Before taking the stage in Las Vegas, NV, at the Education Writers Association’s national seminar last week, Secretary of Education Miguel Cardona announced a comprehensive review of the U.S. Department of Education’s Office of Federal Student Aid (FSA).
Amid the ongoing fallout from the problematic 2024-2025 FAFSA release, this initiative aims to modernize the FSA and prevent future issues. However, the reality is that students and schools are currently navigating the resulting chaos.
2024-2025 FAFSA Fall-Out
If you're trying to pay for college this fall, you might be facing issues with your financial aid. Perhaps you've struggled to submit your FAFSA application and waited months for a financial aid package from your school(s). While many students have completed the process and received their financial aid award letters, many others remain stuck.
According to the U.S. Department of Education and the National College Attainment Network’s FAFSA tracker, FAFSA completions have dropped by over 14% since last year—a significant decline. Secretary Cardona pointed out that "50% of FAFSA filers attend college," suggesting that fewer completions could lead to lower college enrollment rates. He also mentioned the need for a national strategy to bridge the gap between FAFSA completions and college enrollment.
Although there has been coverage on the failed launch of the 2024-2025 FAFSA, the full impact remains unknown. When asked if financial resources were diverted from the FAFSA overhaul project at FSA, the Secretary firmly stated, "We recognized early on that it needed to be delayed and continue to find ways to advance it. But the notion that we diverted resources from this project is false."
Federal Student Aid Full-Scale Review
The challenges with the Federal Student Aid (FSA) system extend beyond the FAFSA. Recently, numerous federal student loan borrowers have faced difficulties with their loan repayment. These issues include a lack of clear information on repayment plans and forgiveness opportunities, coupled with inconsistencies from federal loan servicers.
In response, Secretary Cardona has announced an immediate “full-scale” review aimed at enhancing FSA services for students, families, borrowers, and schools. This initiative will tackle the operational and management problems within the office, guided by an eight-step plan designed to address and resolve the current issues effectively.
- Search for a New Chief Operating Officer (COO): The current COO, Richard Cordray, has announced that he will not be extending his contract, with his tenure ending on June 30, 2024. During the search for a new COO, Denise Carter will serve as Principal Deputy Chief Operating Officer (PDCOO).
- Comprehensive Review of FSA Operations: A thorough review of the Federal Student Aid's (FSA) organization, management, staffing, workflow structures, business processes, and operations will be conducted to modernize the federal financial aid systems. Despite new initiatives like Next Gen Servicing, FSA has faced criticism for its outdated systems and their limitations. Public feedback suggests that all systems could benefit from improvements.
- Engagement of Independent Consulting Firm: An independent consulting firm has been hired to provide recommendations to the COO and the Secretary on enhancing the structure, design, and processes at FSA. The performance-based organization (PBO) structure of FSA has been a point of criticism for several years.
- Contract and Acquisition Review: Contracts and acquisition procedures will be reviewed to ensure they are appropriately structured and that vendors are held accountable.
- Restructured Senior Leadership Protocols: Senior leader reporting protocols will be restructured to increase accountability.
- Creation of an IT Innovation Team: A new IT innovation team will be established to support the organization's digital transformation. This initiative will require additional staff, including top engineers, project managers, and designers, to strengthen FSA’s capabilities.
- Stakeholder Engagement: Input will be sought from the Office of Inspector General (OIG), and Members of Congress will be engaged to ensure their constituents' concerns are addressed.
- Expanded Outreach Efforts: Outreach efforts will be expanded to parents, students, colleges, and community organizations. Listening sessions with these stakeholders will be held throughout the summer to gather feedback and insights.
Secretary Cardona’s Priorities
Secretary Cardona addressed various agency policies, including priorities impacting K-12 education. His higher education agenda includes expanding pathways to higher education, addressing issues of affordability and accessibility in higher education, and modernizing the Federal Student Aid (FSA) office.
The FAFSA complications have caused significant setbacks for millions of students. Despite Secretary Cardona's acknowledgment of these issues, the recent announcement about the FSA review offers little immediate relief for students and schools during this FAFSA cycle. However, the U.S. Department of Education has been making efforts to increase FAFSA completion rates among high school students. The FAFSA Student Support Strategy aims to provide funding to school districts, states, nonprofits, and other public and private organizations. This funding will help expand the availability of advisors, counselors, and coaches to assist students and families with their FAFSA applications. The hope is that additional staff and extended hours will bridge the gap in FAFSA completion rates.
Predicted Outcomes
The public hopes for increased transparency and accountability within the FSA. However, the effectiveness of these changes in preventing future issues remains uncertain.
Presently, the primary objective is to bridge the FAFSA completion gap, which has dropped by over 14%. This decline could significantly impact student enrollments, leading to long-term challenges. Already, we’ve observed colleges closing their doors, citing enrollment issues linked to the 2024-2025 FAFSA. On May 23, the Delaware College of Art and Design announced its closure due to low enrollment. Although the 2024-2025 academic year has yet to begin, the decision has been made to offer teach-out agreements for current students with nearby institutions, which have also agreed to accept incoming students.
The 2025-2026 FAFSA Season…
You may be wondering if the 2025-2026 FAFSA season will face any impacts. Many financial aid professionals are concerned about the upcoming year due to observed delays. These delays include the absence of a draft for the 2025-2026 FAFSA and other materials typically received before the FAFSA cycle begins. When asked at EWA, Secretary Cardona addressed these concerns, assuring that the 2025-2026 FAFSA is expected to be released on October 1, 2024.