The “soft launch” of the 2024-25 Free Application for Federal Student Aid (FAFSA) application had a $1.8 billion error in its inflation adjustment that may delay colleges releasing financial aid awards.
More than 3.1 million applications have been submitted since the soft launch on Dec. 30. However, a miscalculation with the tables used in the student aid index (SAI) that account for inflation would have meant students received less financial aid money.
The Education Department on Tuesday announced an update to the SAI tables that will allow students to benefit from an additional $1.8 billion in aid.
“Updating our calculations will help students qualify for as much financial aid as possible,” James Kvaal, under secretary of Education, said in a press statement.
But the announcement of the update threw delays and chaos into the aid award process.
“On the very day that schools were expecting FAFSA applicant information, they were instead notified by the U.S. Department of Education that they shouldn’t expect to receive that data until March, at the earliest,” Justin Draeger, president of the National Association of Student Financial Aid Administrators (NASFAA), said in a statement. “These continued delays, communicated at the last minute, threaten to harm the very students and families that federal student aid is intended to help.”
The soft launch itself was not without some problems, and students and families were warned to exercise patience.
“Financial aid administrators are anxious to receive data as soon as possible, but also want the corrected and final data delivered,” Gail Holt, dean of financial aid at Amherst College, told Yahoo Finance. “Delivery of data is needed before many schools can share further financial aid eligibility details with families.”
The inflation adjustment error will delay when colleges and institutions will receive data from the Federal Student Aid (FSA) program that is used to determine financial aid packages for students.
“College financial aid administrators have still not received ISIRs (their copy of the FAFSA data for students who listed them on the FAFSA), even though it was promised by the end of January,” Mark Kantrowitz, author and student loan expert, told Yahoo Finance. “By failing to update the tables, less of a family’s income was sheltered than should have been, among other impacts.”
Schools won’t receive FAFSA information (ISIRs) and SAI tables until the first half of March, according to a Federal Student Aid release.
Read more: Student loan issues? Here’s how to file a complaint with the Department of Education
What students and families need to know
Students who have already applied don’t need to do anything as the Education Department is fixing the error on the back end.
However, there may be some delays with colleges issuing financial aid awards that may impact early decision making for students.
“With this last-minute news, our nation’s colleges are once again left scrambling as they determine how best to work within these new timelines to issue aid offers as soon as possible,” Draeger said.
The Education Department is in communication with colleges, and some institutions may decide to give students and families more time, changing decision deadlines as a result, according to a department spokesperson.
“Unless they are told otherwise, families should not need to update their FAFSA information,” Eddy Conroy, a senior adviser at New America, told Yahoo Finance. “This year, the financial aid process is very bumpy, but the improvements made to the eligibility criteria for Pell grants will mean hundreds of thousands more students getting help with federal grants.”
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.