Key Takeaways

The Free Application for Federal Student Aid (FAFSA) is the gateway to accessing federal, state, and institutional financial aid. The California Dream Act Application (CADAA) assesses undocumented students’ eligibility for state and local financial aid. Despite financial aid’s importance, too many California high school graduates fail to complete these forms, resulting in missed opportunities, college decisions made with limited information, and unclaimed aid. Following the example of a handful of other states, California recently enacted a universal financial aid application completion policy to address the issue, starting in the 2022–2023 school year. We find

• Initial data suggests an increase in FAFSA/CADAA completion, particularly among low-income students. In the first year of the policy’s implementation, applications from high school seniors prior to the University of California (UC) and California State University (CSU) systems’ March 2 deadline increased by 16 percent. Students in the lowest-income group saw the largest increase (21%).
• First-year implementation varied across the state. Though implementation levels varied by school district, most districts benefitted from this financial aid policy and saw positive increases in financial aid applications. The variation was often due to district priorities as well as capacity and resource constraints. Despite the differences, districts we spoke to expressed similar goals, obstacles, and strategies.
• Promising strategies exist to overcome obstacles. Obstacles to implementation include parental resistance, high student-to-counselor ratios, inconsistent tracking methods, and confusion about enforcement. To overcome these, districts have prioritized clear communication about the requirement, system-wide support, partnerships with community organizations, data sharing, and incentives for students to complete the form.
• New FAFSA rollout caused problems in the second year, nationwide and in California. A change to the FAFSA form at the end of December 2023 created unique challenges for students and districts in the second year of the policy’s implementation. Though the new form was intended to simplify the process, many students were unable to complete it due to software and identity confirmation issues. However, there is some evidence that the new system has improved as it has been rolled out.

California’s higher education systems can provide a ladder for economic mobility within the state, but their efficacy is largely dependent on keeping higher education accessible to all Californians. The state’s public and private institutions vary in cost from the nation’s lowest community college tuition (at about $1,200 per year) to private institutions like the University of Southern California (over $64,000). For many students, college access depends upon financial aid. To be eligible for federal aid programs like the Pell Grant, work study, and federal loans, most students and their families must complete and submit the Free Application for Federal Student Aid (FAFSA), created in 1965 through the Higher Education Act. Undocumented students are ineligible for federal programs, but in California they can access state, local, and institutional financial aid through the California Dream Act Application (CADAA). Though the CADAA is a state program, it requires many of the same types of financial information as the FAFSA.

States and most colleges and universities also use FAFSA information to provide additional financial aid. The California Student Aid Commission (CSAC) uses it to determine eligibility for the Cal Grant program, which provides tuition—and some non-tuition—support for a majority of the state’s college students. The FAFSA is also the basis for institutional aid programs like UC’s Blue and Gold Plan, CSU’s State University Grant program, and the California College Promise Grant—which provides free community college tuition.

Access to financial aid—especially grant aid—is critical to student success and college completion. Prior research has shown that every additional $1,000 spent on grant aid improves student persistence and degree attainment by about 2 percentage points (Nguyen et al. 2019). Yet historically, most of California’s high school graduates do not fill out the FAFSA, without which they cannot qualify for aid. Only 45 percent completed it in the 2021–2022 academic year—a rate relatively unchanged for the past decade. In fact, the state’s low FAFSA completion rate left an estimated $550 million in federal and state aid on the table in the 2020–21 academic year, $100 million of which would have gone to community college students (Wu 2019; Wheelhouse 2018).

Moreover, students are making decisions about their futures without full information. The most underserved and needy students are those most likely to be deterred by the aid application process (Dynarski and Scott-Clayton 2006). Some who could receive aid may decide that college is too expensive and choose not to attend. Others may attend college but do not know aid is available.

In the 2021–22 state budget, policymakers used Assembly Bill 132 (AB 132) to require all public school districts and charter schools in California to ensure that all of their graduating high school seniors complete either the FAFSA or CADAA prior to graduation. Importantly, this policy did not make the financial aid application a graduation requirement. Students were allowed to opt out, with no punitive measures for students or schools for not fully complying.

California’s universal FAFSA policy was implemented the year before the federal government made major changes to the application. This confluence of events caused problems. Instead of October, the new form rolled out at the end of December, shortening the amount of time students had to apply for aid. Although it was connected to Internal Revenue Service (IRS) data—which helped decrease the number of questions—many students had difficulty completing the form. This caused slow and low FAFSA completion rates in the 2024–25 award year.

This report analyzes the first year of the universal FAFSA policy implementation. First, we use data from the California Student Aid Commission (CSAC) and the US Department of Education (USDE) to show the overall FAFSA results for high school seniors compared to the prior year. Next, we present findings from interviews and site visits with personnel from school districts and schools across the state. We also incorporate some findings on the problematic rollout of the 2024–25 award year FAFSA, its impact on schools and students, and how that rollout has played a role in FAFSA completion declines this year. We conclude with policy considerations based on the research.

California’s FAFSA completion policy (AB 132) was passed in 2021 to increase awareness of college financial aid availability and therefore college access for students in the state (California Legislative Information 2021). The law aims to maximize federal, state, and institutional financial aid for students, and directs school districts to use existing programs to provide supports for students and their families, coordinate information campaigns, and secure data management. A key aspect is that it provides critical information to help students choose their best path after high school—whether postsecondary education, an occupational/technical program, or entering the workforce.

As of 2023, California is one of 15 states that have passed legislation for a universal FAFSA completion policy. Eight have implemented it and the other seven have yet to do so (Table 1). Much of the of the legislation is similar; each state requires school districts to ensure that all graduating first-time filers either complete the FAFSA, a state financial aid form, or an opt-out form. However, some mechanisms differ. For example, Louisiana, Texas, and Alabama require a FAFSA completion or an opt-out to graduate. Indeed, Louisiana was the first to do so and is considered the model for other states and school districts across the country that have subsequently adopted similar policies. Maryland, California, Colorado, and Indiana have softer policies. School districts are responsible for ensuring that their graduating seniors complete a FAFSA, state financial aid form, or opt-out, but it is not a graduation requirement and there are no clear enforcement mechanisms.

Every state that implemented this policy saw an immediate increase in FAFSA applications in the first year, though the magnitude of the change varies. Illinois already had one of the highest FAFSA completion rates and implemented the policy right after the COVID-19 pandemic depressed FAFSA completion. Their first year saw increases of 3.1 percent (4,664 applications), compared to a decrease of 4.8 percent in the rest of the nation at the time. Alabama and Texas saw the largest increases in their first year—about one-quarter (6,326 and 49,072 applications, respectively). Meanwhile the rest of the nation’s increase was 4.6 percent (Figure 1). Maine’s 11.6 percent jump accounts for an increase of 902 applications.

California saw an 11.1 percent overall increase, compared to 3.9 percent nationwide. The National College Attainment Network (NCAN) estimates that by the end of the financial aid cycle, 62 percent of California high school seniors completed the FAFSA, outpacing the national average of 59 percent. This amounts to 28,487 more FAFSA completions in California over the prior year (DeBaun 2023).

Several additional states have recently passed Universal FAFSA policies that will go into effect during the 2024–25 school year, with most of them electing to make it a graduation requirement. More states are recognizing the importance of completing a financial aid application as a step to obtain postsecondary opportunities, and early evidence in those states that have implemented policies points to positive results (NCAN 2024a).

California’s first-year increase suggests that thousands more high school students are receiving information about their financial possibilities for postsecondary education. With FAFSA and CADAA together, the state saw about a 10.7 percent increase in all aid applications by high school students by the September 2 deadline—about 32,822 additional students (Table 2).

There are three main FAFSA deadlines for students in California. The FAFSA application form for the academic year ends on June 30, but most four-year colleges require students to submit the FAFSA in March so that they can provide students with financial aid information before the student chooses which college to attend. The UC and CSU deadlines are both typically March 2. California holds the FAFSA open until September 2 to allow community college students to apply for state aid programs like Cal Grants and the Middle Class Scholarship program prior to enrolling in the fall. Table 2 shows the increase in applications after the first year of implementation of the universal financial aid application policy for each of these dates. The majority of California’s students at four-year institutions attend UC or CSU. The state saw the number of students applying for aid by the UC/CSU deadline increase by 16 percent—about 42,000 more in the first year of this policy. This suggests that the gains associated with the universal FAFSA policy allowed more students to become eligible for aid there (Cook 2024).

Looking at overall trend in FAFSA completion for the state from the 2017–18 to 2023–24 academic years, we see the increase in FAFSA submissions and completions in the first year of policy implementation. The state historically has seen FAFSA completion rates just above 50 percent, but after the implementation we see a significant increase in submissions and completions by the June 30 cutoff date (Table 3).

Notwithstanding these positive overall numbers, if the policy is going to help with upward mobility, students from the lowest-income families must fill out financial aid applications, and do so in time to meet submission deadlines. While comprehensive information about financial aid would be helpful for all, students in lower-income families likely have the most to gain in terms of potential for financial aid to make college more accessible. At the same time, research suggests that students who are most likely to benefit from financial aid are less likely to apply for it (DeBaun 2019). Data provided by the California Student Aid Commission (CSAC) allows for an in-depth analysis of student submission rates by income and wealth. Figure 2 shows a breakdown by Student Aid Index (SAI) of the growth in FAFSA submissions in the first year after implementation of the policy.

Our findings showed a similar trend when looking at the increase in FAFSA/CADAA submission rates among high school seniors across race and ethnicity. Each racial/ethnicity sub-group the CSAC and CDE tracked increased by 4 to 9 percentage points, with Latino, Filipino, Pacific Islander, and Native American students experiencing the largest increases (Figure 3). Though California’s universal FAFSA policy appears to increase FAFSA submissions across the board, the fact that it increased the submissions for the state’s lowest-income and least-represented students in the public college system suggests it is a useful strategy to improve equity in student access to college.

To gauge how the first year of the universal FAFSA/CADAA policy implementation progressed across the state, we conducted site visits at three school districts and conducted interviews at 18 school districts. The sample included three rural, seven urban, and eight suburban districts. The group included a mix of districts that had higher and lower FAFSA/CADAA completion rates. Most commonly we talked to more than one member of staff at the schools, often including school counselors, principals, college readiness specialists, teachers, and superintendents. Through this rich interview data, we identified many similar experiences in terms of obstacles faced and strategies used.

Obstacles

Many of the obstacles to universal FAFSA/CADAA policy implementation have been longstanding, and some were created by the new policy. Counselors, teachers, and other school staff shared during interviews and site visits their challenges in getting all students to complete the FAFSA or CADAA.

Parent participation can be difficult to obtain

Lack of parent cooperation is by far the most recurring obstacle to full implementation. Both parents and students must participate in completing the FAFSA/CADAA. Parents must also enter their tax information from two years prior or allow their student to do so. Interviewees remarked that many parents did not feel comfortable sharing their financial information with students, and some did not feel comfortable sharing the information with the federal government.

As of 2021, 20 percent of California residents under 18 were living in “mixed-status” families—where one parent is a citizen and one is not (California Immigrant Data Portal 2021). Given the share of undocumented and mixed-status families in the state, fear of exposure or interference with existing legal processes is a concern. For example, a school district in Southern California close to the US–Mexico border noted that the biggest obstacle they faced was parents lacking the necessary tax documentation to complete the form. Missing tax filings, incomplete tax forms, and complications with immigration status made it difficult to complete the process.

School counselor caseloads are too large

At every school and district, school counselors were central to meeting the universal FAFSA/CADAA goal. They were often responsible for family and student outreach. Families often depended on them for tracking completed financial applications. The American School Counselor Association recommends a load of about 250 students per counselor, but our interviews revealed many school counselors have caseloads of upwards of 400 to 500 students (American School Counselor Association 2024). Research has already shown that high caseloads lead to burnout and further decrease the already limited time school counselors have to counsel students directly (Bardhoshi et al. 2014). The policy does not provide any new funding up front for more counselors, professional development, or other help for school counselors. Interviewees expressed how their high caseloads limit their ability to know students individually and make sure full implementation is achieved.

Tracking completed applications was complicated

For the first time, schools were tasked with keeping information on completed and uncompleted financial aid applications for each of their high school seniors. School personnel made innovations to determine which seniors had yet to complete a financial aid form and provide the necessary resources and support. For example, staff at a Bay Area urban high school used an online portal on the CSAC website (Web Grants) to track student completion. They discovered that a significant percentage of the students in this district transferred to another high school or went to a continuing education school but were still being counted as enrolled in their high school.

The portal allows staff to run reports that indicate which students have successfully completed a FAFSA or CADAA. It also provides information on whether a GPA verification form has been uploaded and if this information has been matched to a financial aid application. Although about half the districts interviewed used that portal, inconsistent tracking methods are still a key barrier to a streamlined implementation. Every school we interviewed used some version of a shared Microsoft Excel file or Google document. It would be inherently safer and easier if districts had access to a cloud-based system.

The new opt-out process was confusing to students and staff

As mentioned above, the policy allows students to opt out. The CSAC provided a template for opt-outs, but our interviewees did not always feel there was enough guidance on how to use it. The template requires the following information: pupil name, date of birth, and statewide student identifier (SSID). It also requires a counselor signature and a parent or guardian signature if the student is under 18 years old. A student signature is valid in lieu of parent/guardian if the student is emancipated or over 18 years old. It also includes language stating that submitting an opt-out form does not prohibit a pupil from completing and submitting a financial aid application at any time in the future. A sample opt-out form is provided in Technical Appendix C.

However, the law stipulates that each school district determines the date to submit the form, leaving districts to decipher how and when to provide information to students regarding the op-out choice. We encountered uncertainty about what happens if students refuse to either apply for aid or opt out, which schools admit some students did. There was also confusion about what to do with the opt-out forms, as there is no mechanism to collect or monitor them. One district we spoke to was concerned with who was collecting the data, how it was being stored, and who had access to it.

Strategies

While the schools and districts saw similar challenges, they found solutions for their student populations that often relied on cooperation and coordination between many individuals at schools and in districts. We highlight some of the common and more innovative solutions that emerged from our interviews and site visits.

Building external partnerships

Parent involvement is critical to building trust with families who must provide the sensitive information needed to complete the FAFSA/CADAA. Trust must be established between the families and district by instilling culturally relevant support and information (College Board Advocacy and Policy Center 2010). Some schools and districts relied on larger partnerships with community resources to do so.

One example is Val Verde Unified School District’s partnership with TODEC—Training Occupational Development Educating Communities—a local organization that provides legal services to the undocumented and mixed-status families of their community. Their attorneys provide free legal consultation to families, which cultivates a sense of trust and knowledge when tackling a legal form such as FAFSA/CADAA. TODEC also provides knowledge on the rights of undocumented individuals, conducts town halls, and facilitates college tours. Although this service is not available to all students, many districts have also partnered with California Student Opportunity and Access Program (Cal-SOAP), which provides financial aid information to families. They offer counseling sessions virtually or in person with families who have yet to complete their form.

Data sharing

Districts we interviewed noted that improved data sharing across high schools was an important tool for locating students and helping them complete the financial aid application process. Having all student data consolidated to a central location readily accessible to school counselors allows for timely interventions to help students and their families. Some districts have achieved data sharing agreements by working with their county’s department of education or other partnerships.

For example, Val Verde Unified School District is part of a data-sharing agreement with all 23 districts in their county, administered by the Riverside County Office of Education. Val Verde has steadily increased their FAFSA/CADAA completion rates over a seven-year period—from 69 percent to 92 percent—by improving their student tracking systems and ensuring that pupils whose information reported to CSAC were currently enrolled. They also partner with other schools in the district when students transfer, not just to ensure preciseness, but so that the student also gets the necessary support for filing FAFSA/CADAA at their new school. For Val Verde and other interviewed districts with data-sharing agreements already established, this additional data is pivotal in measuring results and pinpointing errors, which districts can then address in an efficient and impactful manner.

At the state level, two data systems mentioned by districts that we interviewed could also prove valuable in ensuring a greater number of students complete the FAFSA/CADAA, and should provide important information to policymakers and practitioners regarding the impact of increased FAFSA/CADAA completion on college access and affordability. First is the California College Guidance Initiative (CCGI). CCGI provides students from middle school to college age with an online portal that allows them to access information on college, career, and financial aid planning. Importantly, this tool also allows students to complete and submit the FAFSA/CADAA and other critical financial aid information directly to CSAC and the Federal Student Aid authority. CCGI also partners with school districts to provide reporting tools and automate routine tasks, and helps districts manage expanding capacity and analysis of the student data they collect. School districts in California often have rich student data but can lack the capacity to use this data to evaluate the outcomes of different policies and practices.

Second, the Cradle to Career Data System—which will provide California with its first longitudinal, student-level data system—will collect and report data on 11 different variables related to student financial aid. The system will collect information on financial aid eligibility, applications, awards, and debt for the state’s high school, public, and private nonprofit colleges. Critically, this data system will also be able to provide information on students who applied for aid and did not receive it, allowing for greater analysis of the barriers students face when navigating the financial aid application process.

Managing policy information flow

One of the most common strategies was prudently managing the information students had access to. Rather than telling students they can either fill out the FAFSA/CADAA or an opt-out form, many districts told them it was a graduation requirement, or simply that they were expected to complete it. Similarly, some chose not to tell students the opt-out form was a choice until later in the school year and after they had attempted other approaches. Opt-outs were generally low (under 10%) at most of the schools we interviewed. The main groups choosing that option were students in Special or Continuing Education groups, students planning to join the military or workforce, and families who had presumed they would not qualify for aid. Even so, despite staff efforts and low numbers of opt-outs, just over 25 percent of students neither applied nor opted out of applying for financial aid (CSAC 2023b).

Incentives and competition

Best practices from several districts show that incentives and friendly competition for schools and students are a key motivation to ensure high FAFSA/CADAA completion rates. Finding a way for students to feel valued for their hard work and effort is important. According to our interviewees, when seniors who complete their financial aid form are celebrated in one form or another, students can look forward to these rewards, which can then become an invaluable tradition.

On a broad level, the California Student Aid Commission created the Race to Submit website, which publicly shares FAFSA/CADAA completion data and strategies. The schools with the highest FAFSA/CADAA completion rates are invited to attend an annual celebration ceremony where they receive banners to display. This friendly competition has been something that many districts have embraced and use as motivation for staff and students alike.

Within individual schools or districts, incentives could be as small as a classroom lunch gathering or as large as a schoolwide festival with activities and prizes. For example, after the FAFSA/CADAA March 2 deadline, Val Verde Unified holds a party called “Cashchella” for high school seniors who have completed the form—with rides, food, and prizes. Seniors who do not complete the application are not allowed to participate. Administrators, staff, and students all noted that this event is considered a highlight for the year and is a key motivator.

The first year of implementation was associated with a 16 percent increase in applications by the UC/CSU deadline (Table 2). However, compliance with the universal FAFSA/CADAA policy was still far from universal. California’s financial aid completion rate for the 2022–23 academic year was 69 percent (Table 3). The state was well poised to implement and refine the strategies mentioned above for even more FAFSA/CADAA coverage. But problems with the new FAFSA Simplification Act rollout caused initial aid applications in the 2023–2024 school year to drop considerably.

The FAFSA Simplification Act Rollout Was Complicated

The federal FAFSA Simplification Act was intended to streamline financial aid applications. It reduced the number of questions from 108 to 36, using application programming interfaces (APIs) that automatically populate the applicant and their family’s tax information from the IRS.

However, implementation and rollout were premature and many students found it difficult to complete the form. This negatively impacted students in two main ways. October is the month that school counselors traditionally start working with students to begin collecting the necessary information to complete the form. But USDE delayed access to the new FAFSA form from October 2023 to January 2024. This set all the schools’ strategies back three months, leaving little time between the rollout and the March 2 financial aid application deadline for UC and CSU.

Secondly, many students could not complete the form due to technical problems, which disproportionally affected mixed-status families. If a parent who is a financial contributor cannot obtain a Federal Student Aid identification number—or if the information they provide does not match exactly to federal tax and immigration data—then the student is unable to advance through the form. As Figure 4 shows, these problems resulted in a late and slow start for FAFSA/CADAA submissions in California and across the nation. UC and CSU extended their application deadline to May 2, allowing an additional 100,000 total applications to be filed. If the deadline had not been shifted, the total number of applications would have been 50 percent less than the prior year.

Applications Dropped Nationwide, but California Fared Better than Most

Due to the new FAFSA rollout, all of the gains made in the first year of the universal FAFSA/CADAA policy were lost by the May 2 deadline in the second year, but those losses were not limited to California. The most recent data available on FAFSA completion for the 2023–24 academic year shows drops for each state compared to the prior year. At the close of the federal FAFSA cycle on June 30, the FAFSA completion rate for high school seniors lags last year by 7.2 percentage points (from 53% down to 46%). For context, between 2019 and 2020 during the onset of the COVID-19 pandemic, the FAFSA completion rate decreased 3.9 percentage points (NCAN 2024b). However, the states with universal FAFSA policies are still near the top of FAFSA completion leaderboards. The top fifteen states in terms of completion percentages include Tennessee (2nd), Louisiana (3rd), Illinois (7th), Texas (8th), and California (13th), all of which have universal policies (NCAN 2024b).

Within California, there are reasons to be concerned. As of the June 30 federal cutoff date, financial aid applications still lag significantly behind 2022 and 2023 levels. The late start and complications kept many students from meeting the UC/CSU March 2 aid deadline, so both systems moved the date to May 2 with the help of the state legislature, which passed a law, AB 1887, to allow for this accommodation (California Legislative Information 2024). However, even with this change, the number of students who submitted FAFSA/CADAA applications by the UC/CSU deadline was down 17 percent, or about 54,000 fewer applications (Figure 4).

The first year of implementation saw increased FAFSA/CADAA completion rates in California compared to the rest of the nation. Those gains were concentrated among the groups the policy is intended to help most—those who were likely to have high financial need and be eligible for federal, state, and institutional financial aid. However, it is important to note that problems with the FAFSA Simplification Act rollout the following year impacted students across the country. In California, it resulted in tens of thousands fewer students applying for aid by the UC/CSU deadline. The FAFSA/CADAA release date has been delayed until December for the 2024–25 school year, again condensing the timeframe that students and districts have to ensure their students complete the form. However, given the success of the universal FAFSA/CADAA policy in the first year and the experience gained through the difficult rollout of the new FAFSA form, we remain optimistic that in the coming years more students in California will complete the form and get the information they need to plan their future. To ensure that the state’s universal FAFSA/CADAA policy is successful going forward we recommend:

Promote FAFSA/CADAA completion as part of the California School Dashboard. The college readiness dashboard includes data on whether high school students are prepared for success after graduation based on measures like graduation rate, performance on state tests, and college credit courses. But FAFSA/CADAA completion is also a critical step for students learning about their college and career options. The state can measure and report this to integrate FAFSA/CADAA completion into better understanding a school’s success.

Improve data sharing among schools and districts. Our research found that linking data systems and improving data sharing and quality are key. At minimum, we recommend that schools within a district share their data. However, it would be even more advantageous if all districts within a region did so, as districts reported that a significant number of FAFSA/CADAA applications become unaccounted for when students move within or across districts. This would aid in tracking student enrollment across high schools, allowing districts to better locate and support them. To accomplish this, districts need additional staff and resources to process, clean, and analyze the rich data they collect. As shown by Val Verde Unified School District and another district in the San Joaquin Valley, involvement from the county government to support data quality, sharing, and access could be a model.

Coordinate efforts and build buy-in across different stakeholders. A more holistic approach to increasing FAFSA/CADAA completion could aid effective implementation and longevity. The more people who are involved, the better the college-going culture at the school or district. This is achieved by slowly building buy-in from stakeholders such as students, parents, teachers, administrators, mayors, legislators, and the community. Most of the successful districts we interviewed had multiple people, multiple points of contact with students and families (classroom, administration, counselors), and events to celebrate milestones. When stakeholders such as mayors and legislators understand and value this policy—not just as it relates to education but the fiscal impact on their communities as a whole—they will be more likely to support implementation.

Build local capacity. Districts should build local capacity by partnering with other school districts in the region and with nonprofits or community organizations that can provide specialized services. Long-lasting impacts are created by implementing culturally relevant support through these partnerships and developing an ethos of postsecondary success.