What's Next for Student Loans and FAFSA?

The Department of Education might be shutting down, but what does this mean for student loans and the FAFSA? The Small Business Administration (SBA) is stepping in to manage federal student loans. This shift comes after significant cuts to the Department of Education's staff and resources. The SBA, however, is also reducing its workforce, which raises concerns about how effectively they can handle this new responsibility. The FAFSA, or Free Application for Federal Student Aid, is a crucial tool for students seeking financial assistance. It's the gateway to various federal, state, and institutional aid programs. Despite the changes, experts believe the FAFSA will likely stick around. The application process relies heavily on contractors and in-house staff, making it a complex system to replace overnight. More than 17 million people completed the FAFSA in the 2022-2023 cycle. Before the recent announcement, the Treasury Department or the Internal Revenue Service were seen as potential new homes for the FAFSA. However, the SBA is now in the spotlight. Transferring the FAFSA to the SBA would require congressional approval, and the outcome remains uncertain. The federal government must continue to manage student aid, but the states and private lenders lack the capacity to take on this responsibility. Students should still submit their FAFSA if they need help paying for college. The form determines eligibility for various types of financial aid, including Pell Grants, scholarships, work-study programs, and student loans. However, some students, particularly those with undocumented family members, may have concerns about sharing sensitive information. The Privacy Act of 1974 protects certain identifying information, but recent policies have raised worries about data sharing with immigration authorities. If you've already submitted your FAFSA, the Department of Education will process your application within one to three days. You can log in to StudentAid. gov to review your submission and make any necessary corrections. However, due to staffing cuts, expect potential delays if you have questions or issues. Your Student Aid Index, calculated from your FAFSA, will be sent to the schools you listed, helping them determine your financial aid package. If you're concerned about delays, reach out to your school's financial aid office for more information.