of Private Colleges Say FAFSA Delays Changed Their Incoming Class
Credit: J. David Ake / Contributor / Getty Images News / Getty Images- A new report says last year’s FAFSA debacle affected the composition of the incoming class at most private colleges.
- More than 40% of colleges reported a smaller entering class, while 11% said their class was less racially and ethnically diverse.
- Most colleges also reported an increase in the number of students eligible for Pell Grants.
- Changes to the formula affected students whose families own small businesses or farms.
While the Department of Education (ED) continues to tinker with the rollout of the 2025-26 Free Application for Federal Student Aid (FAFSA) form, more repercussions from last year’s debacle are coming to light.
According to a new report from the National Association of Independent Colleges and Universities (NAICU), the FAFSA delay hit private institutions and their students especially hard, given the high-cost, high-aid model many private colleges employ.
In a survey of 251 private institutions, 74% said the FAFSA delay “changed the composition” of their incoming class for fall 2024. More than 2 in 5 (44%) welcomed a smaller class, and 11% said their class was less racially and ethnically diverse than in previous years.
In addition, 22% had fewer financial aid recipients than the year before.
“The survey findings provide a clear picture of the disruption caused by the Department of Education’s chaotic rollout of the new financial aid application form,” NAICU President Barbara K. Mistick said in a statement.
More than half of the institutions (58%) reported that FAFSA issues affected the amount of aid they distributed, with 37% offering more and 16% giving less. At the same time, 71% of private colleges increased their discount rate, suggesting they were using institutional aid to offset decreases in federal aid resulting from the delay.
Discount rates — the percentage of tuition revenue awarded as financial aid — at private colleges have been rising steadily for more than a decade, cresting 50% in 2022-23. In other words, private institutions are giving away more money than they’re taking in through tuition.
Four in five private colleges said changes to the FAFSA formula affected students. One positive outcome was that, thanks to the adjustment in eligibility, 64% of colleges reported an increase in the number of Pell Grant recipients.
Overall, though, reports suggest that the FAFSA delays disproportionately disadvantaged low-income, Black, and Latino/a students, and it’s difficult to estimate how many such students would have received Pell Grants if not for the FAFSA confusion. Even before the fiasco, eligible students were leaving $3.6 billion in Pell Grants unclaimed.
Another change involved the number of children in college. Under the new FAFSA formula, families no longer benefit financially by having more than one child in college at a time. Two-thirds of private colleges said this change affected the eligibility of some students on their campus.
Finally, colleges said formula changes involving small businesses and family farms affected aid eligibility. Almost one-third (30%) said the small business exclusion — eliminating the previous exemption of family-owned businesses with fewer than 100 employees — impacted students, while 24% said the same about the new provision that includes the net worth of family farms as assets.
“The delays in the FAFSA rollout have had a tremendous impact on students and institutions, with a disproportionate effect on low-income students,” Mistick said. “The repercussions from this rollout will be felt – by students, families, and institutions — for years.”
Colleges said the ED wasn’t sufficiently transparent during the delay. Nine in ten said the Department failed to provide timely information, and 88% said any such communications weren’t clear. Only 7% said ED officials provided timely responses to requests for FAFSA-related assistance, the survey noted.
“It should come as no surprise that college and university leaders are disappointed with how the Department communicated throughout the rollout of the new FAFSA,” Mistick said. “While there have been improvements of late, a lingering distrust remains as we approach another deadline on December 1. Colleges and universities, students, and families require better communication and transparency from the Department going forward and in addressing the remaining challenges associated with the rollout, so we don’t lose another class of students.”