The Long-Term Impact of FAFSA Simplification on Enrollment and Retention

May is always a tense time of year for college admissions officers as they wait for admitted students to make their final decisions on where they will attend college in the fall. But this year, tensions are running even higher.

Amidst the FAFSA fiasco, Decision Day 2024 came and went, with many colleges and universities postponing the traditional May 1 deadline. And while many students did commit to an institution and paid their deposit, many did so without a clear picture of their financial aid package, leaving admissions officers skeptical as to whether or not the committed students will show up in the fall. 

By early May, institutions generally have a good sense of the size and makeup of their incoming freshman class. And while some students always melt away over the summer, institutions can confidently begin planning for the upcoming academic year. But this year, FAFSA issues and financial aid delays are prompting institutions to proceed with caution, concerned that more students than usual will withdraw before the fall semester starts. 

Further, a number of students are still waiting to receive financial aid packages, causing them to hit pause on any decision until they know if they can afford higher education. And if the delays persist, these students may decide to delay college or opt-out altogether. 

With FAFSA applications nationwide down 16% compared to this time last year, it’s becoming clear that fall enrollments at many institutions will take a hit. FAFSA completions look even worse for low-income students, raising questions about whether or not these students will enroll in college - or forge another path. 

Two-year colleges are seeing an uptick in applications and enrollments and vocational and credential programs are experiencing increased interest as well, leading some to believe that students are exploring more affordable options outside of a traditional, four-year degree.

With student debt crossing $1.6 trillion, it’s no surprise that students are considering more affordable options - or opting out entirely. But what does that mean for the future of higher education?

New Strategies to Improve College Access and Affordability

Despite the doom and gloom, institutions are exploring innovative strategies to maintain enrollment and provide additional support to low-income students who may be on the fence about attending college. 

Last year, Duke University announced it will “provide full tuition grants for undergraduate students admitted from the Carolinas whose family incomes are $150,000 or less.” This year, Duke received 4,700 more applications than they did last year, and the University expects to increase its financial aid awards by $12 million.

Minnesota’s public colleges and universities are also experiencing a surge in enrollment, thanks to increased state funding and investment in new college access initiatives. These increases come on the heels of years of stagnant funding and declining enrollments.

This year, Minnesota increased state funding for higher education by $650 million. They also introduced a program which would allow students whose families earn less than $80,000 per year to attend any public college in the state for free. Minnesota expects that nearly 15,000 students will qualify for this program. 

Another strategy institutions are exploring is the expansion of programs with flexible enrollment models. In a 2020 State of the Field Survey by the American Institutes for Research (AIR), over 80% of respondents said they expect CBE programs to grow over the next five years. And while adding new programs is not a quick-fix, it is a strategy institutions should consider as part of their long-term plans. After all, according to the Time for Class 2023 survey, 69% of students prefer online, blended, or hybrid options.

Offering programs that provide non-standard terms, subscription periods, and non-term enrollment models gives students greater flexibility in when - and how - they pursue their education. And with the right financial aid system and operating structure in place, institutions can effectively manage financial aid for all enrollment models so that students can access the funds they need to succeed. 

The Long-Term Impacts of FAFSA Delays

While programs such as those introduced at Duke University and the Minnesota public colleges and universities are a step in the right direction, the reality is that the FAFSA debacle may prompt more students than usual to forgo college this fall. Time will tell if these students delay their enrollment by a semester or a year, explore flexible enrollment options, or opt-out altogether. But either way, the news isn’t good for struggling institutions. 

With financial aid officers preoccupied with counseling first-year students, existing students are left in limbo. Many are struggling to renew their FAFSA, facing the same issues that plagued the initial rollout. As a result, these students have not yet received their financial aid package for the following year, leaving them unsure if they can continue their education this fall. Should these issues persist, institutions could face higher levels of attrition than they have in years past. And given the current environment, bouncing back from those losses will be even more difficult than it was in the past. 

Further, the FAFSA issues are yet another reason for some struggling colleges to shut down operations. Delaware College of Art and Design recently announced it is closing its doors, citing ““unexpected issues with the rollout of the new Free Application for Federal Student Aid” as one of the reasons for its closure. The college also faced declining enrollments and other financial challenges in recent years. 

While the full, long-term impacts of the botched FAFSA rollout are yet to be seen, it’s becoming increasingly clear that the effects will linger for years to come. For institutions, keeping students and their families engaged is key. While FAFSA frustrations are top-of-mind, coaching students through the process and communicating with them about their options is key to helping them make the right decision for their future. For some, that will mean starting college later than planned. While for others, that may mean enrolling at a more cost-effective community college or trade school.

While this year has been a tough one for financial aid administrators, it’s important to remember that we’re all united in our goal to help every student successfully reach their educational goals. Stay connected with each other and through NASFAA. Because together, we’re united in our mission to help students succeed.