NCAN Report: In 2022, High School Seniors Left $3.58 Billion on the Table in Pell Grants

By Raymond AlQaisi, Senior Manager of Policy and Advocacy and Bill DeBaun, Senior Director of Data and Strategic Initiatives

Reading time: Eleven minutes

The high school class of 2022 left about $3.6 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. But, for a variety of reasons, students do not always apply for it. This oversight results in billions of dollars of unclaimed Pell Grants and may limit students’ consideration of all postsecondary pathways available to them.

“Today's findings are bittersweet. The class of 2022's FAFSA completion increase means more students are accessing the Pell Grant, but so many students across the country are still not getting the financial aid that could put a postsecondary pathway within reach," said NCAN CEO Kim Cook.

This report is the second in a series of NCAN analyses examining unclaimed Pell Grant dollars. NCAN’s analysis from a year ago considered high school class of 2021 graduates and estimated that $3.75 billion in Pell Grants went unclaimed for the high school class of 2021. Between just two graduating classes (2021 and 2022), a whopping $7.33 billion in Pell Grants have been left on the table. The unclaimed dollars from these two high school classes each represent about 14% 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, a segment of which appears below!

Recent graduating classes are leaving more Pell Grants unclaimed than previous classes. Prior research conducted by NerdWallet, an American personal finance company, estimated that the high school class of 2017 left $2.3 billion in Pell Grant funding behind. The substantial increase over time is driven by higher average Pell Grant awards and a lower rate of FAFSA completion. The COVID-19 pandemic certainly has played a role in a reduced FAFSA completion rate.

In the 2021-22 academic year, more than 1.65 million high school graduates nationally did not fill out the FAFSA. If that group is eligible for Pell Grants at the same rate as those who do complete the FAFSA , a key assumption in our analysis, then about 767,000 students from the high school class of 2022 who would be eligible for Pell Grants did not complete the FAFSA. Without completing the FAFSA, students have no opportunity to receive a Pell Grant or other federal financial aid. Information on the percentage of FAFSA applicants whose family income would have qualified them to receive a Pell Grant is from Federal Student Aid, the federal agency that administers the Pell Grant.

NCAN’s analysis reveals that this cohort of students left $3,576,294,082 in Pell Grants on the table. Nationally, the average Pell Grant award was $4,686 for the year.

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

States with the highest rates of FAFSA completion for class of 2022 high school graduates included Washington, DC (74%), Tennessee (71%), Louisiana (69%), Illinois (68%), Texas (63%), Rhode Island (63%), and Alabama (62%).

Conversely, states with the lowest FAFSA completion rates include Alaska (35%), Utah (38%), Oklahoma (43%), Florida (46%), Idaho (46%), and Arizona (47%).

"There's more for states and schools to do to make sure each student who can benefit gets connected to available financial aid. The FAFSA is an important step, but not the only one," said Bill DeBaun, Senior Director of Data and Strategic Initiatives at NCAN and one of the report's authors, "FAFSA completion signals a student's intent to enroll, and supportive systems that connect students with the advising they want and need also make a big difference in their postsecondary plans."

FAFSA completion performance was generally stronger across the country for the high school class of 2022 than for 2021. This increase was a key driver of the slight decrease in Pell Grant dollars left on the table by the class of 2022 compared to 2021. When the number of Pell Grants left on the table decreases, it means more students are completing the FAFSA and receiving Pell Grants for which they may be eligible.

The size of a state’s student population is a substantial factor in the top-line numbers around unclaimed Pell Grant dollars, but it is not the only lens through which to view these data. For example, multiplying a state’s percentage of FAFSA non-completers by its Pell Grant eligibility rate offers another sense of the magnitude of a state’s opportunity to increase Pell Grant dollars. Oklahoma, Florida, New Mexico, Arizona, and Nevada are the only five states whose FAFSA non-completion percentage and Pell Grant eligibility percentage are over 50%; consequently, these states (and their students) stand to gain substantially in terms of federal financial aid if they can increase FAFSA completion.

Another way to consider these data is to look at the Pell Grant eligibility percentage multiplied by the average Pell Grant amount received. This metric offers the expected Pell Grant amount a state can see taken off the table for getting an additional student to complete the FAFSA. Mississippi ($3,243), Louisiana ($2,849), Alabama ($2,781), Texas ($2,725), and Florida ($2,643) top the list by this metric.

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

Why FAFSA Completion is Important

By completing the FAFSA, students unlock federal financial resources to help pay for postsecondary education. To complete the FAFSA, students (and their families) provide information that determines their eligibility for a variety of assistance programs.

The federal Pell Grant is a considerable need-based award that does not need to be repaid. The US Congress sets the maximum award each year, and how much an individual student receives depends on various factors. Starting with the 2024-25 award year (for class of 2024 high school graduates), the Pell Grant will be based predominantly on the federal poverty line and family size due to FAFSA simplification changes.

Pell Grants are the cornerstone of federal financial aid and are a crucial engine of postsecondary access for students from low-income backgrounds. Each year, nearly 7 million undergraduate students benefit from Pell Grants. Since 1972, the program has made a difference in the lives of 80 million Americans.

Attainment of education after high school is strongly associated with a variety of positive life factors, such as financial and physical well-being. Additionally, postsecondary attainment is more likely for individuals who pursue it directly after high school graduation, rather than individuals who take time before enrolling in a postsecondary program.

FAFSA completion helps put postsecondary education within reach for more students by connecting them with resources, including Pell Grants (if they are eligible). Efforts to increase FAFSA completion rates are especially critical for postsecondary students who have historically faced structural inequities in their path to degree attainment, such as students of color and students who experience poverty.

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. The Pell Grant program is an essential support pillar for postsecondary students that Congress could further strengthen to lessen the burden of student debt and over-working during the academic year. Too often, financial hardships prevent students from low-income backgrounds from postsecondary persistence and completion.

“As we work to reverse enrollment declines, it is imperative to leverage all resources and financial aid that could put a postsecondary pathway within reach," said NCAN's Cook.

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 incredible results from a variety of activities that help more students apply for aid.

Universal FAFSA Policies

States that have adopted “universal” FAFSA completion policies have seen impressive results for their students completing the process. The concept of making the federal financial aid form a requirement for high school graduation must also be paired with adequate support for all involved in the process—students, families, and advisors. This includes building and providing robust training for college access professionals who guide students through considering their postsecondary pathways. Effective policies also include an opt-out system, as students can have a variety of circumstances that make this option necessary.

Several states have adopted a universal FAFSA policy in recent years, and there is growing evidence of their results on increasing FAFSA completion. For example, Louisiana – the first state to adopt the policy – has ranked either first or second in FAFSA completion every year since implementation. Texas, another big state that implemented recently, gained the top spot in that cycle for overall year-over-year percent change, with a 25.9% increase (49,000 additional FAFSA completions). States with universal FAFSA (Louisiana, Illinois, Alabama, and Texas) have all seen substantial year-over-year increases, and all are ranked in the top ten states for percentage of high school seniors completing the federal form.

More and more states continue to consider and adopt universal FAFSA. California’s policy is in effect for the current 2022-23 academic year, New Hampshire will implement next year, and Colorado recently established a grant program for their local education agencies (LEAs) to adopt a requirement in assisting students with FAFSA completion. As of this month, Kansas also joined the list of states who have enacted a universal FAFSA policy.

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.

FAFSA Challenges

Statewide “challenges” are another great idea 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.

Using COVID Relief Funding for College and Career Readiness

Over the past few years, Congress appropriated a total of $190 billion in emergency pandemic relief funding for K-12 education—called the Elementary and Secondary School Emergency Relief [ESSER] Fund. This stream of funding was set up for state agencies to provide urgent relief, mitigate, “learning loss,” and promote general education recovery from the pandemic’s severe impacts. Given that the annual federal investment in elementary and secondary education is roughly $80 billion, ESSER presented a massive investment in our nation’s students and schools.

ESSER also presents tremendous opportunities to provide students with supports to consider pathways to postsecondary education. NCAN hopes that many local education agencies will continue to invest these funds in college and career readiness activities—with districts, schools and college access programs cooperating on services for students. NCAN has extensively promoted these opportunities for collaboration within our membership and the potential activities that can be carried out with ESSER funds that would do wonders on the front of college and career readiness. US Secretary of Education Miguel Cardona also encouraged these funds’ use for college and career readiness in a, “Dear Colleague” letter late last fall.

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, to be implemented together for the 2024-25 academic year, achieve critical goals that NCAN has long had for FAFSA simplification.

First, it will significantly reduce the number of questions on the FAFSA that a given respondent will have to answer and give almost all filers the ability to directly transfer financial data from the IRS. Second, a new measure for Pell Grant eligibility will allow for early awareness among high school students so that they can more easily learn whether they will qualify for Pell Grants.

With major changes coming to the FAFSA process, it is imperative that the US Department of Education and FSA work diligently to ensure a smooth and timely implementation of the laws.

Conclusion

All stakeholders – policymakers, district and school personnel, community organizations – can help improve the college and career readiness supports available to students. Those supports can help more eligible students claim their Pell Grant, pursue a postsecondary pathway, and, for the benefit of both individuals and the nation at large, attain a postsecondary degree/credential.

By promoting FAFSA completion and postsecondary enrollment, our nation can also make equitable steps to advancing economic opportunity and security for more Americans. This work is extremely critical, as our country continues to recover from the pandemic, which will have enduring consequences for the college access and success prospects of future graduating classes.

Acknowledgements: NCAN is grateful for the generous support of the Joyce Foundation, which made this analysis possible. Thank you also to Caroline Doglio, NCAN Program Associate, who contributed to the interactive dashboard for this analysis.