FAFSA: 'Unforced error' in aid calculations will likely cause more delays for students
An error at the federal student aid office sent incorrect data to colleges processing financial aid packages.
A calculation error with the 2024-25 Free Application for Federal Student Aid (FAFSA) sent incorrect data to colleges processing financial aid awards, impacting 200,000 students who may have previously received financial aid letters.
The new FAFSA application has been plagued with problems since its soft launch in late December, with a $1.8 billion error that delayed colleges releasing financial aid awards.
Colleges were supposed to receive institutional student information record (ISIR) data to process financial aid awards in January, but that was pushed to mid-March.
In recent days, the Federal Student Aid (FSA) office issued an update stating that they identified an issue for about 200,000 dependent students who reported assets on their FAFSA form and have already had financial aid packages processed and delivered.
“It is not clear when they are going to re-process them to re-calculate, which may make colleges reluctant to release aid offers until they know whether the miscalculations have been fixed,” Edward Conroy, senior adviser of the education policy program at New America, told Yahoo Finance.
This is causing frustration among financial aid administrators.
“This is another unforced error that will likely cause more processing delays for students,” Justin Draeger, president of the National Association of Student Financial Aid Administrators, said in a statement. “At this stage in the game and after so many delays, every error adds up and will be felt acutely by every student who is counting on need-based financial aid to make their postsecondary dreams a reality.”
With data already delayed since January, this new error will likely have the biggest impact on early-decision applicants who applied early.
“Amherst has received more than 2,000 ISIRs — out of more than 5,000 expected at this time of year,” Gail Holt, dean of financial aid at Amherst College, told Yahoo Finance. “The financial aid community is at a loss in having to deal with another setback that was not created by colleges and universities.”
Read more: Student loan issues? Here's how to file a complaint with the Department of Education
Error impacts families who reported assets on the FAFSA form
If you received a financial aid package before March 21 and didn’t report assets on your FAFSA application, you are not impacted.
If you received a financial aid package before March 21 and your family reported assets, such as investments, total cash, savings, and checking accounts, on your FAFSA form, your application will be reprocessed, and the new calculations will be sent to colleges.
“Schools and states can recalculate the [student aid index] SAI to develop a tentative aid package for an affected student without waiting to receive a reprocessed ISIR,” according to the FSA statement.
However, there may be reluctance on behalf of colleges to do this.
“Schools can only work with valid and correct data that is provided to them from the U.S. Department of Education [and] it is not feasible or realistic to send out incorrect FAFSA data and ask thousands of schools to make real-time calculations and adjustments to the federal formula on the school side,” Draeger said.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.
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