Challenges Surround FAFSA Soft-Launch

0:00:09.3 Speaker 1: Hello, welcome to Office Hours with EAB. Well, the new FAFSA is here, and the “soft launch” hasn’t gone too well. Frequent maintenance pauses have locked students out for all but a few hours each day, and many say the information they’ve already entered into the system appears to have been lost. Our experts recap what we know so far, and they offer advice to admissions and financial aid professionals about what they should be doing to manage a very fluid and challenging situation. Give these folks a listen and enjoy.

0:00:46.8 Kathy Ruby: Hello, everyone, and welcome to Office Hours with EAB. My name is Kathy Ruby, and I’m a principal working with EAB’s Financial Aid Optimization group. So unless you’ve been hiding under a rock, you’ve probably noticed that there has been the soft launch of the new FAFSA and spoiler alert, it hasn’t actually gone very well from what we can tell. We’re gonna dig into what’s happening and what led us to this point, and then we’re gonna offer some advice to admissions and financial aid folks about what can be doing to help manage in a very fluid and challenging situation. So luckily, today I’m joined in this discussion by my colleague, Brett Schraeder, who’s very experienced in this area. So Brett, would you mind introducing yourself and telling us what you do here at EAB?

0:01:32.8 Brett Schraeder: Yeah. Hey, Kathy, good to be with you. I’m Brett Schraeder, managing director of the Aid Optimization team, so like Kathy, we’ve both spend lots of time on campuses and now work at EAB and help colleges and universities try to figure this stuff out in particular, this new FAFSA.

0:01:52.5 KR: Never a dull moment. So Brett, can I ask you to give us, just to kick us off, give us sort of an abbreviated version of the history of the simplified FAFSA, what got us here today, how long they’ve been at this and what’s been the impetus for streamlining the FAFSA form?

0:02:11.7 BS: Sure. Well, I won’t go too far back in time, but Lamar Alexander, former Senator from Tennessee, was the proponent of the… What he called the Postcard FAFSA, so families basically check a box and say, “Use my tax returns and come up with my EFC” or now called the SAI. And we’ll get into that in a second, but… So when he retired, Congress finally passed a simplified FAFSA, and so the goal was to really make it easier for families, and so the official line is that, it’s come from a 108 questions to just 36. It was passed, we’re now three years ago that this was passed, and it was actually supposed to be implemented last year, but the Department of Ed asked Congress for a little extra time because it’s such a big project, and so now it will be implemented for the ’24/’25 academic year, which means students right now who are looking at college for next year or continuing in college next year are filling out the new FAFSA.

0:03:20.1 BS: So it’s got several changes to it and including the shorter version and it directly connects to the IRS, so it officially pulls your tax return data over with that comes a lot of minutia around consent and data privacy and some of those things, which will create some challenges for families, which I think we’ll get into, and it does include what we will see is a big expansion in Pell grant qualification and changes the nature of the way families can qualify for Pell grants. It won’t be just based on the data they put in the FAFSA. There are ways to qualify based on income and family size, so.

0:04:07.3 BS: Some good things are coming out of it. And I think in general, this will be a positive thing for families overall, but the department, this is such a big project that it’s gotten behind. The FAFSA is normally available in October, Kathy, as you know about two months ago, three months ago, they said, Well, it’s gonna be December, and then they said, Well, it’s gonna be right at the end of December, and then they launched it on a soft basis in the middle of December, and really it was soft launched up until just a few days ago. A lot of families were having trouble with it, and this has caused some consternation. Senators have gotten involved and said, “Hey, we need some clear guidance, we’ve had families complaining about…” And counselors and colleges all complaining about how challenging this is gonna be, and so we’re here to really, I think, talk about what you can do as a college or university to get ready for this. So Kathy, maybe you can talk a little bit about what’s happened and what we expect to happen with the new FAFSA, what colleges have been thinking about.

0:05:25.7 KR: Yeah, I think in the work that we do with our partners, and I think some of what’s not been covered as much in the media lately is that this is changing eligibility for families, they made some significant changes to the need analysis that are essentially as far as we can tell from the data that we looked at, it’s really helping low and middle to low income families more easily qualify for Pell grants. As you said, it’s a big Pell grant expansion, and I wish that… I almost wish every media article could remind everyone about this is that the government is getting more generous in what they’re rewarding, they’re just struggling to roll out the new process for it to happen.

0:06:09.1 KR: But I think there are some other… There are some winners in terms of financial aid eligibility, and then as we know, there could be some losers as well in terms of some changes they made to the need analysis asking for businesses and farms now and also taking out the number in college as a factor in calculating the SAI. Oh, go ahead.

0:06:32.5 BS: Kathy, can you just expand on those two things a little bit, like what are they doing with business and farm?

0:06:37.3 KR: Yeah, let’s be a little more specific, but… So for the past at least 10 or 11 years, when a family completes the asset section of the FAFSA, they are asked to report the net worth of their investments and cash and savings, they’re told to exclude their home equity and told to exclude their retirement assets and for the past 10 to 11 years, had also been told to exclude the value of a family farm and exclude the value of a family-owned business if it was… If you have fewer than 100 employees, so those family farms and the small businesses are now included again, so when a family that’s filling out the asset section of the FAFSA, which by the way, not everyone has to complete, but for families who do get asked those questions, they’re asked to include the net worth of a family farm, which is a big concern, of course, for some families who may live in an area of the country where they have a lot of value in their family farm, and then also asked to report the value of any kind of business, no matter how many employees there are.

0:07:45.0 KR: So that’s something as we’re working with our partners, they’re concerned, they’re paying attention to how a student’s eligibility might change from year to year, so when we think about what the schools are experiencing, they’re certainly thinking about how eligibility might change for their first year class, their admitted students, but they’re also paying close attention to what might happen to their returning students and how a student’s eligibility might change for aid without regard to the student situation actually changing, the formula just changed instead.

0:08:22.3 KR: So they’re paying close attention to make sure that they’ve made accommodations and are ready to communicate to the returning students about how they’re gonna respond to that. Do you wanna talk a little bit more about that actually, in terms of as we start to think about how schools are addressing these changes, you wanna talk a little bit more about that in terms of what schools are doing or what the options are for returning students?

0:08:50.2 KR: Sure, yeah. So yeah, then that’s a great point, Kathy, you have… With these FAFSA changes, when we’re talking with partners, we really kind of say, you have to have a plan for your new students and you have to have a plan for your continuing students because while they’re all using the same FAFSA a student who’s continuing, obviously, if they gain Pell eligibility or they lose Pell eligibility because of some of the changes, they’re gonna be wondering, Gosh, what happened? And they may be calling your financial aid office and saying, What happened? And newer students, some may understand that as well, if they’ve had siblings in college or have gone through the FAFSA process before, but a lot of families are gonna feel like, Well, this is the process and so I’m doing it. So I think what we’ve really been counseling our schools to be thinking about is how do you communicate to students? And unfortunately, with this slow launch of the FAFSA, Federal Government, Department of Education has also thrown another wrinkle colleges in that normally once a student fills out the FAFSA that data is available within a day to the colleges or universities, and these colleges and universities get the file directly sent to them or downloaded to their portal, and then they can load that data.

0:10:09.1 BS: Well, that data will not be available, we don’t have a date yet, but definitely, probably till the end of January, if not a little longer. So there’s a whole month window right now when students are now filling out the FAFSA, and we can talk about some of the complications that students have had, but students are filling out the FAFSA right now and putting University of Kathy Ruby on their list. And the University of Kathy Ruby doesn’t know that the student filled out the FAFSA because the Department of Ed is not sending the data yet, and so a student, normally would be trained to go log on to the portal within a few days and check if that university got the FAFSA. Well, this year, they’re not.

0:10:53.6 BS: So one of the things we’re doing is really coaching our partners to think about what to say to students when they really are in the dark about this. And can’t really give any advice. And so we’re working with partners there. For example, for partners that have a very early admit day on campus, we have several partners with admit days in early February, we’re saying, Hey, have your students bring their FAFSA submission summary, which used to be called the Student Aid Report, now called FAFSA submission summary.

0:11:32.4 BS: Bring your FAFSA submission summary, so at least we can check to see that we’re on the list, we’ll have your SAI in front of us, so maybe we can give you some coaching about what your aid award might look like, really, it’s gonna be a mindset shift for these schools, because what has traditionally been the case, at least since the prior prior year of facts that came out six, seven years ago, is almost every student shows up on campus by February if they’ve submitted a FAFSA, so they already have a package in their hands and so that won’t be happening anymore. Right, Kathy?

0:12:03.8 KR: Right. And the focus is more on, Okay, how can we get everyone who doesn’t have a package through the pipeline. Right now, everybody possibly won’t have a package.

0:12:14.2 BS: So what do you say to them? Kathy, what are some of the things that you’ve been hearing about how… What the experience has been the first couple of weeks of January with students, and maybe some of the things… I know NPR kicked out a story earlier this week that caused a little consternation in the world.

0:12:33.0 KR: Yeah, in terms of the recent media coverage, there’s been lots of media coverage about the soft launch itself, and about the struggles that families are having, the FAFSA, just to clarify, especially by the time this podcast is published. The FAFSA is available 24/7, but some families are still having difficulties filling it out, and the biggest concern, I think, Brett, that we’ve heard is sometimes the family can’t get all the way through it in one sitting, sometimes if the parent has no… Well, all the time, if the parent hasn’t gotten their FSA ID ahead of time. So we’ve heard back about some FAFSA completion events where not everyone can even fully complete it because it now takes a couple of days before a parent’s FSA ID can be approved.

0:13:21.7 KR: So that’s one of the biggest pieces of advice that we’re making sure that our schools are sharing with their families, which is, Parents, if you don’t have an FSA ID before you do the FAFSA, make sure you give yourself a couple of days. But yes, the NPR article and there was a Washington Post article a couple of weeks before that.

0:13:40.0 KR: So the article is about how the Department of Education did not build in the inflationary increases that were required in the law for the income protection allowances. So let me interpret some of that language. So within the need analysis or the calculation of the SAI, the income protection allowance is kind of what it sounds like. It’s an amount of money that is used… It’s a number that protects your income from being expected to be used to pay for college. So in the context of figuring out… Essentially the formula starts with your gross income, subtracts a bunch of allowances, and then expects a percentage of that to go toward the student aid index.

0:14:28.5 BS: So, Kathy, these are like allowances for living expenses? Everyone has to live on their income.

0:14:35.0 KR: Yep. Food, housing, medical expenses. And there are different amounts depending on your household size. It used to vary depending on how many kids you had in college. Now it’s just based on household size. A dependent student who is with their parents gets a certain amount of their income protected so they can go get a part time job and not be expected to contribute too much of that to college. So the first thing to remember, though, is that the FAFSA Simplification Act increased those income protection allowances by about 20%, sometimes even more. And that did happen. So the law put in place income protection allowances for ’23/’24, and then it said, and by the way, then you have to increase them every year for inflation. Those were two big things, right, Brett? Those IPAs had not increased in…

0:15:25.9 BS: Not happened before.

0:15:26.9 KR: Many, many years. And the fact that they will be increasing it for inflation every year is a great thing. But the department missed it for the first year. We think it’s just one year because the ones in the law are for ’23/’24, and now we’re talking about the ’24/’25 academic year. The most important thing to remember is the big thing happened. The IPAs did go up. They just didn’t go up as much as they perhaps should have. I’m a little bit of a need analysis nerd, so I actually went in and figured out for a family of four, how much of a difference in the SAI is it going to make? And I estimated about three to $700. In other words, the SAI will be about three to $700 higher than it should be.

0:16:13.1 KR: Does that actually translate into lost dollars for a student? It really depends on the college they’re attending, what kind of aid they were qualifying for in the first place. Obviously, if their SAI is so high that they don’t qualify for aid, it doesn’t matter. But if they’re in the middle somewhere, it will matter, but it might not actually translate into dollars.

0:16:32.8 KR: So the concern, I think, is simply that there’s a lot of media attention creating more panic and less faith in the system. And I think that was the next… As we think about this soft launch and the challenges, what are our concerns as you think about it, Brett, what are the concerns about the media coverage and simply just the glitches that are here now and that are creating confusion and panic?

0:17:01.9 BS: Yeah, it’s a good question. Thanks for the needs analysis explanation. That’s always helpful. I always learn more when I talk to Kathy Ruby about needs analysis. So hopefully everyone listening does, too.

0:17:12.8 KR: It’s just math, Brett. It’s just math.

0:17:15.1 BS: That’s right. You make me smarter every time, Kathy. Yeah, it’s a good question. Anytime… Unfortunately, our world we live in, our media loves a good fire or a good emergency or a good sort of negative headline. And that’s kind of what we’re getting with this new FAFSA. And there have been problems. There’s no question about it. Students have had trouble getting in. They were throttling back on that first day, first couple of days, they were not letting everybody in who wanted to fill out a FAFSA. Speaking from personal experience, I have a son in college and I went on on January 2nd to give it a shot, and I waited in line for two hours to get in. So only maybe equivalent to getting Taylor Swift tickets to fill out the FAFSA. So it took me a while to get in. And then people have had other issues where it kicked them out. I talked to someone who emailed them after every section they filled out that they filled out that section. So there’s definitely some glitches.

0:18:18.5 BS: And so anytime you’re reporting, Hey, there’s glitches, or like this NPR story and Washington Post story that said, Hey, you’re going to get less money. It makes students more skeptical of the process, like you said, and probably even some less inclined to fill out the FAFSA or even think like, Hey, is college right for me, this all just sounds like maybe I’ll just wait. And we’ve seen over the last few years several students who have decided to wait to go to college. And we know from all of our research that if a student doesn’t go to college right away after high school, they generally don’t come back. They don’t end up getting to college like, they sit and wait.

0:19:01.9 BS: And so we worry particularly for our students who don’t have a lot of support network around them, parents and aunts and uncles and brothers and sisters that are willing to push them. It’s pretty easy if you run into a problem filling out the FAFSA to just walk away from it. And so I think that’s one of our… Kathy, this is where we worry is our students that don’t have that.

0:19:25.8 BS: And luckily, though, on positive note, the department did figure out how to work with families. For example, we have lots of partners that have families where the student is a US citizen, but the parents are not. And sometimes the parents are undocumented. And it was a real question about how those parents were going to get logged into a system that was a little more complicated. Luckily, it looks like the department had figured that one out. So I think give them credit for fixing that potential issue, which would have affected a lot of students, particularly in Texas and California and other southern states as well.

0:20:06.0 BS: But I think it’s just like always, Kathy, when we work with our students and we work with our colleges, any hurdle is going to be a problem because every hurdle you put in front of students is one more student that decides, Hey, this isn’t my thing.

0:20:24.6 KR: It’s not worth it.

0:20:26.6 BS: I think that’s kind of our worry, and that’s where we really feel like we’re most worried for our partners and for our students. And I think we’ll know hopefully in the next couple of weeks how many students have filled out the FAFSA and how that compares to previous years. And I think we’ll be watching really closely for that. What are you hearing from partners, Kathy? What are they worried about? Or what are they sort of thinking about as they now have to roll out financial aid awards months later than they have the last few years?

0:21:03.8 KR: Yeah, I mean, I think they’re definitely, they’re worried and they’re stressed. I think some of them are getting creative about things they can be doing in the meantime. I guess if we look at the bright side, we can step back and think of this as an opportunity to rethink some processes and some communications. As always, and you know this, our colleagues in the financial aid offices are trying to help our students. They’re trying to understand what’s happening and help families as much as they can.

0:21:37.2 KR: I think when we think about what we’re telling our partners and what they’re telling us that they’re doing, I think some themes emerge, like overcommunicating. That’s especially important during these times when things are changing and things are uncertain. I’m actually going to circle back to a very… And give a very pragmatic piece of advice to our college and university colleagues in terms of what they can be doing, along the lines of overcommunicating.

0:22:05.4 KR: You referred to this period of time, the next few weeks when families are filling out the FAFSA, but the college doesn’t know it. And…

0:22:14.2 BS: I referred to it as the dark times, Kathy.

0:22:16.9 KR: As the dark times. Definitely the dark times. And some schools, you referred to a portal, meaning the college has a portal that the student can log into to see whether or not they’ve gotten their FAFSA. And I’m finding out, as I’m talking to more of my partners, that not everybody has that portal. And I’m actually also remembering back to when I worked for… I worked for a period of time helping families figure out how to pay for college. And one of the most common questions we got during FAFSA season was, how do I know the school got my FAFSA? That was even in normal times, when the school was actually getting it the next day, because the student sees the list of schools it was sent to. But you know, who trusts that it actually got there, right?

0:23:01.6 BS: Right. Absolutely.

0:23:01.7 KR: And so I think more and more of my partners are realizing the importance of no matter when they get the FAFSA and next year, when we’re back to normal, whether it’s October 2nd or whether it’s March 15th, that a quick email to the student and parent acknowledging, We’ve got your FAFSA and this is what our process is from here on out.

0:23:19.4 KR: That’s especially more important this year, of course, but important in any year, quite frankly. So that’s just an example of, I think, a process that some of our partners are now rethinking.

0:23:32.1 BS: Yeah. It always has been surprising to me that that distance between submitting a FAFSA and getting an aid award sometimes can feel really lonely from a college. And I can tell you both Kathy and I have worked on campuses, sometimes it’s actually kind of hard to communicate that but just because of the way the data works and everything. But I agree with you, Kathy. Just overcommunicating that is a big deal. And the other thing, wouldn’t you say, one of the things that I’ve been working with a lot of partners on is saying, Hey, look, you don’t have to create a pie in the sky, but communicate to students, like, Hey, as soon as we get your FAFSA and we can load it into our system, we feel like we can deliver an aid award to you in three weeks or four weeks or one week or two weeks, whatever that is, and then try to meet that goal just so that they know.

0:24:30.0 BS: Because the worst thing I think you can do is have a family sitting there at the dinner table going, Did you get your aid award yet? Well, I don’t know.

0:24:41.4 KR: I don’t know when.

0:24:41.5 BS: I don’t know when they’re supposed to… When is it going to happen? So I think that’s one of those things that I think our partners, that colleges and universities can really just probably do a little bit better job of, and this year in particular is going to have to be done a little bit better. Kathy, in terms of what you sense, do you feel like if everybody is going to be delayed on this, it’s going to squeeze students coming up to that May decision time, don’t you think?

0:25:15.6 KR: Oh, yeah. On the one hand, this is a timeline that we used to go through every year before prior, prior year, the FAFSA wasn’t available till January 1st. Obviously, this is very different in that there’s no data coming for a month and we’re not even sure how well that’s all going to work and all that sort of thing. So I think there’s real potential for timelines to get squeezed. I don’t think we’re advocating that institutions need to adjust their May 1 deadline. And of course, as you know, many of the institutions we work with are working on their class well throughout the summer. But I think it’s going to be important for institutions to be flexible and open to granting extensions and communicating that to the students who might need it because it really will depend on who the student’s selection set of schools is.

0:26:03.6 KR: There will be some students who will have all of their packages when they need them to make their decisions, but then there’ll be others who may not. We were talking earlier today, too, about there will also be students who might make a decision without a full picture. They may have some magical thinking around. Well, I don’t have my financial aid award yet, but I really want to go to this school, so I’m going to deposit and hopefully it’ll all work out. It’ll be fine. So there’s that potential, too. It’s just going to be a long summer of really understanding who are your students who deposited, when did they deposit and what information did they have when they made that decision?

0:26:44.8 BS: Yeah. I think you and I have talked a lot about this. Any comparative data you have is going to be wonky this year. Normally this time of year we’re saying, Hey, you had 1200 FAFSAs in by January 12th, and this year you have 1300. It’s looking good. And this year we’re going to have two or three months of, Well, you had 1200 FAFSAs last year, but we have no idea what you have this year. And good advice. I think you and I, we sort of say it jokingly, but I think it’s really serious is if you have dashboards that track FAFSAs that the campus sees or president sees or the cabinet sees, you may want to give them a heads up on this that those aren’t going to look right for a while because the worst thing you can do is probably scare your president enough that he pulls up the dashboard one day and then goes, Oh, my gosh. And then gives you a call and says, What’s going on?

0:27:45.3 BS: So just understanding that the whole time and benchmarking, time shifting and all of that is going to happen this year and then thinking ahead, it’s going to happen next year, too, because we’re going to go back to, as far as we know, the department of Ed has said a year from now we’re going to be back on the October FAFSA release.

0:28:12.4 BS: So this year’s data is going to look weird compared to any of the last few years and any years looking forward. So it’s going to be a little bit like when everybody moved their deadlines during COVID And so then you couldn’t really have any comparison data on how are we tracking compared to last year.

0:28:31.3 BS: That was back when we thought COVID was going to be, Oh, we’ll shut down for three weeks and everything will be fine. So hopefully this won’t be quite that extended of a pain point.

0:28:43.7 KR: Not to even mention the EFC versus SAI comparison. Like how completely different that’s going to be if you’re comparing the profile of your class based on that.

0:28:53.5 BS: Yes.

0:28:54.5 KR: Totally different world.

0:28:56.4 BS: Yeah, different world. I hope, though, in the long run, and maybe as we start to wrap up here, is I kind of hope… And Kathy, curious if you have any thoughts on this, but I kind of hope once we settle in, this will be a better process for families and we will see more Pell money out there that students qualify for. Speaking personally, I went through the FAFSA process. I would say it is easier, it is a little more straightforward. I think hopefully that’ll mean better things ahead despite some of the challenges. What do you think as we wrap up here? Any last piece of advice or things that we should be thinking about?

0:29:42.8 KR: Yeah, I mean, absolutely. If we end on an optimistic note here. When you think about it, what they’ve done is huge and to connect directly to the IRS and yes, there are glitches, but I think we’re also seeing plenty of feedback that says, I got through the FAFSA and it asked me hardly any questions, did I do it right? And as families get… And they did, they probably did it right, they just are surprised. And so as everyone gets used to that, this should be a more successful process and hopefully it will increase access and improve FAFSA completion rates because it will be an easier process.

0:30:22.8 BS: And that’s the goal, isn’t it?

0:30:24.4 KR: Yes, that’s the goal.

0:30:26.3 BS: Well, glad I think any… I guess I can wrap it up since Kathy kicked it off. Enjoyed spending time today talking with you, Kathy. It’s always fun to talk about FAFSA and FAFSA geekdom. Hopefully folks got something out of it and we will probably keep on this. And I can envision another podcast in a couple of months about how this all shook out for our partners. So glad to spend time.

0:30:57.4 KR: Great to spend time, Brett.

0:31:04.6 Speaker 1: Thank you for listening. Please join us next week when our guests take a look at the growing non consumption market and explain why cost is not the culprit. Until next week, thank you for your time.

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