Another ‘Breakdown’ in Federal Student Aid?

Financial aid professionals at colleges across the country say that this spring’s cuts at the Department of Education caused “breakdowns” in the federal student aid system that could affect student aid processing this cycle, according to a new survey from the National Association of Student Financial Aid Administrators.

Fifty-nine percent of the 909 financial aid offices surveyed reported “noticeable changes in [Office of Federal Student Aid] responsiveness or delays in processing timelines” since the Trump administration laid off half of the department’s employees in March, including hundreds of staff at FSA.

One-third of respondents reported disruptions to the Free Application for Federal Student Aid and Institutional Student Information Records processing systems for the current cycle—issues that exacerbated the FAFSA debacle last year and led to months-long delays of student aid packages.

It could also have more pronounced downstream effects for next year’s cycle. Sixty-two percent of respondents said they’d submitted an application to participate in the federal aid system since March. Of those, half said the processing timeline was longer than usual and 25 percent said they’d received no response or acknowledgment of the application. Forty-one percent of respondents said they didn’t know whom to reach out to to find out if there are any issues.

If those application timelines are delayed, the entire financial aid calendar for the 2026–27 cycle could be affected.

Cuts to the Office of Federal Student Aid, from the layoffs to substantial reductions in third-party contracts, have worried financial aid professionals for months. Issues that upended the FAFSA and student aid processing in 2024–25, like a lack of internal staffing capacity at FSA and insufficient oversight for unaccountable software vendors, appear poised to resurface due to the spending slash.

“In our community, people are saying this is the next crisis period,” Karen McCarthy, NASFAA’s vice president for government relations, told Inside Higher Ed in March. “There is concern this will be significantly disruptive for financial aid.”

In an email responding to questions about the survey results, an Education Department spokesperson blamed the Biden administration for residual issues, claiming that under Trump, the agency has significantly improved the system for financial aid professionals.

“In President Trump’s first 100 days, the Department has responsibly managed and streamlined key federal student aid features, including fixing identify [sic] verification and simplifying parent invitations, while ensuring the 2026–27 FAFSA form is on track,” they wrote.

They also pointed to an April 11 survey of FAFSA users—who are students, parents and high school counselors, not the financial aid officials NASFAA surveyed—which found that 92 percent of users reported a satisfactory experience with the form this year. That form was finalized in November under the Biden administration after an intensive push to fix the issues that plagued it during the 2024–25 cycle.

In addition, the spokesperson noted that 85 percent of questions from families and financial aid offices are now answered by the virtual AI chat bot Aidan, instead of the call centers which the Biden administration staffed up considerably in the fall—and which were largely gutted during the March reduction in force at the Education Department.

The Trump administration also laid off dozens of employees at regional offices across the country meant to serve as liaisons to institutions, particularly in issues of compliance and federal student aid.

Forty-four percent of NASFAA survey respondents said their regional FSA office had closed in the past two months, and 33 percent said they didn't know the status of their office. In addition, 36 percent of respondents said their primary contact at the department had changed since the RIF; 38 percent said they didn’t know whom their primary contact was anymore.

Financial aid officials said this has led to breakdowns in communication and general uncertainty that have significantly increased their own workloads.

“With fewer federal contacts available to answer questions, resolve issues, or process routine requests, institutional staff have had to take on additional troubleshooting, repeated outreach to federal systems or help desks, and administrative workarounds, often without clear guidance,” the NASFAA report says.

That, in turn, has limited financial aid staff’s capacity to help students navigate the complicated aid process, the report continues, and contributed to staff burnout—already a major problem for financial aid offices.

Students are already feeling the impact. Survey respondents reported a spike in complaints about service breakdowns from students and inquiries as to when they will receive their financial aid—or if they should expect to receive it at all.

While respondents said the full consequences of the processing issues were still unclear, a majority had already observed direct delays or obstacles to students’ participation in the federal aid system. Fifty-eight percent of financial aid officers said the delays and issues over the past two months directly affected students’ ability to apply for or continue to receive aid; another 19 percent weren’t sure. Only 23 percent of respondents said student aid was unaffected by the department cuts.