WSJ Your Money Briefing - College Financial-Aid Applicants Will Face Delays Again This Year

Episode Date: August 12, 2024

Most families and students won’t be able to begin filling out federal college financial-aid forms until late fall, the second straight year of such delays. Wall Street Journal higher-education reporter Melissa Korn joins host J.R. Whalen to discuss what it could mean for their ability to access funds. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is an ad by BetterHelp. What are your self-care non-negotiables? It's hard to make time for the things that keep you healthy, but being consistent with self-care is like working a muscle. And when life gets crazy, that muscle keeps you strong. Therapy is the ultimate self-care, and BetterHelp makes it easy to get started with affordable online sessions you can do from anywhere.

Never skip therapy day with BetterHelp. Visit BetterHelp.com to learn more. That's BetterHelp.com. Here's your money briefing for Monday, August 12th. I'm J.R. Whelan for The Wall Street Journal. For many college students and families, applying for financial aid last year was one big headache, as they dealt with delays and glitches on the FAFSA website.

Well, last week, the Education Department put the word out to expect similar delays again this year. It was really hard for a lot of families to figure out how much college might cost, which is one of the main factors in deciding where to go for so many families. This is tens and tens of thousands of dollars you're talking about. Our higher education reporter, Melissa Korn, looked into what that could mean for their access to financial aid. She'll be here to talk about it after the break. Go back to school with Rogers and get Canada's fastest and most reliable internet.

Perfect for streaming lectures all day or binging TV shows all night. Save up to $20 per month on Rogers Internet. Visit Rogers.com for details. We got you. Rogers. The college financial aid application process is going to be delayed for a second straight year. Wall Street Journal higher education reporter Melissa Korn joins me. Melissa, remind us why it's so important for students and families to fill out the free application for federal student aid or the FAFSA is really the gatekeeper to most financial aid at colleges and considered for a lot of their merit and need-based grants and scholarships. So if you want financial aid in college, this is your first step.

What caused the delays last year that gave financial aid applicants so much aggravation? So the Department of Education overhauled the FAFSA. They redid the form itself, so what families saw when they filled out the application. They also made a lot of changes to the formula, to the calculations behind it, and to the technology behind it that allowed the form to pull in information from the IRS, from tax forms, things like that. So it was a major overhaul, and it just did not go smoothly by any measure. And that delayed the application process by two months? It delayed the start of the process by two months. It delayed the actual process by even longer in some cases. So the application for the past eight or 10 years has opened October 1st.

Last year, it didn't open until the very end of December. And then even when people could access the form, they had trouble submitting it. So we still have families now where the student's supposed to start school in a couple of days or weeks, and they still haven't gotten their final aid offer and scholarship money. So a lot of technical glitches that people were dealing with, and it sounds like it really derailed the tuition picture for a lot of families. It really did. It was really hard for a lot of families to figure out how much college might cost, which is one of the main factors in deciding where to go for so many families. Most families can't just casually assume

that they'll make up the difference somehow, right? This is tens and tens of thousands of dollars you're talking about. So you had a lot of families crossing their fingers and signing, yes, I'll go here and really just hoping that it worked out. You had a lot of families saying, well, hold on, maybe we don't commit this year. We take a semester off, we take a year off, and then we figure it out next year. And the concern there, of course, is that the students don't come back or don't come in the first place. Why will the process be delayed again this year? The Department of Ed has said that their goal is to avoid some of the snafus of the last cycle. avoid some of the snafus of the last cycle, right? So by rolling it out slowly, granting limited access beginning October 1st, and then kind of ramping up throughout October and November so

that everyone has access by December 1st, that will allow them to test for bugs in the system. They'll be able to see if students and families from certain demographics, certain family situations, certain tax situations, if they have trouble filling it out, then they can fix that before it goes really broad. So the hope is that just like most software updates, they do some testing and then they launch it. Is there a schedule by which students can apply during that time frame? who maybe their family has filed amended tax returns. So they're pulling the data from the IRS is a little more complicated for them. Or if they have a parent who's not a U.S. citizen,

their application can be a little more complicated. So they're going to really try to get a broad range of applicants just to make sure the system works for them on a small scale and then release it more widely. So we don't have a great sense of exactly, you know, on October 1st, this on October 15th, this other group, things like that. But they did say on a call last week with media that they are ensuring that people who do have access early are not going to be at

a significant advantage in terms of accessing funds, right? There are states and there are schools that run out of money at a certain point, and it's kind of first come, first serve in terms of accessing scholarship dollars. Everybody will still be able to tap into those pools of funds, the Department of Ed said, because everyone will still have access by December 1st. Has the Department of Ed put schools on notice that this is how it's going to work out this year? Yes. And they've been in touch with schools about how they're prioritizing, frankly, rolling out this new year's cycle, even at the expense of finishing up last year's cycle. They haven't finished processing all of the applications from students who are

planning to start school this fall. And they have acknowledged that... Those applications are not done yet? Correct. So there is so much piling up. It would seem that the families and students, the last thing they need is uncertainty at this point. Yes. So and what they're trying to say is we want there to be certainty starting next year. And a lot of people need to make corrections to their aid applications, change in job status, accidentally typed a number wrong, whatever it is.

And usually schools can process those by batches. And the Department of Ed essentially said, you're going to have to do those one by one because we just need to focus on the new stuff now. So knowing now there's a potential delay coming up toward the end of the year, how can students and families be in position to best navigate this? Families, frankly, and colleges will benefit from understanding that this is not going to be an immediate process. The goal is that once they do have the opportunity to submit their applications, they will be processed quickly. So they're not going to have to sit and wait for weeks or months

to find out the results, if you will, which this past year, many did have to wait a long time. So that is one benefit, assuming all goes well here. But to actually gain access to the system, they're just going to have to wait. It's a good reminder that they should be having conversations with their kids, with students early about costs, about not getting your hopes up about one particular school, because you never know how much financial aid they're going to be able to award you. You can predict, you can use a net price calculator and make some estimates. But if cost is a major factor in choosing your school, you're just going to have to be patient. And honestly, for most people, this isn't going to affect the timeline of their decisions because many students wouldn't be finding out if they're getting into school until after they're able to apply for financial aid anyway.

That's WSJ reporter Melissa Korn. And that's it for your Money Briefing. This episode was produced by me and Ariana Osborough, with supervising producer Melanie Roy and deputy editor Chris Zinsley. I'm J.R. Whelan for The Wall Street Journal. Thanks for listening.