The Financial Aid Disaster 2024

John W. Dysart
President
The Dysart Group

The federal government through the Department of Education pledged to simplify the process for applying for financial aid.  The new process would be easier and provide a streamlined user experience.  The new formula would ensure more low-income students would be eligible for Federal Pell Grants.  The rollout of the formula and process has been a complete disaster.

• While the financial aid season launched in October for both students and financial aid offices, the changes resulted is significant delays. The timeline for students moved from October to January for students and families still encountered obstacles and delays.  The timeline for schools moved from October to early March, to the middle of March, and now the end of March.
• The formula has been delayed due to bugs. The Department discovered an error in the calculation regarding the treatment of inflation and was going to move forward without making a correction until public backlash forced a change.
• Families seeking financial aid are being forced to wait an additional five months to determine their eligibility.
• Colleges and universities are just now receiving calculated eligibility for some students, but a new issue was discovered which means that more than 200,000 applications will need to be recalculated.
• It is a nightmare for families and students, especially for those with high financial need.
• The delays have obliterated options for financial planning.
• The number of students who have applied for financial aid this year has dropped. It has been projected that as many as 2,800,000 fewer students will apply for financial aid this cycle, a drop of 20% compared to previous years.
• The fiasco is going to directly impact enrollment for both students and institutions. For colleges and universities still recovering from the pandemic, many are likely to experience declines in enrollment for both new and returning students.
• It is possible, given trends in recent years, that the issue may force some schools to close.

The Department of Education has announced steps to mitigate the problem.

• Fewer financial aid applicants will be selected for verification.
• The Department will suspend program reviews through the end of 2024.
• There is an announcement to deploy teams to select colleges and universities overwhelmed by the impact of the delay.

Institutions are doing all that they are able.

• Many have delayed or eliminated the deadline for students to commit to enrollment.
• Many have been forced to hire additional personnel and invest more in communication efforts at a time of budget stress.
• Colleges are preparing to deal with backlash from students negatively affected by the formula changes such as students from families with multiple children in college.

Everyone is forced into a wait and see mode. The impact of the disaster on college enrollment is difficult to predict. The negative implications for enrollment are likely to vary by institution type, with private colleges and universities likely to bear the brunt of enrollment declines.

It is unfortunate that poor planning, technical difficulties and terrible execution will discourage some students from attending college, create financial difficulties for families with significantly less time for financial planning and cause material enrollment and revenue shortfalls for many colleges and universities.