WASHINGTON — The Department of Education said this week that it is making an additional adjustment to this year’s Free Application for Federal Student Aid, known as the FAFSA, that will make $1.8 billion more available in financial aid.
The new change follows a complete overhaul of the form, which after years of work, was released on December 30.
The FAFSA determines eligibility for federal Pell Grants and federal student loans – and in most cases, the financial aid provided by colleges as well. The new version of the FAFSA – which will be used for the 2024-25 academic year – is shorter and simpler and is expected to make some low-income borrowers eligible for more financial aid.
But initially, the Department of Education did not tie the new FAFSA calculation to the latest inflation data, as required by law. Failing to adjust the calculation could have resulted in less aid for some students during the 2024-25 academic year.
On Wednesday, the agency confirmed to CNN that it will now adjust the FAFSA formula to reflect the most recent inflation data. The latest change was previously reported by NPR and The Washington Post.
FAFSA changes could delay financial aid awards
Usually, the FAFSA is available on October 1 each year, but the overhaul of the form pushed back the release date by roughly three months.
The Department of Education was required to release the new version by the end of 2023, and while it met that deadline, the form was only available sporadically, for about 30 minutes at a time, for the first two days. It was not made available 24 hours a day, seven days a week until January 8.
Furthermore, the Department of Education has said it won’t send FAFSA data to colleges until the end of January, giving them less time than in prior years to generate financial aid packages.
The timing varies by institution, but typically award letters are sent to students in March, who must commit to a college by May 1. It remains to be seen whether colleges can announce financial aid awards on their usual timeline.
There is some concern that the new inflation adjustment, announced this week, will lead to further delays.
“Adjusting these inflationary numbers is the right thing to do, and should have been done from the beginning,” Justin Draeger, president of the National Association of Student Financial Aid Administrators, 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,” he added.
The Department of Education told CNN that it will provide more details on the timeline for the update soon.
Also on Wednesday, a group of Republican lawmakers sent a letter to the Government Accountability Office asking for an investigation into the Department of Education’s handling of the FAFSA rollout.
“Repeated delays from the Department of Education … in rolling out the new FAFSA have left students and schools in limbo for the upcoming school year,” wrote the lawmakers.
FAFSA overhaul will make more students eligible for financial aid
Separate from the inflation adjustment, the overhaul of the FAFSA makes the form easier to fill out and increases the number of families eligible for financial aid.
In fact, the Department of Education estimates that 610,000 more students will qualify for a Pell grant on an annual basis. The Pell grant program is a key way the federal government helps students from low-income families go to college by providing eligible students with money they don’t have to pay back.
And an estimated 1.5 million more students will be eligible for the maximum Pell grant amount, which typically changes each year. The Pell grant is worth up to $7,395 during the current school year.
In previous years, the FAFSA could be as long as 108 questions. With the new form, some applicants will have to answer as few as 18 questions, which would take less than 10 minutes to complete, according to the Department of Education.
