In this episode, Matt and Jadrian discuss the significant issues surrounding the Free Application for Federal Student Aid (FAFSA), its impact on students, and broader implications for higher education. Both agree that it’s a mess right now, but we can’t go back in time and fix that. What’s more interesting to think about is what this means for students who are thinking about going to college, but haven’t completed the FAFSA because of the issues.
In this episode, we discuss:
What went wrong with the FAFSA rollout for this year
The consequences of this fiasco, and which students we might expect to suffer the most from the blunder
Why do we have federal involvement in the market for financing a college degree
How this relates to government failures in general
And a whole lot more!
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Some show notes:
Spring is finally in full swing and the weather is nice out! Jadrian is celebrating the day with a shandy from his favorite brewery in Texas: a Shiner Lemonade Shandy. Matt has opted for a Go Birds! Hazy Pale Ale from Flying Fish Brewery in Somerdale, New Jersey. Both have made for an excellent warm-weather treat.
We logged on today to talk about the crisis/disaster/fiasco surrounding the rollout of the new FAFSA. It was an ambitious plan to make the process easier, but it has come with a lot of issues that have severely impacted both colleges and students. The site soft-launched in December. By the end of February, only about 18% of the 17 million students who typically apply had submitted the form.
The FAFSA is the Free Application for Student Aid and is a government form/process. Most students in college (and/or their parents) will be familiar with it, but here is some background information for those of you who aren’t:
The form was redesigned this year, to make the process smoother for applicants. It didn’t work. So, what went wrong? First, the FAFSA was delayed from its usual release time in October until December. It eventually was released at the very end of December, and even then there were problems. The system was glitchy, but there were errors with the data even after applicants were able to get onto the system.
The result—students who would normally have had financial aid offers from universities early in the year didn’t have them. Most students decide on college with that information in hand, but many are still uncertain about where they will go. Potentially even more concerning, fewer students are completing the FAFSA and certainly this means fewer students will go to college next year than would have otherwise.
Matt and Jadrian are excited to attend the CTREE Conference in Atlanta at the end of May! If you're an economics educator attending the conference or you just live in Atlanta, we’d love to connect with you. We’ll visit at least one local brewery and would happily set up a few microphones for anyone interested in joining the show. If you're interested, don't hesitate to reach out. Let's find a spot to chat about economics together!
This week’s pop culture references:
Matt introduced a thought-provoking scene from Hamilton called "The Room Where It Happens." At this moment, Jefferson's decision to compromise with Hamilton is influenced by his desire “to work a little closer to home,” echoing Madison's sentiments. This highlights the potential for government failure when agreements are made based on personal benefit rather than the best interests of constituents.
This scene also serves as an illustration of the Principal-Agent problem, a topic that Matt & Jadrian looked at in a previous episode. For more insights on this economic concept, check out the episode here:
What is the Principal-Agent Problem and How Do We Address It?
Jadrian's contribution features a standup routine by Neal Brennan, focusing on the complexities of student loans. Brennan underscores the capital market imperfections surrounding student loans provided by private markets. He compares student loans and small business loans by suggesting that college students essentially represent the business—but therein lies the problem:
The FAFSA Fiasco