Key points:
The Free Application for Federal Student Aid (FAFSA) has long been the starting line for millions of students on the path to higher education. For decades, it’s also been a grueling maze of financial forms and red tape. This year’s more streamlined version aimed to fix that, and early signs suggest it’s helping. But even the FAFSA at its best can’t fix what’s truly broken about pursuing and paying for college.
Soaring tuition prices have forced students to carry $1.77 trillion in student loan debt–more than the market cap of Meta. Yet the crisis in higher education isn’t just about the cost of college; it’s about the return on investment. Too many students end up drowning in debt for degrees that don’t deliver. To change this reality, we must stop asking “How can students pay for college?” and start asking “How can college pay off for students?”
What FAFSA improvements can and can’t do
The new FAFSA is like adding a step stool under a shelf that’s still impossibly out of reach. Simplifying the application process is a win, making it easier for students and families to access aid. But the cost barriers of actually attending college remain stacked far too high: rising tuition costs, sky-high housing and childcare costs, opaque fees and expenses, and missed earnings while learning. Many college students end up in debt, ultimately putting them behind instead of ahead.
The problem starts early. Colleges and universities control how costs and aid packages are shared, and many make it difficult–some intentionally–to understand or compare information. Worse, they rely on outdated communication methods like email that don’t fit younger generations’ habits, meaning students may miss important messages and deadlines.
Without transparent information or financial coaching, students face two bad options: Opt out of options that seem too costly–losing potential earnings or career paths–or take on burdensome student loans and spend decades trying to pay them off. Either way, they lose.
Emergency aid could be a lifeline
For many students, even a minor emergency can derail their education. The car they rely on breaks down. Rent goes up. An unexpected medical bill wipes out their savings.
Financial aid packages don’t cover living costs, forcing students–especially those from under-resourced communities and families–to make hard decisions about paying for housing, childcare, food, and other basic needs. Nearly one-quarter of undergraduates report experiencing food insecurity. Four million undergraduates are raising children who may need childcare.
The scope of this is simply alarming: Forty million people in the U.S. have some college credit but no degree. Helping students most at risk of dropping or stopping out requires better support systems.
Emergency aid programs can offer relief and, according to WGU Labs research, measurably increase graduation rates. But too many are bogged down by cumbersome applications, strict qualifying criteria, and lengthy evaluation periods. Emergencies are hard to predict, and when students realize they need help, aid from emergency funds may come too late.
States like Minnesota are leading the way with smarter models. Their state-run emergency aid program provides grants to institutions to assist students with housing, food, and transportation expenses that could otherwise prevent them from finishing the academic term.
Employers must step up
For students with financial obligations beyond tuition, the trade-off between the benefits of college and the opportunity cost of forgoing income might not appear worth it. Employers can help address this challenge.
Creating a stronger learn-work-learn cycle in which employers or other programs cover all or part of the cost of education fosters a shared-risk model. Expanding employer-funded education benefits is a start, especially when changes cover certificates and other short-form courses. State-funded upskilling programs, like those in Massachusetts and California, also open the door, particularly to small and mid-sized businesses.
In workforce development programs, employers share the risks–and the benefits. Workers get the skills they need to prepare for better-paying jobs, while employers retain valuable employees and get a skilled workforce to fill critical gaps.
Confusing repayment system penalizes borrowers
Navigating student loan repayment options can be more confusing than taking out the loan in the first place. Only about 28 percent of borrowers know about all their repayment options, causing many to pay more than is necessary. Multiple messy rollouts of the Biden Administration’s loan forgiveness programs and confusing updates to the FAFSA application have done little to help students understand their options.
Borrowers already face big consequences for taking on debt, and confusing repayment systems further hamper them. In a national survey, WGU Labs found that student loan debt has been linked to delaying financial and personal milestones like buying a home or car, building savings and other financial assets, moving out of their parents’ house, marriage, and additional education. Furthermore, survey responses showed that borrowers who are Black, LatinX, and women, as well as those without a bachelor’s degree, struggle most to repay their student loans.
A system in need of bold change
This year’s FAFSA overhaul is progress. It’s a step stool toward a more accessible and student-friendly financial aid system. But it’s just that: a step.
The bigger problems like opaque pricing, insufficient aid, and the disconnect between education and the workforce remain far from solved. Today’s college students and families deserve and want better: clearer costs, greater accountability from colleges, and more support to graduate without a mountain of debt. Achieving that will take systemic shifts to share information in plain language, streamline applications and aid distribution, strengthen ties between educational institutions and employers, and create effective repayment and forgiveness programs.
As higher education enrollment continues to decline, the need for bold action grows. If we fail to act, millions of students and families will be the ones who continue to carry the cost.
