WSJ Your Money Briefing - The New Fafsa Is Out. Here's What Students and Families Need to Know.

Episode Date: November 22, 2024

The Free Application for Federal Student Aid, or Fafsa, has been released for the 2025-26 academic year. Wall Street Journal reporter Oyin Adedoyin joins host J.R. Whalen to discuss what students and families can expect, after last year’s glitches slowed down the aid process for many students. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Exchanges. The Goldman Sachs podcast featuring exchanges on the forces driving the markets and the economy. Exchanges between the leading minds at Goldman Sachs. New episodes every week. Listen now. Here's your money briefing for Friday, November 22nd. I'm JR Whalen for the Wall Street Journal. This year's FAFSA is available for students and their families to apply for financial aid. But some may still have bad memories from last year's form, which was littered with

glitches. It caused a decrease in the number of students and families that were either able to successfully complete the FAFSA or even try to attempt it. Some 46% of high school seniors completed the form earlier this year. That's down from more than half of high school seniors last year. So you could see how people were discouraged from completing the form. We'll talk to Wall Street Journal personal finance reporter Oyen Adedoyan after the break. A&W is now serving pre-organic coffee, and you can get a $1 small coffee, a $2 small latte, or like me,

a $1 small coffee and a $2 small latte. Available now until November 24th in Ontario only. Woohoo! A new version of the Free Application for Federal Student Aid, or FAFSA, has been released. Wall Street Journal personal finance reporter Oyin Adedoyin joins me. Oyin, earlier this year the Education Department said there would be a staggered rollout of the FAFSA for the 2025-26 academic school year. Has that happened? It has.

So the Education Department basically released an application around that time to a bunch of nonprofit organizations around the country that serve first generation students, students with mixed status families, and low income, middle income students to apply for the FAFSA early in small batches so that they could catch glitches and bugs in real time. Was there a broader rollout? Yes, as of Monday of this week, all families were able to complete it,

but it was still under the guise of a beta four testing, which meant it was almost like the education department put an asterisk on the form. It's still under the guise of a beta four testing, which meant it was almost like the education department put an asterisk on the form. It's still not fully launched, but all families can go in and start the process. Now though, families can officially start filling out the FAFSA and the hope is that they won't have a problem with it this time.

When's the deadline to apply? The FAFSA is usually accepted on a rolling basis. Families can apply as late as June 30th of 2025, especially for those who are coming into college for the first time. You want to get that application in sooner rather than later so that you can start to compare financial aid offers from different colleges.

If she's confirmed, what's likely to be on the to-do list for education secretary nominee Linda McMahon? The FAFSA is definitely going to be a top concern. Since it was released late last year, it's been fraught with glitches and problems. It's been rolled back, it's been rolled forward. There's just been a lot of angst around this application from families and students to colleges and universities.

So there's a lot of doubt in the system right now with that application. How do those glitches impact the number of students and families who filled it out? They caused a decrease in the number of students and families that were either able to successfully complete the FAFSA or even tried to attempt it. Some 46% of high school seniors completed the form earlier this year. That's down from more than half of high school seniors last year. So you could see how people were discouraged from completing the form.

You talked to a lot of those people. I did. What was that like? It was a lot of stress. Applying for colleges and universities is always stressful for students every year and their families. And the FAFSA was always seen as this daunting form. So the idea that it would be simplified into something that could be done in five minutes or less was really exciting for families. So when it turned out that it actually ended up over complicating the form,

that really stressed a lot of families out and it compressed the timeline greatly for families to decide where they wanted to send their kids to school. How do those issues affect colleges and their admissions process? Colleges were scrambling too. Financial aid departments were super stressed. They had to operate in a more compressed timeline as well, since the FAFSA glitches caused delays in when the form was released. So financial aid departments had weeks to do something that they would otherwise do in months.

What happens if families don't fill out the FAFSA? Then they don't qualify for federal student aid. So that's money from the government, whether that's a Pell Grant, which you don't have to pay back,SA. Then they don't qualify for federal student aid so that's money from the government whether that's a Pell grant which you don't have to pay back or some kind of student loan but they also might not qualify for a certain state or local scholarships because those processes also use the FAFSA to inform how much need a family might have. So what's the early verdict on the new form? Is it bug-free? People seem excited. Counselors and higher education advocates say that it's definitely a lot easier to do.

Folks who have participated in the beta testing say that they've had a more seamless process, or glitches, or bugs that have popped up have been instantly fixed. And the call centers have also been operating more smoothly this year. The education department hired more folks So there are more people available to respond to any concerned calls from parents

They also clarified some wording in the form in what way do they do that? There was a question about unsubsidized loans Which is a type of federal loan that is not based on financial need to qualify for and so a lot of students were financial need to qualify for. And so a lot of students were basically selecting that, yes, they needed an unsubsidized loan, even if they didn't, just because of how the question was worded. So financial aid folks have tweaked that question

and put the default setting to no, so that students aren't accidentally selecting that they need an unsubsidized loan when they might not. But there's still some glitches. Students have to complete the FAFSA every year, regardless of whether they're applying to college or currently enrolled in college. And some of the things that these early beta testing sites have seen that families and students have run into

is that students are still being booted out of the form before they can complete it. They're not sure why this is happening, but for some reason, you know, you might get halfway into the form and be kicked out of it. Don't fret. And everything goes away?

No, everything doesn't go away from what I've heard. It still kind of updates and saves your information. So just try to log into it again and try not to get too frustrated if that happens to you. There's also still some issues surrounding a student who maybe has a parent who doesn't have a social security number. In some cases, that parent might need to fill out the tax portion of the application manually. Just be aware of that if you're in that scenario. There's also been some issues with address recognition.

So in some cases, if you are writing your address differently from the way that it appears in a tax form, because of that direct link to the IRS, it might be hard for them to find the same exact address across both platforms. So try to copy down your address in the same way that it's written on your tax forms if possible. That's WSJ reporter Oyin Atedoyin. And that's it for your money briefing. Tomorrow we'll have our weekly markets wrap up, What's News in Markets?

And then we'll be back on Monday. This episode was produced by Ariana Osborne. I'm your host, JR Whalen. Jessica Fenton and Michael Laval wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio.

Thanks for listening.