Students, parents leave billions of dollars on the table by failing to file a FAFSA

Personal Finance

The Covid-19 pandemic and economic shock that followed has made it more difficult for many parents and students to afford college.

Yet even fewer families applied for financial aid this year.

The Free Application for Federal Student Aid, or FAFSA, serves as the gateway to all federal aid money, including loans, work-study and grants, which are the most desirable kind of assistance.

If you still need financial aid for the 2020-21 academic year, June 30 is the last day families can file the FAFSA.

In other words, you can still complete a FAFSA now and get a Pell grant for the past academic year. (Students worried about the upcoming 2021-22 term have until June 30, 2022 to apply, although it’s better to get your aid application in as soon as possible.)

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As of June, the number of applications was down 5% from last year, with just over half of all high school seniors applying, according to the National College Attainment Network.

“The FAFSA decline is really concerning,” said Bill DeBaun, the National College Attainment Network’s director of data and evaluation.

“People don’t skip competing the FAFSA because they have all the money they need for college,” he said.

Research shows that students from low-income backgrounds, students of color and first-generation students have been hardest hit by the Covid pandemic. The FAFSA numbers suggest some of these would-be undergraduates have opted out of college entirely.

“We should be worried, not because students can’t get back on a post-secondary pathway, just that many won’t,” DeBaun said.

In ordinary years, high school graduates miss out on billions in federal grants because they don’t fill out the FAFSA. Many families mistakenly assume they won’t qualify for financial aid and don’t even bother to apply.

Others say a lengthy and overly complicated application is major hurdle.

Congressional education leaders have been working toward simplifying the FAFSA, which would go a long way to increasing access.

In December, the Consolidated Appropriations Act was passed to streamline the process. Those changes were supposed to go into effect in the 2023-24 academic year.

However, earlier this month, the Department of Education told Congress that the simplification process will need to be delayed until 2024-25 school year. The 12-month delay is due to the technology upgrades necessary to complete the changes, the Education Department said.

Meanwhile, college costs are rising.

Tuition and fees plus room and board for a four-year private college averaged $50,770 in the 2020-21 school year; at four-year, in-state public colleges, it was $22,180, according to the College Board, which tracks trends in college pricing and student aid.

For families who have already filed the FAFSA but have since experienced a financial shock, it is also possible to amend their FAFSA form or ask the college financial aid office for more aid, according to Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”

Colleges are likely receptive to appeals, he said — particularly now.

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