Yesterday, President Trump issued "Improving Education Outcomes by Empowering Parents, States, and Communities" which describes how the executive branch intends to move functions of the department of education elsewhere. Many Financial Aid professionals still have PTSD as it relates to the rollout of the new FAFSA in 2023 (which contributed to a 9% decline in overall enrollment). Are we on track for something similar in the next academic year?
What's in the order
The order has three topics that directly relate to how the department of education functions are intended to be moved:
- Section 1: The Department of Education is not a bank, and it must return bank functions to an entity equipped to serve America’s students.
- Section 2(a): The Secretary of Education shall take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities
- Section 2(b): The Secretary of Education shall ensure that the allocation of any Federal Department of Education funds is subject to rigorous compliance with Federal law and Administration policy
As it relates to Financial Aid, this could mean three things:
- Student Loan administration will be moved to a separate organization which has yet to be named (or possibly created).
- The future of the functions for verifying the student's financial aid application and verifying its contents is unknown. A direct reading of Section 2(a) could indicate that each of the states would be responsible for this function that the DOE performs today.
- There will be a high level of scrutiny on whether institutions are complying with the different policies surrounding financial aid.
How this could affect colleges and universities
I believe that the factors that went into the 2023 FAFSA are an indicator of what might happen. Although we're sure that there will be a number of legal challenges to this order, the lack of clarity on the future as well as the intent of the secretary of education to dissolve the department could very well guarantee significant issues in upcoming academic years.
Overview of FAFSA rollout
The GAO put out a write-up summarizing what went wrong with the 2023 FAFSA rollout, which covers what happened in detail. In essence, the Department of Education was tasked by Congress to overhaul its federal student aid system. This initiative was intended to take an existing process and streamline it (reducing steps, automating verification, simplifying the experience). Due to the delays in the process, institutions had to cope with many systems inefficiencies and students could not be offered their financial aid on time for enrollment. The following chart in the article illustrates this:
Will this be better or worse?
It is our belief that this could be much worse due to a number of factors:
- In 2023, the FAFSA process was not changed -- but automated. The Department of Education was responsible for collecting the applications -- and the data was to be verified from other agencies (IRS, DHS, etc.). If administration of this process is pushed to the state level -- instead of one central mechanism for collection and verification -- there will be 50 of them that need to be setup and managed.
- There are already legal challenges to this order. As these challenges play out in court, there will be uncertainty as to when and how this would be implemented. At the same time, many of the staff needed to administer these processes at the Department of Education may be let go. While all this is happening, the clock is ticking on the admissions processes for the 2025-2026 academic school year.
- The secretary of education is tasked with transitioning these processes and not being responsible for them. This is an important distinction because the success of an initiative is directly correlated to the leadership structure and the goals of those leaders. One could use the US's withdrawal from Afghanistan as a corollary. Because the goals of US military leadership was to transfer its responsibility to the Afghan people and leave the country; whether the Afghan military would be successful in those taking over the duties wasn't sufficiently focused on.
What can you do?
Unfortunately, much of this will play out in a way that institutions can't control. That said, the role that an higher education institution plays in ensuring compliance with whatever policy drives the issuance and management of financial aid and student loans will be very similar. If your process is manual, now would be a good time to do some automation so that you have enough time to react to changes that could be coming your way.
Therefore, anything that can be done to automate the student compliance aspects of the process will go a long way in protecting your institution from disruption -- since you will be able to issue aid in a more timely manner if another transition pushes up against enrollment deadlines.
