Feds make error in financial aid data, affecting 200K students

The Department of Education in the United States admitted Friday that it had sent numerous inaccurate student financial aid assessments to colleges recently, attributing the error to an external vendor.

While the issue has been addressed according to the announcement, it is expected to cause further delays in the provision of financial aid offers to college and high school students.

Critics have labeled this mistake as the latest in a series of missteps in the rollout of the new Free Application for Federal Student Aid (FAFSA) by the Biden administration, a form crucial for millions of students annually.

More details: A considerable number of students may have limited time to compare financial aid offers from different colleges.

The introduction of the new form has been plagued by difficulties with external contractors from the outset. A significant multi-million dollar contract was awarded to General Dynamics Information Technology in 2022 to upgrade the Education Department’s aid processing systems.

General Dynamics, which was previously involved in the launch of Obamacare, has faced criticism within the Education Department for its role in the ongoing glitches.

The department did not explicitly name the vendor responsible for the errors, noting that large projects typically involve multiple vendors and subcontractors. Many colleges now await the government’s actions as they navigate the tight timetable to complete tasks usually spread over months.

Although colleges have their financial aid forms, they rely on the federal government for foundational data collection. Justin Draeger, president of the National Association of Student Financial Aid Administrators, emphasized the importance of accurate data for colleges to provide aid effectively.

“This latest error is likely to cause further processing delays for students,” said Draeger, highlighting the impact on students relying on financial aid for their educational ambitions.

What transpired?

The Department of Education incorrectly assessed the financial capacity of around 200,000 students, potentially resulting in higher financial aid for students with greater resources.

The formula used by the agency to calculate this includes the students’ savings, checking accounts, and other financial assets, but an oversight resulted in this information not being factored in until recently.

An Education Department spokesperson confirmed the vendor-related issue causing the miscalculations, reassuring that future records will not be affected by this error.

The reprocessing of the erroneous calculations is currently underway, with no fixed timeline provided by the department for resolving these applications.

Further reading: Understanding the potential implications of the new FAFSA on farm families as per various opinions.

Following the update, colleges have been advised to issue provisional aid offers to affected students while the recalculations are taking place. However, this suggestion has sparked concerns about the feasibility of adjusting federal formulas in real-time.

The trickle of student data to colleges commenced last week after a prolonged delay, with only a fraction of the applications processed compared to the total received by mid-March.

Alyssa Dobson from Slippery Rock University mentioned receiving some student data but acknowledged the need for reprocessing applications post-announcement.

In response, several schools, including Dobson’s, have extended their deadlines beyond the usual May 1 cutoff for college selection, potentially pushing it to June amid ongoing discussions.