Report: FAFSA Rollout Disproportionately Affected Low-Income Black and Latino Students

By Maria Carrasco, NASFAA Staff Reporter

The rollout of the 2024-25 FAFSA has been riddled with technical issues, errors, and glitches, and has ultimately led to nearly 300,000 fewer high school seniors completing the financial aid application this year — most of which come from low-income, Black, and Latino communities, a new report from The Century Foundation found. 

The report, conducted by The Century Foundation’s Peter Granville, compared data from late May 2024 to data from late May 2023 and found that the large decline in completed FAFSAs is in part due to this year’s tumultuous rollout, which gave students less time to complete the form, and less time to make an informed decision on where to enroll when they eventually did receive their financial aid offers. 

Those declines can be felt more acutely in lower-income regions of the country. Granville wrote that this report — a first-of-its kind study merging granular demographic data on American communities with FAFSA completion data for the class of 2024 — indicates that the drop-off in FAFSA completions has been significantly worse among historically marginalized communities. And as a result, institutions are likely to see enrollment declines that are linked to race, educational attainment, and income.

“This dropoff in FAFSA completions threatens to reduce college enrollment in the fall, because students who have not completed a FAFSA will not learn whether they qualify for federal aid, nor will they know how much aid they will receive,” Granville wrote. “Absent this information, they cannot make an informed choice about college enrollment, potentially swaying their decision where to attend college and whether or not to continue their education at all.”

Specifically, communities with a high share of residents living in poverty, non-college adults, or Black or Latino residents, show year-over-year declines in FAFSA completions that are 20% greater than those in communities with a low share of these groups. The report also found that FAFSA completions declined largely for public high schools that predominantly serve historically marginalized communities this year. 

Looking at specific indicators and how they impact FAFSA completions, Granville found that communities with the largest population share of those living in poverty had a decline of 16.4% in year-over year FAFSA completions. Meanwhile, communities with the smallest population share of those living in poverty had a decline of 12.8% in year-over year FAFSA completions. That’s 51,000 fewer FAFSA completions year-over-year, out of 642,000 students in high-poverty areas. 

Additionally, communities with the largest population share of people who never went to college saw a 16.5% decline in year-over year FAFSA completions, while communities with the smallest population share of people who never went to college saw a 13.2% decline. That’s 42,000 fewer FAFSA completions year-over-year, out of 514,000 students in low-attainment areas. 

Meanwhile, communities with the largest population share of people who are Black or Latino saw a 16.7% decline in year-over year FAFSA completions, whereas communities with the smallest population share of people who are Black or Latino saw a 13.8% decline, a difference of 86,000 FAFSA completions year-over-year, out of 1.03 million students in high-minority areas.

Further, a FAFSA that has been submitted by a student in a community that has a high share of residents living in poverty, non-college adults, or Black or Latino residents is nearly twice as likely to be incomplete compared to a submitted FAFSA from a community with a low share of these groups, Granville found. 

The report also analyzed the time it took students to submit the FAFSA, and found that the median student who submitted their FAFSA this year did so roughly 75 days later than the median student who had submitted one by May last year. Granville wrote that this could mean the class of 2024 is less likely to make an informed decision about college enrollment.

In a “ best-case scenario,” the 2024-25 FAFSA cycle would see the FAFSA completion rate land around 53.8% by the end of August, Granville found, which is a 2.9 percentage point drop from last year. However, using the 2017 cycle as a comparison, Granville wrote he expects the FAFSA completion rate to land around 51.9% by the end of August, which is a 4.8 percentage point drop from last year.

To help right-size the situation, Granville wrote that Congress should work on legislation to secure funds to help colleges, particularly community and regional colleges, to make up for lost revenue in the coming years since there will be enrollment declines. The funds should shield colleges from having to scale back their services and allow colleges to strengthen outreach to their surrounding communities, Granville suggested. 

Perhaps most important to note, Granville wrote, is that the FAFSA is key to helping students find affordable options for college.

“As a nation, we have let the price of college rise perilously over what most families could afford on their own,” Granville wrote. “For many students, grant aid helps fill the gap—but only if they can access those grants. Funding the whole system of higher education relies heavily on students accessing financial aid through the FAFSA: it was not meant to operate with a flawed or delayed FAFSA, much less both.”

Also released last week, a new report from Ellucian found financial instability is creating challenges with student retention in higher education. 

Specifically, out of over 1,500 U.S. college students, 59% of students said they considered dropping out due to financial stress. And many students surveyed identified financial stress as affecting their college experience. 

For example, 78% of students reported negative impacts on mental health due to financial stress, 61% said the stress of funding their education negatively impacted their academic performance, and 57% said they had to choose between college expenses and basic needs like food and clothing.

"Financial aid is a critical factor in determining where students opt to pursue higher education,” Laura Ipsen, president and CEO of Ellucian, said in a statement. “In fact, almost half of students say a $5,000 difference in scholarship aid would change their top school choice. With 61% of students reporting financial stress negatively impacting their education, it's clear that academic success is directly linked to student financial success.”

The report also highlighted the importance of clarity in financial aid communications, as only 21% of students surveyed said they were incredibly confident they understood the details of their financial aid offer letter. About three-quarters of students — 76% — reported that the amount of financial aid they were offered and the overall financial aid process impacted their college choice. And 44% of students said they would switch their top choice school for just $5,000 more in scholarship aid.

With college affordability being more important than ever — especially in the year of the 2024-25 FAFSA rollout — The College Cost Transparency (CCT) initiative is asking institutions to commit to its principles and standards in financial aid offers to help bring clarity and transparency around the cost of college to students and families. So far, more than 550 institutions from all 50 states, Puerto Rico, and Guam have joined as a partner institution

 

Publication Date: 7/3/2024


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