The Worst Year
The Worst Year
FAFSA: Where are we now and what will next year bring?
It has become a higher ed truth, universally acknowledged: this is the weirdest and worst FAFSA year we've ever seen. I've already spent some time detailing why FAFSA was such a mess this year, but I thought it might be helpful to give an update on where we are with FAFSA and admissions this year. I’m also gonna polish my crystal ball to make some predictions about what FAFSA and admissions might look like next year and beyond.
Where We Are: Fall Financial Aid Applicants
At this point, most new students who've used the electronic version of the FAFSA application have had their applications processed and likely have received their financial aid offers from all or nearly all of the colleges they applied to. Most colleges prioritized processing applications from new applicants/students first, which makes sense given the need for students to have that information prior to making their admissions decision. This also means that many colleges are only now beginning to process the aid packages for their continuing (sophomores and beyond) students, so some current college students may not find out if their aid has changed due to the new FAFSA formulas (or, like in Minnesota, due to changes in state financial aid programs) until into June or July.
The vast majority (around 99%) of students use the electronic FAFSA but for the 1% who use the paper form for some reason1, their applications are still sitting. The Department of Education estimates that no paper FAFSAs will be processed until the end of June, so those students have a long wait ahead of them still.
There are still some students and families who are still working through FAFSA, either because they need to make corrections and were struggling to get into the system to get those made or because they are in the small percentage of students who get selected for a process called verification. Verification is when a student's college requests submission of things like tax documents and W2s to verify that the information submitted on the FAFSA was accurate. Every year some percentage of students are selected for verification, which can add several weeks on to the processing time for the financial aid office, depending on how quickly students get the requested information turned in. This year, thankfully, the Department of Education has confirmed that it is reducing the number of students selected for verification, so that should hopefully help some families get packaged sooner.
Where We Are: Admissions Updates
This fall looks like it could be a VERY challenging enrollment year for many non-highly selective colleges. FAFSA application rates are down across the country and many states are also expecting a corresponding decrease in college enrollments. According to the National College Attainment Network (NCAN), as of early May, there has been a nationwide decrease of 20.5% in FAFSA completions by the high school class of 2024 compared to the same point in time for the class of 2023. Every single said, even those that require FAFSA completion as a high school graduation requirement, have seen declines in their FAFSA completion rate, with the smallest decrease in Indiana (-6.4%, a FAFSA required state) to the largest decrease in Mississippi (-29.2%).
While there are some families that opted out of FAFSA this year because they anticipated that they would not qualify for need based grants and will enroll their student regardless, there are also likely some potential students who have opted out of higher education entirely for next year because they couldn't (or perceived that they wouldn't be able to) get the FAFSA done.
It is still a little early in the admissions cycle to know exactly where things will stand for next fall's enrollment. Some of the more highly selective schools are still moving students off of waitlists (a process that is usually pretty much done by this point, but got delayed due to FAFSA). Some of the moderately selective private colleges are still working on their yield rates, including upping some scholarship or institutional aid offers, to try to seal in their class. Community colleges typically continue to enroll students all the way through the summer, with about 20% of their students enrolling in August, so they still have ground to cover. All the being said, NCAN is currently estimating that there could be as much as a 10-15% decrease in college enrollments for fall 2024.
Those decreases will likely largely be felt by community colleges and regional public universities. It could be potentially catastrophic for some smaller private colleges that are already undersized. We've already had a few reports in the past few weeks about some college closures and I wouldn't be surprised if there are a few more.
(Note: I'll likely do a post soon about the why, hows, and what happens next when a college closes, so if you have any questions about that, feel free to drop them in the comment section!)
There are currently both national and state/local efforts happening to increase FAFSA completion rates for the fall 2024 start, but it may be too little, too late for some potential students. While the federal government has set aside $50 million to support FAFSA completion efforts, those fund still haven’t been allocated to states and the clock is ticking, given that funds are supposed to be used by August 31, 2024.
Looking Forward
Earlier this spring, I was feeling more optimistic than I am currently that the FAFSA application will open on time for the 2025-2026 application but my optimism has started to wain a bit. In a typical year, the latest version of the FAFSA opens in October. This year it was delayed until January (technically Dec. 30th, but really January for most families). I don't think it will be quite as late next year but I'm also not confident that they'll get the inevitable system updates, corrections, and testing done by October 1st.
I suspect there will be a lot of conversations about and marketing efforts around trying to increase consumer confidence in the FAFSA next year. The FAFSA news coverage this year was almost universally negative and there are already plans in place to try to highlight why the new FAFSA is a "Better FAFSA" but it makes sense that there will be people who are skeptical about that.
I will still beat the drum that families should complete the FAFSA and that there is good need-based aid available for low-income families, so I would actually prefer that FAFSA be delayed a little (say, November) and really be ready to be fully functional and operational than for them to rush something that is still glitchy just to make it to October.
I haven't heard much conversation about this yet, but I am wondering it we might also see an increase in the number of colleges that also request that students complete the CSS Profile (operated by the College Board, not the federal government) as part of their financial aid process. Currently the CSS is only required by around 250 schools, but those schools were sometimes able to get financial aid estimates to students sooner this year, so that gave them a bit of a competitive advantage in a delayed FAFSA year. There may also be some states that use FAFSA for awarding state aid who may consider starting a separate financial aid application for state aid programs. This is A LOT of work to stand up, so I'm not super confident that this will happen next year, but I'm sure there are states considering it for the future.
In terms of admissions, I don't expect there to be significant changes for the highly selective schools. Some of the schools that are returning to requiring test scores may see a bit of a dip in application numbers as some students who don't have exceptional test scores self-select out, but I don't think this will make any of the schools that are in single digit admissions rates noticeably easier to get into. These schools also typically overenroll students who don't qualify for need-based financial aid, so their fortunes are less tied to the challenges of the FAFSA rollout.
I do think the less selective private institutions will be more assertive in recruitment and aid packing next year, especially those that didn't hit their enrollment targets this year. I expect the tuition discounting rate to increase2 and acceptance rates to stay the same or go up. Most of the schools in this category will likely stay test optional for the next admissions cycle if they already were.
Public universities and community and technical colleges are typically under resourced when it comes to recruiting and marketing and are most likely to enroll students who qualify for need-based grant aid, so they may have some big ground to cover to stabilize enrollment for their next year. A big variable for these schools will be figuring out how to recruit adult learners or the recent high school grads who opted not to enroll for fall 2024.
Ultimately, I still think next year will be better than this year, for students and parents at least. It might be tougher for colleges and universities, especially those who saw enrollment dips this year. I'll be curious to see the final tallies of financial aid and enrollment for this year because it remains true: this year was a bad one.
Some students, including those who are incarcerated or who might have limited access to technology for other reasons, still do the paper form for now. Eventually FAFSA would like to entirely eliminate the paper version.
Tuition rates are also likely to increase a bit for next year, so not confident that net affordability will be better.