The FAFSA is finally easier, but it's still not enough

Key points:

The Free Application for Federal Student Aid (FAFSA) has long been the starting point for millions of students on the path to higher education. For decades, it has also been a grueling maze of financial forms and red tape. This year's more streamlined version aimed to fix that problem, and early signs suggest it's helping. But even the FAFSA, at its best, can't fix what's really wrong when it comes to completing and paying for college.

Skyrocketing tuition prices have forced students to carry $1.77 trillion in student loan debt–more than Meta's market capitalization. However, the higher education crisis is not just about the cost of college; It's about return on investment. Too many students end up drowning in debt for degrees they don't earn. To change this reality, we must stop asking “How can students pay for college?” and start asking yourself “How can college be profitable for students?”

What FAFSA Enhancements Can and Can't Do

The new FAFSA is like adding a stool under a shelf that's still impossibly out of reach. Simplifying the application process is a win, making it easier for students and families to access aid. But the cost barriers to actually attending college remain too high: rising tuition costs, sky-high housing and child care costs, opaque fees and expenses, and lost income while learning. Many college students end up in debt, which ultimately leaves them behind instead of ahead.

The problem starts early. Colleges and universities control how costs and aid packages are shared, and many make it difficult.some intentionally–understand or compare information. Worse, they rely on outdated communication methods, such as email, that don't fit the habits of younger generations, meaning students can miss important messages and deadlines.

Without transparent information and financial advice, students face two bad choices: opt for options that seem too expensive (losing out on potential income or career paths) or take on onerous student loans and spend decades trying to pay them off. Either way, they lose.

Emergency help could be a lifesaver

For many students, even a minor emergency can derail their education. The car they depend on breaks down. The rent goes up. An unexpected medical bill wipes out your savings.

Financial aid packages do not cover living costs, forcing students (especially those from low-income communities and families) to make difficult decisions about paying for housing, child care, food, and more. basic needs. Nearly a quarter of university students report experiencing food insecurity. Four million university students are raising children who may need child care.

The extent of this is simply alarming: forty million people in the US they have some college credits but no degrees. Helping students who are most at risk of dropping out requires better support systems.

Emergency relief programs can offer relief and, according to WGU Labs research, significantly increase graduation rates. But many are bogged down by cumbersome applications, strict grading criteria and long testing periods. Emergencies are difficult to predict, and by the time students realize they need help, help from emergency funds may come too late.

States like Minnesota are leading the way with smarter models. Your state emergency aid program provides grants to institutions to assist students with housing, food, and transportation expenses that might otherwise prevent them from completing the academic term.

Employers must step up

For students with financial obligations beyond tuition, the balance between the benefits of college and the opportunity cost of forgoing income may not seem worth it. Employers can help address this challenge.

Creating a stronger cycle of learning, working, learning in which employers or other programs cover all or part of the cost of education encourages a shared risk model. Expanding employer-funded education benefits is a start, especially when the changes cover certificates and other short courses. State-funded skills enhancement programs, such as those Massachusetts and CaliforniaThey also open the door, especially to small and medium-sized businesses.

In workforce development programs, employers share the risks and benefits. Workers gain the skills they need to prepare for higher-paying jobs, while employers retain valuable employees and gain a qualified workforce to fill critical gaps.

Confusing payment system penalizes borrowers

Navigating student loan repayment options can be more confusing than applying for the loan in the first place. Only about 28 percent of borrowers know all your payment optionswhich caused many to pay more than necessary. Multiple haphazard rollouts of the Biden Administration's loan forgiveness programs and confusing updates to the FAFSA application have done little to help students understand their options.

Borrowers already face big consequences for going into debt, and confusing payment systems hinder them even more. In a national survey, WGU Labs found that student loan debt has been linked to delay financial and personal milestones such as buying a house or car, accumulating savings and other financial assets, moving out of your parents' home, getting married, and receiving additional education. Additionally, survey responses showed that Black, Latino and female borrowers, as well as those without a bachelor's degree, have the most difficulty repaying their student loans.

A system in need of bold change

This year's FAFSA review is progress. It is a step forward toward a more accessible and student-friendly financial aid system. But it's just that: one step.

The biggest problems, such as price opacity, insufficient aid, and the disconnect between education and the workforce, remain far from resolved. Today's college students and families deserve and want better: clearer costs, greater accountability from colleges, and more support to graduate without a mountain of debt. Achieving that will require systemic changes to share information in plain language, streamline aid applications and distribution, strengthen ties between educational institutions and employers, and create effective repayment and forgiveness programs.

As higher education enrollment continues to decline, the need for bold action grows. If we do not act, millions of students and families will continue to bear the cost.