Fafsa Fix Will Mean Less Aid for Many

July 21, 2014

The U.S. Education Department will automatically reprocess the student-aid applications of tens of thousands of applicants who inadvertently overreported their income this year, costing many of the applicants their Pell Grants, the department has announced.

The fixes, which were scheduled to be made on Monday evening, focus on roughly 200,000 applicants who entered cents into the Income Earned From Work field in the online 2014-15 Free Application for Federal Student Aid, or Fafsa, instead of rounding their income to the nearest whole dollar. In such cases, the new system ignored the decimal point, converting an earned income of $5,000.19, for example, into $500,019.

If the error isn’t caught or corrected on individual forms, such filers will most likely receive more aid than they are entitled to. That’s because the mistake, in isolation, increases applicants’ allowances against income, primarily the Social Security tax allowance. Such allowances are shielded from consideration in calculating the Expected Family Contribution.

Excluded from Monday’s fix are additional applicants whose reporting errors probably cost them a Pell Grant. Such applicants, who were initially assumed to be the majority, now appear to be the minority—or at least, a lesser priority for the department.

The National Association of Student Financial Aid Administrators is urging the department to take additional steps to identify such applicants, who would benefit from a fix.

Meanwhile, the association is telling its members to take a second look at non-tax-filers with unusually high earned income or a large year-over-year increase. Such applicants are the ones most likely to have overreported their income and to be eligible for a Pell Grant, said Justin Draeger, the association’s president.

Correction (7/22/2014, 1:33 p.m.): This article originally said the mistake increased applicants’ "income protection allowance," but it actually increases other allowances against income. The article has been corrected to clarify that.