Education Department accused of ‘malicious negligence’ amid FAFSA issues

Personal Finance

As problems with the new Free Application for Federal Student Aid persist into the spring, harsh words are being directed at the U.S. Department of Education.

Former top student loan official Wayne Johnson accused the Education Department of “malicious negligence” in a recent letter written to U.S. Secretary of Education Miguel Cardona and other senior officials and shared with CNBC.

“Continuing to whitewash this evolving calamity with ‘corporate style crises management PR’ is extraordinarily irresponsible,” wrote Johnson, who served as the chief operating officer of the Office of Federal Student Aid from 2017 until 2019 and is now running for Congress.

“Each of you is personally and collectively responsible for what is manifesting to be a level of incredible harm inflicted upon students and schools,” Johnson wrote.

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Johnson had a “brief” tenure as COO of FSA, a department spokesperson told CNBC of his correspondence, “during which time none of the changes he now talks about were successfully implemented.”

“We will also note that the FAFSA Simplification Act requires not just a new form but a complete overhaul of the formula and process for delivering financial aid to students,” the department spokesman added.

A separate group of Republican lawmakers also has requested a federal inquiry into the rollout and whether students were given sufficient information on the new process.

To be sure, the overhaul was a “major” undertaking imposed by Congress without additional funding or resources, a senior Education Department official said on a January press call. “Our ‘North Star’ here is trying to make sure that students get the help they need for college.”

‘Any further delays would be disastrous’

The FAFSA serves as the gateway to all federal aid money, including loans, work study and grants, the latter of which are the most desirable kinds of assistance because they typically do not need to be repaid.

However, this year, fewer students are applying for financial aid, data shows, as the U.S. Department of Education works to resolve ongoing technical issues with the new form, including preventing contributors without a Social Security number from starting or accessing the application.

“This adds to the growing list of can’t-miss priorities that the Department must deliver in the month of March, a timeline students and institutions desperately need the Department to meet,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “Any further delays would be disastrous for both students and schools.”

They’ve been accepted into schools and they don’t know if they can afford it — that’s a problem.
Lydia McNeiley
college and career coordinator in Hammond, Indiana

Award letters are typically sent around the same time as admission letters so students have several weeks to compare offers ahead of National College Decision Day on May 1, which is the deadline many schools set for admitted students to decide on a college.

Especially ‘scary’ for those depending on aid

For most students and their families, which college they will choose hinges on the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans.

“They’ve been accepted into schools and they don’t know if they can afford it — that’s a problem,” said Lydia McNeiley, a college and career coordinator for the public school district in Hammond, Indiana. “It’s not fair across the board, but for those that are depending on that financial aid letter, this is scary.”

In Hammond, most high school seniors are first-generation college applicants who would qualify for aid but have hit obstacles with the 2024–25 form, McNeiley said.

“The message that they are getting is that they have to prove that they deserve to be on those campuses,” she said. “It’s really a slap in the face.”

Because of the extensive delays, many colleges are now relying on their own calculations to determine student aid packages, which could open the door to issuing financial aid award offers that schools may not be able to honor or “cause tens of billions of dollars in improper payments,” Johnson wrote.

“Moreover, it is highly probable that FAFSA related systems failures will continue to further disenfranchise large populations of students into 2025-2026,” Johnson added in his letter, underscoring how important the awarding of federal student financial aid is to driving college enrollment.

Johnson equated the potential impending enrollment decline to the one experienced at the height of the Covid-19 pandemic, when college attendance notched the largest two-year drop in 50 years.

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