MyCollegeCorner’s John Hupalo recently appeared on the Prudent Money podcast hosted by financial expert Bob Brooks discussing the shifting landscape of the college admission process in the wake of changes, delays, and untimely errors as a result of the rollout of the new FAFSA form.
BB: So how has college enrollment been affected by the FAFSA fiasco? Well, we have been tracking the problems with student aid and the FAFSA process pretty much for the last year. Today, college admissions expert John Hupalo is here to give us an update. John, always good to talk to you. How are you doing today?
JH: I’m doing great, Bob. Thank you. I hope you’re enjoying the summer.
BB: So far, so good. Let’s talk a little bit about the FAFSA and where we are today. For our listeners who haven’t really been keeping up with it, just give us a little bit of the Cliff Notes version of what the FAFSA is and what the problem is.
JH: The punchline in all of this is the name, the FAFSA – Free Application for Federal Student Aid. Every student in the country who wants to receive either a federal student loan or a Pell Grant, or have eligibility for other federal programs to reduce their cost to college is required – not just a good idea – they’re required to file these forms. So this FAFSA form is a big deal because, again, in order for a student to be eligible for any federal student aid, and frankly for some other aid as well, states use the FAFSA information, colleges use the FAFSA information as the baseline for determining how much each student might require some aid.
And as you said, we started talking of this about a year ago when it was pretty apparent that with the new FAFSA Simplification Act – the idea that there were problems in the past and they want to try and make it easier for students to file these forms – they undertook this large rewrite of the entire system and the FAFSA was completely messed up. The form is supposed to be available on October 1st. Then they came in December and said well, we’re going to launch this soon with this thing they called the “soft launch”. And, a long story short, the actual form was not ready without major errors until the middle of May.
So these poor high school students, seniors trying to understand how much aid they might be eligible for, were in the dark during that whole period. They were really frustrated. Their parents were frustrated because they tried to fill out the form. They tried to do what was right. They were doing what they were told they needed to do to get this federal aid and the form simply was not ready for prime time. It caused a lot of confusion for families. And we see the numbers and the impact that this has had on families and the reduction in the amount of forms that have been filed is really significant.
It’s a really sad story for students who were involved in this process and, as of this moment, think the form is working the way they intended it to. But of course, you know, we’re in July. Students are well past the application process and they’re actually packing, getting ready to go to school.
BB: You know, I never asked this question, but I do wonder – you said it’s required – what if the student says “I’m not going to fill it out. I’m not going to go through the process.”
JH: So there’s actually 2 great questions there. One is what happens if the student decides that. Well, that’s simple. If the student doesn’t file a form, then they’re not eligible for any aid. That’s very simple.
Then the other question, which is really interesting, involves their contributor – usually a parent or someone else who has to contribute financial information to determine how much aid that family is eligible for. And again, we’ve talked about this before. It’s mostly how much income you have. Assets have a little to do with it, but it’s mostly income. So what happens if the student goes to file this form, but the parent or guardian, whoever is responsible for their financial well-being up to this point, doesn’t want to file? What happens? And in that case, the student would be eligible for a federal student loan, but not for the other aid.
This is a very complicated thing on both sides. There are protections in place to try and help the student who may not be getting support from their family. But again, you don’t file the full form, you’re not eligible for the full aid package.
BB: Let’s talk a little bit about some data that I got out of an article that says for most college hopefuls, issues with the FAFSA forced a practical approach to this year’s complicated admission season. One recent study found that 76% of students said the financial aid amount awarded to them and the overall financial aid process was the top driver in their choice about where to go to college. These high school seniors will all choose the best offer over the best school. What do you make of that? Any of that surprise you?
JH: Well, it’s the first piece of good news that I’ve heard from this perspective. I’ve been talking about this and you and I have talked about this for years now. That families, students should really look at this choice as their first large consumer purchase. They should look at the purchase of education just as they would to buy a car or a home or whatever. And too many times in the past, families will stretch way too far with too much loan debt, taking money out of their savings, their 401K plans, to try to get the student to go to what they thought was the best school, a brand name school, whatever it might be.
So if there’s one positive takeaway maybe in this whole mess, it’s that families are looking at this like consumers. They’re consumers of education and they’re saying, okay, what’s the best deal that I might be able to get? I actually had a conversation with a young entrepreneur who just graduated from a school in Massachusetts who’s starting a company for this very reason. When he started in school, his parents said to him, I want you to tell me what you think is the best return on this investment. What are the pros and cons of these two schools that you’re looking at? And that student said, I did the research and I found out if I went to brand name school A, I’d have to borrow about $45,000 more than if I went to what was not considered to be a brand name school, but a great school. He graduated, has a great degree, and started a business to help other students understand that shopping like a consumer is a really good idea when you’re thinking about going to college.
BB: Of course, you’ve been through this process with your two daughters. I’m in the midst of the storm with two boys, and fortunately one of them is going to be graduating in ’25. But you know, it’s made me appreciate what we’ve been talking about for years which is why it’s so very important to be smart about this decision. Because this is not cheap. It’s not a cheap purchase.
JH: It’s not a cheap purchase and it’s one of those emotional purchases on the front end where your student, you know, your son and daughter, the love of your life sits down with you the first time and says I want to go to this school and the parents’ emotional reaction is not to be a consumer and do what that other student’s parents said. Tell me the cost benefit and what’s the ROI. A lot of families look at that as almost a challenge and say, you know my daughter wants to go to this great brand name school with all her best friends, and now it’s kind of keeping up with the Joneses. We’ll do whatever we have to do to get her to go to that school, to make it financially viable.
But what they don’t get, Bob, is what you just said. Kind of look at it in the very short term and say, okay, we scratched together all this money. We took out all these loans. She’s now happy off to school. And then four years later, when you’re looking and saying, okay, my child’s now going to graduate in six or eight months, and guess what? Now I have $50,000, $100,000, $150,000 of debt hanging over my head. It becomes a whole different thing. So again, the lesson and maybe the potential good news is that families are, and I’ve seen this over the last few years, they’re starting to think more about how they’re going to actually pay the college bill and having that difficult choice earlier on, saying, listen, there are a lot of great schools out there, job placement rates are good for lots of different schools. You can get a great education. Doesn’t have to be a brand name, extremely expensive school to have a great result.
BB: It makes me think about the situations where your child does go to college and doesn’t take it seriously or gets way too caught up into the social aspect of it. And putting that parent in that position of this is serious business here. You’ve got to really be able to put your best foot forward and take advantage of this education. And unfortunately that doesn’t happen in all cases. And I can only imagine the situation that puts the parent in to say hey, you got to come home or you got to go do something else.
JH: And I think part of the problem with that, Bob, is when parents have done what we talked about before, which I think should be on the list of the five things you shouldn’t do to help your kid. And one of them is extend yourself so they can go to college. And when I say extend, I mean taking an excessive amount of debt because you can’t borrow for your retirement. And once you’ve spent that money and it’s out, it’s really hard when you’re 50 or 60 to earn that back. You’ve run out of time basically. And you see this anecdotally in the newspaper articles that we read and some of the big outstanding student loan debts that we hear about, again mostly in the newspapers, $150,000, and I’m 65 years old and I still have $100,000 of student loan debt. How could that be? It goes back to that very basic choice that somebody made early on.
BB: You know, John, there was an interesting statistic that said that only 46% of new high school graduates have completed the FAFSA according to the National College Attainment Network, when a year ago that number was 53%. What do you make of that statistic?
JH: This is only the second time that the completion rate has been under 50%. It’s not good news and it’s what we’ve seen because of the whole FAFSA fiasco. But now here’s the little bit of good news inside that dark cloud, the little silver lining. And that is, back in May when we talked about this very issue, it turned out that the completion rate was below 40%. It was off significantly.
So what I think you can infer there is that because that form wasn’t fully available for all those families, they were really behind the 8-ball, but they really caught up pretty substantially. You think about going up like almost 10 or more actual percentage points in such a short time tells you that the iceberg may have been broken a little bit and you’re starting to see a little bit more of a flow. I think that is the good news that they were able to get that form into place finally. And again it’s four or five, six months after it should have been up. But it is in a better place now and families are starting to move through that process.
And what you said earlier, and it’s a point that we can’t let go, and that is families were really smart about how they responded to all this. They talked to the colleges, they were trying to figure out as best they could with some really bad information about how their financial aid process and how their financial aid award letters might come out in this mess. The bad news is, of course, completion rates are down, which means enrollment rates are going to be down. That’s already being documented across the board. And so there are significant negative effects of all of this. But again, at the end of the day, some families were able to navigate quite smartly and, to their credit, they were able to put their kids in a great situation.
BB: I got to think that this is horrible timing. When you start to think about the downtrend, assumably, that has started in college enrollment where parents are actually giving it a second and third thought, and students are giving it a second, third thought. I mean, everybody’s thinking about how do we want to go about investing for this task, this process of going to college. It makes me wonder if, when it’s all said and done, it’s going to accelerate maybe that downturn in enrollment.
JH: I think it will, and the pile-on effect is pretty huge. There are lots of newspaper articles over the last several years. Is college worth it? Is this investment really worth it? The government made it really hard to get federal aid this year. The general feeling in the country, I’ll say, is probably not terrifically positive right now. It seems every time you turn around there’s another sort of gush coming at you, a big windstorm, and I think people are just generally tired as a result of all that. So to have that extra energy to go and fight for this becomes an issue.
And I think we are going to see in the next six months or so, how much of an add-on effect it will have for next year. Because one of the really big problems for the schools, especially the smaller independent colleges, is that they’re the ones who were starting to make some enrollment gains just before the pandemic and they got hit with the pandemic. Then they got hit with the FAFSA fiasco. And now you’re seeing a lot of these smaller colleges starting to cut back. One of the colleges cut ten of their fifty sports programs, a school in Missouri, Lindenwood actually. Was that the school that your son was thinking of going to?
BB: Yeah, he was going to go there on a partial Olympic weightlifting scholarship and they shut down the program. It was not good.
JH: There’s a living example of it. But there are other schools. They’re cutting programs. They’re trying to find ways to move forward. And whatever positive momentum they were able to get was really derailed by this whole FAFSA fiasco. It’s going to take them now several years and some I think probably won’t survive as a result of that.
BB: Fast forwarding, we get past enrollment, get past the start of school, and October comes back around. And now we’re talking about filling out forms for the next year or next fall. I know it may be a little bit tough to tell, are they still going to be dealing with problems at that point, or should it be pretty well put together?
JH: Well, should it be pretty well put together? Of course the answer is yes, because they’ve had all this time. Will it be put together? That’s the question. And there are two things going on here, and one of them is that the Congress is extremely upset obviously, because they’re hearing from their constituents about what a nightmare this all was. So there’s a bill right now in the House of Representatives that’s making its way through to require that the form be available on October 1st this year. There’s a lot of controversy about that because some folks are saying, well, if it’s not ready again, meaning there’s still errors and you put it out there, that’s worse than having it out early. There’s this whole debate going on, this idea of we really need to get back to some sense of normalcy, that we know when that form is going to come, and we know it’s going to be right.
Now, I hope you’re sitting down, Bob, because when I tell you this, you’ll probably fall off your chair. The other thing that has happened here is the US Department of Education has hired two people from a competitor organization to come and fix the FAFSA problem. So there are two of these financial aid forms that are out there, the FAFSA form, which all students have to fill out if they want federal financial aid. But then about 300 other schools use another form called the CSS Profile that’s put out by the College Board. And the College Board folks who were in charge of that form are now at the United States Department of Education trying to fix the FAFSA form for October. And I’m thinking to myself, if I were in Texas, I might be saying something like this is the fox in the hen house if I’ve ever seen one. Literally the people who are responsible for the competitor’s form are now responsible for the government’s form. It’s really crazy.
BB: You can’t make this up. You know what bugs me, I guess, is that with Congress, maybe a helping hand would have been great about 10-12 months ago. If you think about it, take a step back. Whether they screwed it up or they made some mistakes or didn’t do it the right way, whatever it was, you can appreciate what a big process it was. But to assign some troops or put the ultimatum down that, hey, you gotta get down with this by October, that help was needed about 10-12 months ago.
JH: Or 24 months ago. This was very complicated. You’re talking about connecting to the Internal Revenue Service tax retrieval. There’s a lot of security involved with that. There was an awful lot of complexity to this, but again the Federal Student Aid Office asked for an extension. They got the extension by about a year and they still missed by about a year. I think ultimately the most important mistake that the Department of Education made was a year ago just fessing up and saying we’re not going to be ready and put some Plan B in place where you use the old form for another year or whatever it was going to be. But to have put these families through this stress this last year, to me, was just a crime.
BB: Right. You know what’s interesting? I found that the process was really pretty streamlined, pretty easy. I know it took maybe 15-20 minutes max to get through it. I was surprised.
JH: And that’s the promise. I think the goal was a great one. Let’s simplify it. And your experience was what others more recently had. But if you had tried that in January or February, that was really not anybody’s experience.
BB: I didn’t try it in January, February. Once again John’s website is mycollegecorner.com. Go check out the website, there’s a lot of great information there. John, always blessed to have you come on the program and we’ll talk with you next month.
JH: Bob, thanks very much. Be well.