Latest FAFSA blunder leaves colleges in 'compromising' position

This year's Free Application for Federal Student Aid (FAFSA) saga has taken another turn after the Department of Education sent incorrect financial aid information to colleges and universities, possibly creating more delays for students and putting schools in a compromising situation.  

In the latest development, colleges have been told they are allowed to use faulty student data the department sent them, as long as the error means an applicant receives more federal aid than they qualify for, not less. 

The green light to purposely process information that is incorrect is a huge concern for advocates as it can put financial aid administrators in a sticky situation, especially at a time where reprocessing forms could mean students don’t receive the financial aid information they need until May. 

“We want students to be able to get as much financial aid that they need, if they're eligible. We want that absolutely 1,000 percent, right?” said Emmanual Guillory, senior director of government relations at the American Council on Education (ACE). “But at our institutions, this type information is audited. You don't want to be on record literally processing information that’s inaccurate, knowingly processing inaccurate information.” 

"And you're doing a disservice to students, if you give them the illusion that they're eligible for more aid in one year, when really, they're not,” Guillory added. 

The errors affected hundreds of thousands of applications sent to schools last month.  

The department's suggestion to universities to process the inaccurate forms came Monday, when they released a statement saying the schools “may use their professional judgment to decide on a case-by-case basis, whether to proceed with the current ISIRs [institutional student information records] for FAFSAs when reprocessing is expected to increase students’ SAI [student aid index] and reduce financial aid eligibility, or to request that the Department reprocess any one or more of those FAFSAs.” 

But Guillory said that is an unfair spot to put college officials in, especially as any investigations by a future administration could lead to problems for universities if they accept incorrect data.  

“It just puts our professionals or financial administrators on the ground in a very compromising position. It should never be their decision to choose between doing things the right way, which means actually processing the [forms] using the accurate data” or choosing the way that would give some students more money but forcing officials to say, “'We’ll just compromise everything that we’ve been told not to compromise,'” he said.  

Guillory said his group is not confident the April financial aid timeline will stay in place, and that students will likely get offers after the typical May 1 deadline for them to decide on a school.  

The Education Department said in a statement to The Hill that Federal Student Aid and the IRS "have implemented fixes that have resolved the majority of these issues for applications moving forward."

"On Monday, the Department provided more information to schools to address these issues and how to move forward on packaging aid offers for records not affected by these issues – which are the vast majority of previously-submitted applications," a spokesperson for the department said.

The department and other advocates have encouraged schools to move back their decision deadlines in light of the troubles with FAFSA, with around 150 schools already moving theirs back, according to ACE. 

Education Secretary Miguel Cardona sent a letter to governors asking them adjust state financial aid timelines and ensure budgets are in place to support colleges.  

“I know you are committed to helping students access the college and career pathways that can help them achieve their dreams, expand economic mobility, and meet the workforce demands of your state and our nation,” Cardona told governors. “Together, we’ll deliver a Better FAFSA and transform student financial aid for generations to come.”  

But goodwill between the department and schools is dwindling as college officials are having to make tough decisions in a process government officials have already delayed by months.

The department launched the revamped forms at the end of December, two months past when the normal FAFSA cycle begins. From there, the forms had technical issues for the first few weeks they were online.

Colleges were then told instead of getting the financial data in February, they would receive it in March.

"We recognize that while the new FAFSA is easier and simpler for many families, implementing this new system has brought certain challenges. The Department is putting all hands on deck to address challenges that have occurred and make sure schools, states, scholarship organizations, students and families are receiving regular updates on FAFSA implementation," said an Education spokesperson.

FAFSA has had approximately 6.6 million applicants so far this year, with officials still hoping to reach the average of 17 million seen in a normal year.

“The trust and the faith in the records that they're seeing this isn't there from the institutional standpoint,” said Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators. “Institutions will be discussing internally, you know, at what point do we move forward with issuing offers, because we just don't know if there will be more announcements. 

“And institutions really don't want to be in a position of sending out aid offers and then having to redact those aid offers,” she added. 

Students are experiencing whiplash as deadlines keep getting pushed back.

McCarthy suspects that even for those whose forms were not inaccurate, this mix up could cause delays. While the department did let schools know which applications were error-free, colleges may wait to send out their aid offers until all the forms are correct.  

“Hopefully schools can use those lists to then start to work on aid offers for those applicants but all of that just adds additional steps, some manual workarounds to the process,” McCarthy said.