In December 2020, Congress passed the Free Application for Federal Student Aid Simplification Act, known as FAFSA, to streamline the process of applying for federal student aid and to update the underlying formulas and criteria that determine aid eligibility and awards. These changes go into effect for the 2024-25 school year. A series of delays in the availability of the FAFSA form, technical challenges with submission, and processing errors have contributed to a sharp decline in FAFSA completions among high school seniors, both nationally and in Virginia, relative to this time last year.
While the issues with FAFSA have undoubtedly contributed heavily to the decline, are there other factors leading to fewer submissions? This year’s graduating seniors were freshmen during the 2020-2021 school year, when many were forced to attend school remotely or in a hybrid format. In addition, there has been a steady decline in the percentage of students who attend college immediately following high school. Could a college enrollment crisis be brewing this fall?
What is the FAFSA, and why are the delays such a big deal?
The FAFSA is required for students to receive federal financial aid through Department of Education programs. These programs, also known as Title IV aid, include federal Pell Grants, work study, and low-interest student loans. Many states and institutions also require FAFSA to qualify for other scholarships and programs.
In typical years, the FAFSA form becomes available on Oct. 1 and students receive financial aid information in early spring at the latest, oftentimes alongside their college admission decision. Applicants then have until May 1 to place a deposit at the school at which they plan to attend. Issues with FAFSA this year, and lagging deposits, prompted many schools to extend these deadlines. Not surprisingly, schools that have tremendous numbers of applicants and low acceptance rates were less likely to extend than schools that are very sensitive to enrollment declines. For example, Washington and Lee University held to its May 1 deadline, while schools like Longwood, Radford and Sweet Briar all extended their deadlines to June 1.
It is important to note that some other schools, including all community colleges, will accept students up until the semester begins in August, and will allow for last-minute FAFSA applications for consideration of aid. This could shift the types of institutions students attend this fall, with more students attending community colleges and overall enrollment declines at four-year institutions.
Declines in FAFSA completions — a focus on 2024 high school seniors
So how bad is it this year, and does it really matter for enrollment? Let’s start with the latter. FAFSA completions have been shown to be a predictor of overall college enrollment. While most schools are not sharing data yet, Missouri State University recently shared its struggles publicly. While the school had a strong number of freshmen applicants (up 4.1% from last year), and admitted students were up 2.3%, the number of students making deposits was down 5.8% compared to last fall as of May 16. Other schools have indicated less confidence that students who have paid deposits will actually show up this fall.
As of May 17, national FAFSA completions for students completing high school this year were down 15.5%. Virginia is faring slightly better, with completions down 13.3%. Southwest and Southside Virginia are seeing declines that exceed both national and state levels. FAFSA completions in the region are down 16.3%.
Not only is there variation across Virginia, but there is also considerable variation across the Southwest and Southside regions. There are some high schools with declines of greater than 40% and others that have actually seen increases in FAFSA completions this year. The following larger high schools in the region, which typically have more than 100 FAFSA completions each year, have the most and least severe FAFSA completion declines as of May 17.
Is it too late to get back on track?
It is impossible to know exactly what higher education enrollment will look like this fall across Virginia. Since students at many institutions have until later this year to complete the FAFSA form, the hope is that there will be a significant “catch-up” between now and then. It seems unreasonable, however, to expect completion rates to recover fully to 2023 levels.
FAFSA issues are coming at a time when college enrollment rates among recent graduates are falling (they have been since 2018), and young people are expressing concerns regarding the return on investment of higher education. While the additional income gained from a degree (especially a bachelor’s degree) is significant, and the likelihood of unemployment declines immensely with degree attainment, students are viewing college attendance more skeptically these days.
This class of students has been through a lot in the last four years. In March 2020, COVID-19 dramatically interrupted their eighth-grade year, and in most school districts, their ninth-grade year was spent either learning virtually at home or in some sort of socially distanced hybrid schedule. It seems reasonable to assume that this could be impacting their college attendance decisions in real ways, and as such, they may be more sensitive to hurdles like FAFSA complications.
There is some good news to share … there is still time for students to fill out the FAFSA this year! It is imperative for us to encourage high school seniors to complete the form and to encourage school administrators to continue advocating for college attendance this fall. Even if students miss the deadlines associated with the colleges they hoped to attend, community colleges across the state can work with students to provide them with options that may be more financially accessible. Also, there may be four-year schools that are happy to extend deadlines even beyond what is published publicly if students inquire. Hope is not lost, but time is certainly of the essence!
Stephanie Norris is a senior research analyst at the Federal Reserve Bank of Richmond. Laura Ullrich is a senior regional economist at the Richmond Fed.
