2018 FAFSA Study

Students Missed Out on $2.6 Billion in Free College Money

NerdWallet’s annual analysis of Pell Grant data found over 600,000 students in the Class of 2018 didn’t complete their FAFSA to qualify for the awards.

By Anna Helhoski
Oct. 16, 2018

The high school Class of 2018 missed out on $2.6 billion in free money for college, according to NerdWallet’s annual analysis of federal financial aid data. The money went unclaimed because about 661,000 of the nation’s graduates who were eligible for a Pell Grant simply didn’t complete their federal financial aid application.

The Free Application for Federal Student Aid, or FAFSA, is crucial to unlocking financial aid for college, including federal loans and money from states and schools.

Students who don’t submit the FAFSA can’t access free federal Pell Grants, which are awarded to students from lower-income families based on financial need, school costs and other factors. Students may receive a Pell Grant for up to 12 semesters, or about six years. Information provided on the FAFSA determines the grant amount a student will be awarded.

A Pell Grant-eligible high school graduate could have received up to $6,095 for the 2018-19 school year, according to the U.S. Department of Education. The total awarded to college students for 2018-19 was $27.5 billion, which was distributed to over 7 million students.

Key findings

  • More than half of U.S. high school graduates were eligible for free aid. In the 2017-18 academic year, 52% of high school graduates (1,144,644 students) were eligible for a Pell Grant, according to federal financial aid data from the Florida College Access Network. Our calculations counted all graduates, including those who didn’t start college after high school, to show the scope of students who would be eligible for federal aid if they had applied for it.
  • Over a third of 2018 high school graduates didn’t complete the FAFSA. Among all high school graduates — not just those who were eligible to receive a Pell Grant — 37% (1,266,474 students) didn’t complete a FAFSA, according to NerdWallet’s analysis.
  • $2.6 billion went unclaimed for the 2018-19 academic year. High school graduates eligible for a Pell Grant left behind $2,582,758,067 in free aid by not applying for financial aid, according to NerdWallet’s analysis.
  • Students could have received nearly $4,000, on average. Nationally, each student left behind an average of $3,908 in Pell Grant aid that could have been used toward attending any college that processes federal student aid, according to NerdWallet’s analysis.

“All college-bound students should fill out the FAFSA, no matter how much their family earns,” says Brianna McGurran, NerdWallet’s student loans expert. “Losing out on critical financial aid is one of the biggest mistakes students make. Submitting the FAFSA as soon as possible should be as essential as the college application itself.”

Losing out on critical financial aid is one of the biggest mistakes students make. Submitting the FAFSA as soon as possible should be as essential as the college application itself.

Brianna McGurran, NerdWallet student loans expert

Last year, Pell-eligible students in the Class of 2017 left behind $2.3 billion in aid, according to a previous analysis by NerdWallet.

» FAFSA STEP-BY-STEP: Learn about applying for financial aid with NerdWallet’s FAFSA Guide.

Not completing the FAFSA costs borrowers

The decision to forgo the FAFSA and a shot at Pell Grants can be expensive for a college student.

Say as a college freshman you borrowed $3,908 — an amount equal to the average Pell Grant award — from a private lender at a typical interest rate of 8%. By the time repayment begins after four years of college and a six-month grace period, the private loan already will have accrued nearly $1,400 in interest. Over 10 years of repayment, you’ll fork over $7,718 in payments, including interest, to a private lender for money that would have been free had you completed the FAFSA.

Not all students are eligible for a Pell Grant, of course. But filling out the FAFSA is also the key to receiving the one kind of financial aid that is available to everyone regardless of economic need: federal student loans.

These loans carry lower interest rates than private loans, have more repayment options and offer loan forgiveness. Borrowing less for college now may have an impact on financial decisions for years to come.

» CALCULATOR: Use a student loan calculator to find out how much your loans will really cost you.

How the states rank

What we found

  • Utah and Alaska were the two states with more than half of students who didn’t submit a FAFSA. 55% of Utah’s high school graduates didn’t complete it, the highest among all states. In Alaska, 52% of graduates didn’t finish the application.
  • Tennessee and Louisiana have the fewest graduates who didn’t complete a FAFSA. Tennessee and Louisiana tied for the lowest percentage (17%) of high school graduates who didn’t complete the FAFSA.
  • Mississippi high school graduates demonstrate the most need for Pell Grants. Sixty-seven percent of this state’s high school graduates were eligible for a Pell Grant, and those who received the money had the highest average grant awards among recipients ($4,329). A third of those eligible for a Pell Grant in Mississippi didn’t submit a FAFSA, one of lowest rates among all states.
  • New Hampshire graduates demonstrated the least need for Pell Grants. In the Granite State, 32% of high school graduates were eligible for a Pell Grant, and recipients received the lowest average Pell Grant award ($2,691) among all states.
  • About two-thirds of graduates who are eligible for Pell Grants live in the most-populated states. High school graduates from the four most-populated states left behind the most money by not submitting a FAFSA:
  1. California graduates left behind $353,791,128; 61% were eligible for a Pell Grant.
  2. Texas graduates left behind $358,959,904; 61% were eligible for a Pell Grant.
  3. Florida graduates left behind $170,673,202; 61% were eligible for a Pell Grant.
  4. New York graduates left behind $152,143,411; 54% were eligible for a Pell Grant.


METHODOLOGY

In each state, we looked at Pell Grant-eligible graduating high school seniors who didn’t complete the FAFSA in the 2017-2018 application cycle.Data showing Pell Grant eligibility was provided by Florida College Access Network, which analyzed U.S. Department of Education data.

We multiplied the eligibility number by the average amount of Pell aid disbursed to all students.

Why we focused on Pell Grants: As the largest source of federal funds for college, Pell Grants are free money and a major part of financial aid packages awarded to lower-income students — before work-study funds and student loans are tacked on.

We used the most recent data from the Department of Education to find the average Pell Grant award across all colleges and universities in each state. The maximum amount awarded in the 2017-2018 cycle was $5,920; for 2018-2019, it is $6,095.

How we calculated Pell Grant money left on the table: The number of high school graduates not completing the FAFSA equals the number of 2018 high school graduates minus the number of completed FAFSA applications by June 2018.

The number of Pell-eligible high school graduates not completing FAFSA equals the percent of Pell-eligible applicants multiplied by the number of high school graduates not completing FAFSA.

Pell Grant money left on table equals the number of Pell-eligible high school graduates not completing FAFSA multiplied by the average Pell Grant award.

How we estimated the number of high school graduates who didn’t complete the FAFSA: Using federal data from the Florida College Access Network, which compiles data for all states, we looked at how many high school students completed the form from October 2017 to June 2018, the final deadline for most colleges.

Then, using data from the Florida College Access Network, we took into account the total number of high school graduates in each state to estimate the number of graduating seniors who didn’t complete the FAFSA.

How we assessed Pell eligibility for students who didn’t complete the FAFSA: Using 2017-18 Pell Grant-qualifying applicant data from the Florida College Access Network, we estimated the number of graduating seniors who could have been eligible for a Pell Grant if they had filled out the FAFSA. Like the Florida College Access Network, we assumed the rate of Pell-eligible recipients is the same for students who didn’t complete the FAFSA as for students who did.

Pell Grant money left behind by the Class of 2018: Full breakdown

State % of grads not completing FAFSA Grads who didn't complete FAFSA Pell Grant-eligible grads who didn't complete FAFSA Average Pell Grant Total Pell Grant money left on table
Alabama 39% 19,565 11,809 $4,016 $47,424,925
Alaska 52% 4,022 1,538 $3,496 $5,376,399
Arizona 44% 30,106 17,663 $3,908 $69,021,889
Arkansas 37% 11,417 6,655 $4,050 $26,950,914
California 33% 145,005 88,284 $4,007 $353,791,128
Colorado 42% 24,455 10,432 $3,653 $38,109,236
Connecticut 31% 12,480 5,025 $3,510 $17,637,248
Delaware 34% 1,849 1,122 $3,665 $4,112,430
District of Columbia 28% 2,781 1,315 $3,852 $5,065,441
Florida 39% 69,859 42,766 $3,991 $170,673,202
Georgia 36% 38,515 20,735 $3,966 $82,232,350
Hawaii 41% 5,715 2,571 $3,896 $10,016,657
Idaho 44% 8,985 4,570 $4,059 $18,550,805
Illinois 32% 46,764 23,475 $3,795 $89,078,156
Indiana 36% 26,668 12,636 $3,844 $48,570,622
Iowa 37% 13,130 5,372 $3,676 $19,748,707
Kansas 47% 16,480 7,742 $3,845 $29,769,127
Kentucky 32% 14,899 8,326 $3,857 $32,112,078
Louisiana 17% 8,028 4,808 $4,003 $19,245,636
Maine 37% 5,284 2,595 $3,861 $10,017,502
Maryland 38% 23,991 10,152 $3,508 $35,613,758
Massachusetts 30% 22,258 8,491 $3,849 $32,678,103
Michigan 35% 36,418 17,509 $3,734 $65,371,322
Minnesota 38% 23,427 8,660 $3,524 $30,522,058
Mississippi 29% 8,590 5,723 $4,329 $24,773,022
Missouri 40% 27,787 13,712 $3,836 $52,606,355
Montana 42% 3,930 1,816 $3,954 $7,179,587
Nebraska 38% 8,935 4,154 $3,697 $15,360,101
Nevada 33% 8,246 4,782 $3,614 $17,285,832
New Hampshire 40% 6,182 1,959 $2,691 $5,272,797
New Jersey 32% 32,702 13,687 $4,031 $55,167,562
New Mexico 46% 9,327 5,838 $3,738 $21,825,646
New York 32% 66,463 35,863 $4,242 $152,143,411
North Carolina 40% 42,284 23,043 $3,981 $91,739,586
North Dakota 46% 3,370 1,147 $3,970 $4,554,682
Ohio 37% 46,318 20,803 $3,763 $78,286,431
Oklahoma 46% 19,099 10,828 $3,886 $42,080,569
Oregon 31% 11,570 5,702 $3,689 $21,034,017
Pennsylvania 37% 51,450 22,399 $3,925 $87,908,172
Rhode Island 30% 3,169 1,572 $3,811 $5,991,333
South Carolina 36% 16,597 8,991 $3,952 $35,528,808
South Dakota 37% 3,212 1,276 $3,673 $4,686,056
Tennessee 17% 11,238 6,270 $4,026 $25,241,658
Texas 44% 149,365 91,232 $3,935 $358,959,904
Utah 55% 21,467 9,874 $4,036 $39,854,922
Vermont 44% 2,983 1,192 $3,782 $4,508,489
Virginia 38% 34,669 15,134 $3,853 $58,306,999
Washington 41% 28,754 12,846 $3,904 $50,150,563
West Virginia 35% 6,320 3,427 $3,873 $13,272,029
Wisconsin 42% 27,683 11,398 $3,669 $41,815,160
Wyoming 46% 2,663 1,094 $3,831 $4,191,470
U.S. 37% 1,266,474 660,955 $3,908 $2,582,758,067