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The college financial aid sector may be facing a perfect storm of issues right now.
Institutions are still dealing with fallout from a botched rollout of the new Federal Application for Federal Student Aid (FAFSA). Many students received long-delayed financial aid packages as a result, with some delaying or forgoing college plans altogether. Meanwhile, a recent survey of financial aid employees indicated a majority are burned out and may leave the profession.
To say that it has been a trying year for financial aid offices across the country is an understatement. But financial aid leaders are continuing to pave new pathways forward.
“A lot of schools are on the verge, and this [the FAFSA debacle] is pushing them over the top,” said Howard Leslie, vice president of financial aid compliance at Berkeley College, and a 48-year veteran of the industry.
Last year, the Department of Education announced extensive changes to the FAFSA in a massive overhaul designed to streamline the application process and make financial aid more accessible to students and families. However, the subsequent financial aid cycle proved particularly challenging for institutions and students, with technical issues and missed deadlines causing processing delays by weeks or months and some institutions changing their acceptance deadlines because of it. Students must submit the FAFSA to be considered for federal loans and grants, as well as most financial aid packages from states and colleges.
The changes, a result of the FAFSA Simplification Act, signed into law in 2020, include a reduced number of questions, a direct data exchange with the IRS, and a new formula called the Student Aid Index (SAI), which impacts how aid packages are calculated. But then a series of snafus, including delays in when colleges received FAFSA applicant data, caused a ripple effect, increasing workload for financial aid staff and leaving students in limbo waiting longer to receive financial aid package information.
Leslie said proactive communication by his office to students and families has been successful and will continue to play a key role in helping them adapt to FAFSA changes and better understand financial aid decisions.
“We had incredible communication plans, videos, a webpage we update, to explain all of this to students so they understand the changes in the aid packages,” he said. “We have been communicating literally since last summer about FAFSA simplification.”
FAFSA completion rates for the 2024-25 school year were heavily impacted by the challenges with the rollout of the new form, with completion rates down 24.3% over the previous year as of the start of this summer. In June, the federal government announced $50 million to help boost completion rates for the next cycle.
Stress on financial aid offices across the country has been compounded by staffing issues, and these stressors may not show signs of letting up. A March 2024 survey conducted by the College and University Professional Association for Human Resources (CUPA-HR) and the National Association of Student Financial Aid Administrators (NASFAA) indicated that more than half of financial aid employees are likely to seek other employment within the next year. One in three of those surveyed indicated they are “likely” or “very likely” to seek new opportunities within the next 12 months. Among the top concerns of staff are better pay, opportunity for remote work, and desire for a more flexible schedule.
“A very large percentage of financial aid offices are understaffed,” Leslie said. “So now you have understaffed financial aid offices that are dealing with more student concerns and… FAFSA technical issues. The technical issues caused not a bump, but a mountain, of issues.”
With Fall 2024 admission deadlines now long past at many institutions, it remains to be seen how the FAFSA debacle will impact how many students show up on college campuses next semester. Financial aid offices are a key pillar on campuses, and financial aid packages — along with the time it takes to receive a package — play an increasingly important role where students decide to attend college. In a recent survey from Ellucian, an ed tech company that produces financial aid products, 76% of students said their financial aid award influenced where they enrolled and 92% said they would go elsewhere if processing took longer than eight weeks.
Institutions hardest hit by the FAFSA debacle and staffing issues tend to also be some that are already facing enrollment challenges, due to changing demographics, waning confidence in higher education, and lack of perceived value of a college degree.
Leslie has some advice for financial aid staff on continuing to weather the storm.
“Stay the course,” he said. “Help your students and schools through this horrific year that we are all having. We always knew it would take a lot of work and we will get through this, like we always have, to see the greener pastures for both our students and schools.”
