FAFSA Will Adjust for Inflation, Potentially Delaying Financial Aid Offers
Credit: Image Credit: Bloomberg / Contributor / Getty Images- The Simplified FAFSA soft-launched in late December with a myriad of reported issues.
- One such issue was that it did not take inflation into consideration, which goes against Congress’ requirements.
- The Department of Education will make the fix for the upcoming award year.
- Making that fix, however, likely comes at the cost of delayed or incorrect financial aid offers.
College students may soon qualify for more financial aid thanks to an incoming fix to the Free Application for Federal Student Aid (FAFSA).
A Department of Education (ED) spokesperson told BestColleges that ED plans to incorporate a fix to the 2024-25 FAFSA that will result in many college students seeing larger financial aid awards for the upcoming academic year.
The department will adjust for inflation when determining a student’s Income Protection Allowance (IPA), which means their report will show less family income available to pay for educational expenses, thus leading to more financial aid.
The FAFSA Simplification Act of 2020 required ED to adjust for inflation yearly. But when the long-delayed 2024-25 FAFSA launched Dec. 30, that adjustment was missing.
Advocates wondered for weeks whether ED would make the adjustment at all for the 2024-25 award year or if it would opt to institute a fix for the next FAFSA instead.
Many celebrated the news of the inflationary fix, but some advocates are worried about how ED plans to implement the change. According to a statement from the National Association of Student Financial Aid Administrators (NASFAA), it’s still unclear when and how ED plans to make its adjustment.
The FAFSA soft-launched in late December, and ED previously told BestColleges that more than 1 million students submitted their application in the first week and a half.
It’s unclear whether ED will hold onto applicant data and not send information to colleges and universities until it makes the inflation adjustment. Or, the department may opt to send information to schools in late January as initially planned and later send amended financial aid offers to students.
Either option comes with a significant downside.
Adjusting these inflationary numbers is the right thing to do, and should have been done from the beginning,
NASFAA President Justin Draeger said in a statement.
Unfortunately, because the department is making these updates so late in the financial aid processing cycle, students will now pay the price in the form of additional delays in financial aid offers and compressed decision-making timelines.
If ED plans to make adjustments before sending student data to schools, financial aid offices likely won’t be able to send award notices to students until late February or later. If ED plans to make the change after sharing data with schools, institutions will have to send out financial aid award letters that may be lower than what students will ultimately qualify for.
Students and families need the complete picture of what college will cost them — and financial aid offices will be doing everything they can to ensure students have the information they need as soon as possible to make informed college-going decisions,
Draeger said.
The department spokesperson added that by taking inflation into account, students will have access to an additional $1.8 billion in federal student aid.
All the while, ED is still scrambling to fix ongoing issues with the new Simplified FAFSA.
The department traditionally releases the form to students in October but delayed the new form’s release until late December. After it finally launched, students reported a myriad of issues, including an ongoing issue that prevents students with at least one parent who doesn’t have a Social Security number from completing the form at all.