A 2025-26 FAFSA form.
Credit: Andrew Reed / EdSource
Financial aid staff at California’s colleges and universities have a cautiously optimistic message to share this spring — but are weighing contingencies in case massive restructuring and cuts at the U.S. Department of Education upend federal aid this summer and fall.
First, the good news. Federal aid for this spring term — like Pell Grants and work-study aid — has already been disbursed. Universities are processing files from the Free Application for Federal Student Aid, or FAFSA, for next fall on schedule. And in turn, colleges are sending prospective students preview offers of grants and other support they are eligible to receive if they enroll.
But trepidation is building about what’s ahead for the hundreds of thousands of California college students receiving Pell Grants and federal loans. Layoffs that have roughly halved the U.S. Department of Education’s workforce “raise serious concerns about the near future, particularly potential delays to the upcoming FAFSA cycle and the federal government’s capacity to accurately distribute billions in student aid,” said Toni DeBoni, the associate vice president for enrollment management at CSU Channel Islands.
Those worries come following President Donald Trump’s executive order directing Secretary of Education Linda McMahon to “take all lawful steps” to close the Department of Education. The White House wants to potentially shift the $1.6 trillion student loan portfolio to the U.S. Small Business Administration (SBA) and even transfer Pell Grants to another department.
Trump administration officials have pledged not to interrupt services as they wind down the Education Department, which would require congressional action to be formally eliminated. Trump says student loan servicing has “been a mess” and that it would improve under the SBA. But critics charge that dismantling Education parceling out its workload could hamper the distribution of aid to millions of students and harm student borrowers.
If those dire predictions prove true, the University of California (UC) and California State University (CSU) systems would face disruption to a major funding source. Cal State received almost $2.3 billion and UC about $1.7 billion in federal student aid in the 2022-23 school year, much of it for Pell Grants and student loans. Any delay would also be felt at California community colleges, where 24% of students received a Pell Grant in the 2023-24 school year.
Both university systems are reassuring prospective students and saying they think federal student aid will continue uninterrupted, despite fears of possible cutbacks.
A UC spokesperson said in a statement that the system of 10 campuses does “not expect recent news about the U.S. Department of Education to impact our ability to award and disburse financial aid to our students” and that federal grants and loans remain available “with no anticipated changes to availability in the foreseeable future.”
A CSU spokesperson said the 23-campus university system does not anticipate any delay or stop to federal student aid in the 2025-26 school year, adding that “the number of [student and parent] concerns regarding recent federal actions haven’t been widespread.” Systemwide, almost 42% of CSU students receive a Pell Grant, a form of aid for students from low-income families that can provide up to $7,395 for the 2025-26 award year.
However, Cal State officials addressed the uncertainty about federal changes more directly at the March meeting of the system’s board of trustees.
“We know that there have been some (departures) of employees in the Department of Education,” Chancellor Mildred García said. “We are concerned about the process it will take to really go through the FAFSA, and that’s the most that we have heard.”
“We don’t know who’s going to be processing our FAFSA applications, who is the people in charge, etc.,” she added.
Nathan Evans, the CSU system’s chief academic officer, said that students and families seeking help with their federal student aid “are having difficulty in connecting and engaging with folks that support the FAFSA process at the federal level. So our teams at our universities are working as hard as possible, but sometimes those answers can only come from the folks that are helping support that directly.”
Meanwhile, the California Student Aid Commission reported in late February that the number of high school seniors completing financial aid applications was down 25% compared with the same point two years ago, before the rocky rollout of the 2024-25 FAFSA. State officials attributed the decline in part to a nearly two-month delay in the opening last fall of the current federal financial aid cycle.
Aiming to boost applications, the California Student Aid Commission extended the state’s priority deadline — the date by which students planning to attend four-year schools must apply for most state aid programs — until April 2. The latest commission data shows that as of April 1, about 55% of current high school seniors have completed a FAFSA or the California Dream Act Application, a form of state financial aid aimed at undocumented students. An aid commission spokesperson said the commission plans to soon compare applications through early April to previous years.
So far, there are promising signs that aid applications are increasing. An analysis by the National College Attainment Network found that FAFSA submissions in California have risen 11% year-over-year. Financial aid staff at Cal Poly Pomona, CSU Bakersfield and UC Riverside said they have observed more FAFSA applications than in the previous year or two, suggesting a return to normal after complications with the new FAFSA.
But financial aid officials said Trump’s call to close the Department of Education has led some families to mistakenly conclude that federal student aid is no longer available, discouraging them from applying. Officials are working to counter that misinformation.
Chad Morris, the director of financial aid and scholarships at CSU Bakersfield, has a simple message to families questioning whether federal aid will be reduced or delayed: Apply anyway. “Take the steps as if there won’t be any disruption,” he said.
Cal Poly Pomona is also trying to keep students focused on the here-and-now basics: The Department of Education is still operational; Pell Grants and federal student loans are protected by the law and are still available; students should apply as usual.
“We don’t know what’s going to happen,” said Jessica Wagoner, the university’s senior associate vice president for enrollment management and services, “but what we can do is tell (students) what’s going on now.”
Those soothing messages could be muddied by the loaded choice facing students who are eligible for federal aid as U.S. citizens or permanent residents, but who have spouses or parents who are undocumented immigrants. Students from such mixed-status families may have particular apprehension about whether data submitted through the FAFSA could be used for immigration enforcement purposes, though federal law prevents the U.S. Department of Education from using information students enter into the FAFSA for a purpose other than determining a student’s aid.
University of California students have sued the Education Department, accusing it of turning over sensitive federal student aid data to members of Elon Musk’s Department of Government Efficiency, or DOGE. A federal judge in March blocked DOGE from accessing private data housed at the Education Department.
“When students are completing the FAFSA, they need to really look at the risk factor that they may take, especially mixed-status families,” said Jose Aguilar, the executive director of UC Riverside’s financial aid office. “But at the end of the day, if they are eligible for these federal grants and programs, I would encourage them to apply through the FAFSA.”
UC Riverside has already started sending new students preliminary aid award letters. Its students receive about $79 million in Pell Grants, another $3 million from federal work study and Supplemental Educational Opportunity Grant combined, and an additional $70 million in federal direct subsidized student loans, Aguilar said.
Given the swings in federal education policy this spring, some university officials are starting to think about how they might respond if federal aid is delayed. DeBoni of CSU Channel Islands said her campus is “actively preparing contingency measures.” The university could extend internal deadlines for students to accept admissions offers or apply for scholarships, she said, and institutional scholarships could help to fund students’ expenses.
At Cal Poly Pomona, Wagoner said the university could give students waiting for aid similar leeway. But the university, where almost 44% of students receive a Pell Grant, would face “a very big challenge” in the unlikely event of an abrupt drop in Pell dollars, Wagoner added. “I don’t know if we — if any institution — could supplement that loss.”