NCAN Report: In 2023, High School Seniors Left Over $4 Billion on the Table in Pell Grants

By Louisa Woodhouse, Policy Associate, and Bill DeBaun, Senior Director, Data and Strategic Initiatives

Reading time: 15 minutes

The high school class of 2023 left more than $4 billion in Pell Grants on the table by not completing the Free Application for Federal Student Aid (FAFSA), according to a new analysis by the National College Attainment Network (NCAN).

Federal financial aid helps make postsecondary education more affordable for millions of students each year. This is especially true of the Pell Grant - the largest source of federal aid for many students from low- and moderate-income backgrounds. For a variety of reasons, however, students do not always apply for this aid. This oversight means that billions of dollars of Pell Grants go unclaimed each year. As a result, students may limit their consideration of available postsecondary pathways, and rule out college options which would be financially feasible with the support of a Pell Grant.

“Today’s findings serve as a clear call for increased investment in FAFSA completion and student support efforts, to ensure that students are able to access all federal aid for which they are eligible. We’re hopeful that the shorter and simpler FAFSA form will expand access to this aid as well, to help put a postsecondary pathway within reach for students nationwide,” said NCAN CEO Kim Cook.

Recent Trends in Pell Grant Use

This report is the 3rd in a series of NCAN analyses examining unclaimed Pell Grant dollars. NCAN’s previous analysis estimated that the high school class of 2022 left $3.6 billion in Pell Grants unclaimed. Between the just two graduating classes (2022 and 2023), a whopping $7.6 billion in Pell Grants have been left on the table. The unclaimed dollars from these two high school classes each represent about 16% of annual Pell Grant expenditures.

These data and more are available for all 50 states and the District of Columbia via an interactive online dashboard, part of which appears below.

The trend data on unused Pell Grants is worrisome: recent graduating classes are passing up on more Pell Grant dollars than those in earlier years. Prior to NCAN’s Pell Grant analysis, NerdWallet, an American personal finance company, estimated that the high school class of 2017 left $2.3 billion in Pell Grant funding unused. Over the last few years, that value has jumped to more than $4 billion. The substantial increase in unused Pell dollars over time is driven primarily by an increase in the average value of Pell Grant awards. As FAFSA completion rates have stayed relatively similar over the course of the last few years, the higher Pell Grant value is the main factor leading to an increase in unused Pell dollars. While the increase in available federal aid is undeniably positive, substantial work is needed to ensure that students make use of it.

Key Takeaways and State-Level Insights

NCAN’s analysis reveals that the graduating class of 2023 left a staggering $4,010,871,031 in Pell Grants on the table. Nationally, the average Pell Grant for award year 2023-24 was $4,974.

FAFSA completion is a critical step in determining eligibility for, and receiving, federal financial aid. In the 2022-23 academic year, more than 1.6 million high school graduates did not fill out the FAFSA. If that group is eligible for Pell Grants at the same rate as those who did complete the FAFSA – a key assumption in our analysis – then nearly 792,000 Pell Grant-eligible students from the high school class of 2023 did not complete the FAFSA. Completing the FAFSA is the only opportunity for students to determine their eligibility and receive a Pell Grant or other federal financial aid. Without a complete FAFSA, students cannot receive a Pell Grant, and may not even be aware that they are eligible. As the value of the Pell Grant continues to increase, as it did this year, students who do not complete the FAFSA, but are eligible based on their family income, will miss out on increasingly valuable sums of federal financial aid. Data on the percentage of FAFSA applicants whose family income would have qualified them to receive a Pell Grant is collected by Federal Student Aid (FSA), the federal agency that administers the Pell Grant.

Predictably, states with higher student populations recorded the highest sums of Pell Grant dollars unused by high school graduates. The table below shows the top five states ranked by Pell Grant dollars left on the table for the high school classes of 2021, 2022, and 2023.

States with the highest rates of FAFSA completion for class of 2023 high school graduates included Tennessee (73%), Louisiana (71%), Illinois (68%), California (65%), Rhode Island (64%) and Mississippi (64%).

Conversely, states with the lowest FAFSA completion rates included Alaska (37%), Utah (39%), Oklahoma (46%), Florida (47%), and Idaho (47%). Aside from states with the lowest rates of FAFSA completion, Vermont, Nevada, Arizona, Kansas, and Wyoming had completion rates under 50%.

“FAFSA completion rates have rebounded since the pandemic, which is great, but only about half of seniors nationally completed a FAFSA by June 30 last year, which is not as great," said Bill DeBaun, Senior Director, Data and Strategic Initiatives at NCAN, and one of the authors of the report, "As Congress invests in the Pell Grant and the Better FAFSA expands Pell Grant eligibility, FAFSA non-completion becomes more costly to students, families, states, and our nation. Connecting students with the financial aid that can make a postsecondary pathway possible continues to be an 'all-hands' effort, and these figures show there's more for all of us to do.”

The FAFSA completion rate decreased slightly for the class of 2023, dropping from 59% in 2022, to 58% this year. Though relatively minor, this is a notable shift from NCAN’s findings last year, where our analysis showed that the FAFSA completion rate had improved for the class of 2022 (59%), in comparison to the class of 2021 (57%). Generally, a dip in FAFSA completion leads to an increase in Pell Grants left on the table: when fewer students complete the FAFSA, fewer students receive the federal financial aid for which they are eligible, and therefore, more Pell dollars go unused.

However, given the relatively minor decrease in completion rates between the class of 2023 and 2022, it is likely that the increase in Pell Grants left on the table was largely driven by an increase in the dollar value of the average Pell Grant. The maximum federal Pell Grant was set at $7,395 for award year 2023-24 - an increase of $500 from the previous award year. Nationwide, the average disbursed Pell Grant award for 2023-24 came to $4,974, which is almost $300 more than the previous year’s national average. As the maximum Pell Grant continues to increase, and the average award becomes more valuable, eligible students are passing up increasingly large sums of federal financial aid.

Aside from FAFSA completion rates, and the dollar value of the average Pell Grant award, the size of a state’s student population is a substantial factor in the top-line numbers around unclaimed Pell Grant dollars. As shown in the table above, states with large student populations consistently record the highest numbers of unused Pell Grants in NCAN’s analysis. While student population is a key factor in these calculations, other metrics paint a broader picture of the landscape of unused Pell Grants, and for the potential to improve both FAFSA completion and the Pell Grant take-up rate. For example, the Pell Grant eligibility percentage multiplied by the average Pell Grant award by state estimates the Pell Grant amount a state can expect to see taken off the table when each additional student completes the FAFSA. Mississippi ($2,249), Louisiana ($2,238), Tennessee ($1,918), Alabama ($1,903), Texas ($1,890) top the list by this metric.

Data on the previous metric is available for each state via NCAN’s interactive dashboard (roll over in the Dive Deeper table).

The Importance of FAFSA Completion

Completing a FAFSA is the only way for students to receive federal financial aid, which can be a dealbreaker when it comes to affording postsecondary education. To determine their eligibility for various financial assistance programs - most notably, the Pell Grant - students and their families must complete a FAFSA.

Pell Grants are the cornerstone of federal financial aid and a crucial engine driving postsecondary access for students from low-income backgrounds. Each year, nearly 7 million undergraduate students benefit from Pell Grants. The US Congress determines the maximum Pell award each year. For award year 2023-24, the maximum Pell Grant was set at $7,395. Historically, the amount of Pell dollars each student receives has depended on various factors, including family finances, an institution’s cost of attendance, and whether the student intends to enroll full- or part-time. Starting with the 2024-25 award year (for the graduating class of 2024,) Pell Grant eligibility calculations will be based predominantly on the federal poverty level and family size, due to FAFSA simplification changes. The US Department of Education (ED) estimates that the form’s new process to determine Pell Grant eligibility will significantly expand access to the award, with nearly 1.5 million more students receiving the maximum Pell Grant amount.

While FAFSA completion is necessary to receive a Pell Grant, the importance of FAFSA completion goes far beyond the receipt of federal financial aid. FAFSA completion, more importantly, is a fundamental step in the path to postsecondary attainment. In turn, the attainment of a college degree is strongly associated with improved financial security and well-being, resulting from higher earnings and lower unemployment rates.

FAFSA completion helps put postsecondary education within reach for more students by connecting them with the financial resources they need to cover the cost of college. Efforts to increase FAFSA completion rates are especially critical for students who have historically faced structural inequities in their path to degree attainment, such as students of color, those who are first-generation to college, and students from families with low incomes.

Further, students without a sufficient set of financial aid resources may rely more heavily on student loan borrowing and working long hours to cover the cost of college. FAFSA completion alleviates the reliance on these funding sources by awarding need-based grants, such as the Pell Grant, to students who qualify. Too often, financial hardships prevent students from low-income backgrounds from postsecondary persistence and completion. FAFSA completion helps to ensure that students have the maximum available financial aid to make postsecondary options more affordable.

“As the Pell Grant grows in value, students are passing up on increasingly large amounts of federal aid by not completing the FAFSA. This money can really be a gamechanger when it comes to completing a college degree. As we make progress towards doubling the Pell Grant, it’s critical to ensure that students can actually access this funding,” said Louisa Woodhouse, NCAN Policy Associate, and an author of the report.

How States Can Improve FAFSA Completion

Given the role FAFSA completion plays in students’ consideration of various postsecondary pathways, and ultimately their access to greater economic opportunity, states must find ways to actively promote the federal financial aid process. The good news: states have seen promising results from a variety of activities that help more students apply for aid.

Universal FAFSA Policies

Momentum surrounding “universal” FAFSA completion policies has gained traction over the course of the last year. States that have adopted these policies – which make FAFSA completion a high school graduation requirement – have seen impressive results for students. Louisiana, which was first to adopt a universal FAFSA policy in 2017, has ranked first or second in FAFSA completion every year since implementation. For award year 2023-24, the state ranks second, according to NCAN’s data, with a 71% FAFSA completion rate among Louisiana graduates. Illinois, California, and Texas, which also have implemented universal FAFSA policies, all rank within the top 10 states for percentage of high school seniors to complete the federal form.

2023 was a busy year for universal FAFSA adoption and implementation. In the spring legislative session, four states voted to adopt universal FAFSA policies (Connecticut, Indiana, Nebraska, and Oklahoma,) and New Hampshire and Connecticut implemented universal FAFSA policies in the fall. Indiana, Nebraska, and Oklahoma are slated to implement their policies for academic year 2024-25, while Kansas plans to enact a universal FAFSA requirement in 2027. Currently, 13 states have implemented, or plan to adopt, some form of universal FAFSA completion for high school students.

In order for universal FAFSA approaches to be successful, FAFSA completion requirements must be paired with adequate support for all involved in the financial aid application process - students, families, and advisors. Robust training and support is essential for college access professionals, who guide students and families through consideration of available postsecondary pathways. Effective universal FAFSA policies also include an opt-out system to account for students who may not be able to complete the form due to obstacles surrounding parental financial information or citizenship status.

Although universal FAFSA policies have become increasingly popular across the country - and as expected, have helped states improve FAFSA completion rates among high school graduates, there is little research on the effect of universal FAFSA as pertaining to enrollment in postsecondary education. As postsecondary attainment is the true end goal of financial aid access and FAFSA completion efforts, further research is needed to determine the relationship between universal FAFSA completion policies and increased postsecondary attainment.

FAFSA Data Sharing

States agencies looking to increase FAFSA completion rates should also consider their systems of student-level FAFSA data sharing efforts with their districts, high schools, and communities. By establishing these practices, high school counselors and local college access partners can better target their outreach efforts to students and help them receive the support they need—both in terms of advising and financial aid resources. This approach can improve school participation in FAFSA completion challenges, enhance college-going advising practices, and ensure that students obtain financial aid. Examples of states with exemplary FAFSA data-sharing processes include California, Colorado, and Washington.

In future FAFSA cycles, data sharing may prove to be a challenge. FSA recently announced that detailed FAFSA completion data for award year 2024-25 will not be released until April 2024. This delay will place a greater burden on counselors and others involved in college access work, who have historically used FAFSA completion data to target outreach efforts and keep pace with FAFSA completion numbers from previous years.

FAFSA Challenges

Statewide “challenges” are another great way for states to incentivize districts and schools to increase the share of their graduating seniors who are submitting a FAFSA. Initiatives like these can help build necessary P-20 partnerships between all stakeholders in the process—states, school districts, students, and their families. Along with these efforts, college access professionals should receive the requisite funding for, and resources on, financial aid counseling and the application process. Schools can also host FAFSA completion events and disseminate college readiness-related resources to families, students, and practitioners with state support. Many states have taken concerted steps like these to drive FAFSA completion. Excellent examples include: Connecticut, Georgia, Louisiana, Michigan, Mississippi, North Carolina, and Oregon.

How the Federal Government Can Help

In recent years, the US Congress enacted two major laws to improve the process of applying for federal student aid: the FUTURE Act and the FAFSA Simplification Act. These laws aim to make the federal financial aid application easier for students to complete and expand Pell Grant eligibility for students from low- and moderate-income families.

The new FAFSA form, which launched on December 31, 2023, is expected to significantly reduce the number of questions on the FAFSA for most applicants and allow for a much larger percentage of students and families to transfer financial information directly from the IRS to the FAFSA form. The enhancement of the direct data transfer option should help to streamline FAFSA submission, making it easier and faster for students to complete the application and reducing the need for data verification. Second, the new form includes updates to student aid calculations that will extend Pell Grant access to 610,000 students nationwide. FSA estimates that the updated process to determine Pell Grant eligibility will lead to nearly 1.5 million more students receiving the maximum Pell Grant award.

As we look to the 2024-25 FAFSA, it is imperative that the ED and FSA work diligently to ensure a smooth and timely implementation of the laws so that their promise of greater, easier to access federal student aid is realized.

Conclusion

The class of 2023 left more than $4 billion on the table by not completing the FAFSA. The growth of this value, as compared to last year’s $3.6 billion, continues to sound the alarm regarding college access and affordability: across the country, students are not receiving the financial aid necessary to afford college. When students overlook the FAFSA, they pass up financial aid dollars that could significantly shift the trajectory of their postsecondary pathways, bolstering college completion rates and financial security.

It is imperative that policymakers, state agencies, and college advisors make use of the tools and resources available to improve FAFSA completion for students nationwide. Through the implementation of FAFSA simplification legislation, universal FAFSA policies, data sharing agreements, and even FAFSA completion challenges, stakeholders can help students receive significant federal aid dollars. This support is critical to ensure that students can claim the Pell Grants and other federal aid for which they are eligible—and ultimately, attain postsecondary degrees that lead to increased financial stability, employment, and economic opportunity for individuals and the US at large. 

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