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Diving overview:
- S&P Global Ratings said this week that delays in federal financial aid will be most challenging for colleges with large numbers of low-income students and those eligible for Pell Grants.
- The U.S. Department of Education has delayed releasing the Free Application for Federal Student Aid for 2024-25. To simplify the form, the deadline is December 30th, about 3 months later than usual. But the shock is that colleges will not receive FAFSA applicant information until March of this year. — This gives institutions much less time to write and distribute financial aid offers to prospective students.
- The university will likely have to make last-minute adjustments to its fiscal year 2025 budget. As a FAFSA hold up We will release fall 2024 enrollment estimates and tuition revenue estimates. According to S&P.
Dive Insights:
Congress tasked the Department of Education with modernizing the FAFSA, a traditionally laborious form that requires students and their families to complete more than 100 questions. The new version now requires up to a few dozen questions and pulls some information directly from the IRS.
However, the update significantly delayed the typical FAFSA timeline. The Department of Education subsequently announced expanded application options and flexibility for colleges and universities. containing federal staffing To help under-resourced universities Relaxation of certification requirements.
Compressed timelines and potential budget issues will not impact colleges equally, according to S&P. Institutions that serve minority populations and those with large numbers of low-income students are likely to have difficulty moving quickly and providing accurate aid offers.
In a competitive registration environment, speed can be everything.
“Some schools with more resources may extend financial offers before receiving FAFSA information to gain a competitive advantage for fall admission,” the credit bureau said.
However, this approach can lead colleges to overspend on financial aid. And if a student's decision is delayed, larger deposits may arrive later than usual.
“From a credit perspective, uncertain admissions mean colleges have limited time to adjust their fiscal 2025 operating budgets,” S&P said.
Some universities and systems; Like California State University, which has already postponed financial aid and commitment deadlines in response to FAFSA delays. S&P Global Ratings predicted Wednesday that more would follow.