Details Trickle Out About $50 Million FAFSA Support Fund

The U.S. Education Department wants to spend up to $50 million to help underresourced colleges adjust to the new Free Application for Federal Student Aid, but more than a week after publicly announcing that plan, there are more questions than answers about who will get the money, what they can use it for and what kind of impact it will have.

The department wants to distribute the money to nonprofit organizations that will then hire financial aid professionals to support institutions. Those nonprofits are waiting to hear more about how many colleges and universities will need the additional assistance and the criteria used to select those institutions.

The money is part of a broader strategy quickly rolled out this month to help colleges and universities adjust to issues with processing financial aid applications. Institutions won’t get students’ application information until next month at the earliest, a delay that college administrators said will exacerbate an already-difficult admissions cycle and mean students will receive aid offers months later than usual, giving them less time to compare aid offers and decide where they will enroll—if they enroll.

The launch of the new FAFSA has been rocky after it was pushed back three months. Still, colleges expected to receive students’ application information by Jan. 31, until the department said otherwise on Jan. 30. To assist institutions, the department has set up an online concierge service and is deploying teams of federal personnel to underresourced colleges.

And then there’s the $50 million prong of the plan. The department said the money—2.45 percent of the department’s budget for student aid administration—will go toward recruiting financial aid professionals and providing technical assistance to support those institutions with limited resources. This is the first time the department has extended additional resources to directly aid preparation efforts for the new FAFSA.

At this point, two nonprofits have been selected to receive a portion of the funding—the National Association of Student Financial Aid Administrators and the Partnership for Education Advancement—and other organizations likely will join the effort. NASFAA and Ed Advancement, a nonprofit focused on strengthening historically Black colleges and universities, are both in the initial stages of planning for how they can help.

The department itself is not doling out the $50 million. Instead, the agency directed the Education Credit Management Corporation to use the funds to support institutions. ECMC is a nonprofit and guarantee agency for the Federal Family Education Loan program, and it will make any funding allocations. The department has stressed that it’s not a party to any agreement reached between ECMC and participating nonprofit organizations.

The $50 million is from a surplus in ECMC’s Federal Fund, a department spokesperson said, which would typically be returned to the Treasury Department. That fund includes federal payments for defaults, bankruptcy, disability and other claims. ECMC can use the money for certain purposes, such as paying insurance claims, refunding payments made by borrowers after a loan is discharged or other purposes as authorized by the education secretary, the spokesperson said.

ECMC does provide regular reports on its use of the Federal Fund and is subject to annual independent audits as well as departmental reviews, giving the Education Department some oversight of this process.

The department directed questions about disbursement of the funds to ECMC. ECMC said in a statement that it will follow “specific and detailed direction of the [Education] Department in administering these resources.”

Education Department officials have said the additional funds and support will help institutions prepare their systems for the new FAFSA data, train staff, and develop aid packages. It’s not yet clear which institutions will benefit, other than those that are considered under-resourced. ECMC and the department are working to develop the criteria to select institutions, but colleges and universities that want support should email the department’s concierge service.

All historically Black colleges and universities as well as tribal colleges and universities will have the chance to receive some support through one of the department’s approaches, according to the department.

While institutions await more specifics, NASFAA and Ed Advancement are planning their next steps and determining exactly how they can help.

NASFAA last week started recruiting a team of financial aid professionals who can work remotely for at least 10 hours a week. The support initiative will be run by its consulting arm, Blue Icon Advisors. So far, 255 people have expressed interest in helping, according to NASFAA. The team at NASFAA is evaluating and sorting through submissions to determine how to best deploy the individuals.

“When the Department of Education asked us to help them provide assistance to the neediest of institutions—those who may not be able to implement the Better FAFSA at all—we said yes,” NASFAA president and CEO Justin Draeger said in a statement. “While we know that these are incredibly challenging times for all schools, we encourage our members who are able to lend a hand to do so, for the benefit of all of our students.”

Ed Advancement started thinking in August about what its 17 partner HBCUs would need to adjust to the new FAFSA and to mitigate the risk of the delay, said Annie Reznik, the organization’s chief of staff. It kicked off its efforts with a webinar last week, asking the 17 colleges whether they’re interested in consulting support, an interim staff counselor or both.

Reznik said the organization, which has 35 employees, is in the process of determining how many institutions it can support and what it would take to scale up those efforts.

“I think there are a ton of questions in terms of how much we’ll be able to build on our existing relationships and experience to actually bring some solvency to this crucial situation,” she said.

The department first reached out to Ed Advancement about whether the organization could help earlier this month, Reznik said, noting it’s a “rapidly evolving situation.”

“The department’s request or invitation to us to be a part of solving the problem definitely aligns with our mission, but I think when you’re dealing with the crisis of time, you always would have wanted more of it,” she said, adding that she would have preferred to see more focus last fall on how the delay might impact institutions.

Reznik said she’s hoping to have some assessment of what institutions need by the end of the month. She expects institutions will need technical help to update their student information systems as well as extra staff.

“There’s definitely no silver bullet on this,” she said. “That’s partially because of the varying states and types of student information systems.”

Reznik said it’s a crucial time for institutions, students and families. She expects most institutions will need some help.

“A very, very small percentage of institutions have it under control with the CSS profile and giant endowments, but other than that, pretty much everybody’s facing a crucial few months,” she said.