August 04, 2025
Recent findings from a comprehensive analysis by a national educational organization reveal a troubling trend: many students from low-income backgrounds are not completing the Free Application for Federal Student Aid (FAFSA) due to misconceptions about their eligibility for financial assistance.
This year, approximately 55 percent of high school graduates submitted their FAFSA applications, marking a notable recovery following last year’s problematic rollout of the updated form. However, despite this improvement, a significant number of students—around 1.6 million out of nearly four million graduating seniors—still opted not to apply for federal financial aid. The analysis highlights a critical issue: many students mistakenly believe they do not qualify for assistance.
The insights were derived from the Student Financial Wellness Survey conducted by Trellis Strategies, which gathered responses from over 53,000 undergraduate students across 104 institutions nationwide. Among the survey’s inquiries, it sought to understand the reasons behind students’ decisions not to complete the FAFSA.
Several key reasons emerged from the data: 21 percent of respondents indicated they felt they could afford college without aid, while 20 percent expressed concerns about accumulating debt. Additionally, 15 percent cited a lack of information on how to apply, and another 15 percent found the application process too lengthy. Notably, the most common reason—cited by 49 percent of participants—was the belief that they were ineligible for financial aid.
This raises an important question: are these students from higher-income families who accurately recognize their ineligibility, or are they low-income students who are missing out on potential aid?
According to Bill DeBaun, a senior director at the organization, understanding the demographics of these students is essential. He emphasized that if low-income students are misinformed about their eligibility for need-based aid, it indicates a significant awareness issue that needs to be addressed by all stakeholders in the education sector.
To differentiate between students from varying income levels, the analysis examined responses to other survey questions, such as whether they would struggle to obtain $500 for an unexpected expense or if they had received public assistance since January 2024.
The findings revealed that 48 percent of those who would have difficulty accessing $500 did not complete the FAFSA due to the belief that they were ineligible for aid. Similarly, 41 percent of respondents who had received public assistance—such as food, healthcare, or housing benefits—also thought they were not eligible for financial aid.
The analysis concluded that a significant number of students who could qualify for federal financial aid are not applying because they assume they do not meet the criteria. Furthermore, those who reported financial difficulties or received public benefits were more likely to indicate that they lacked sufficient information about the FAFSA process.
DeBaun noted that the percentage of lower-income respondents who did not complete the FAFSA due to misconceptions about their eligibility is a clear indication of a communication gap regarding need-based grant aid. He stressed the importance of addressing this miscommunication through collective efforts in policy, programming, and practice.
In summary, the data underscores the need for improved outreach and education regarding financial aid eligibility, particularly for low-income students who may be missing out on crucial support for their higher education journey.