How Much Free College Aid Went Unclaimed Last Year?

Last October, Inside Higher Ed broadcast a live webcast from its studios in Washington DC on the topic “Supporting Student Success: Case Studies in Making College More Affordable.” The first speaker on the panel was Catherine Brown, the senior director of policy and advocacy at the National College Attainment Network (NCAN). This association represents nearly 600 member organizations across the United States that help students prepare for, apply to, and succeed in college.

Brown told a stunned audience that NCAN’s research revealed college-bound high school graduates had carelessly left billions of dollars in unclaimed financial aid “on the table” during every academic year for which an analysis had been performed, starting seven years before in 2017. In fact, she said that the two recent graduating classes (2022 and 2023) had left a whopping $7.6 billion total of need-based financial aid on the table.

These totals for the wasted money have climbed during each passing year since 2022, and new data NCAN released in April 2025 shows that last year was no exception. The high school class of 2024 left almost $4.4 billion on the table, a $400 million increase over the class of 2023, when students failed to claim about $4 billion. A previous analysis showed that they left $3.6 billion on the table during 2022.

To put that growth in perspective, the most recent $4.4 billion total amounts to about double the $2.3 billion in wasted funding estimated by the San Francisco personal finance website NerdWallet for college-bound students nationwide during the first such analysis performed in 2017.

According to NCAN, the primary driver of increased waste over the years is the rise in the average value of student awards issued under the Pell Grant program. This is a crucial federal financial aid program that we’ve referenced in several recent articles here on OnlineEducation.com, but never specifically discussed—until now.

Created by the landmark Higher Education Act of 1965, this subsidy was initially known for 15 years as the Basic Educational Opportunity Grant, or BEOG. The subsidy was then renamed in 1980 on behalf of the famous Democratic U.S. Senator Claiborne Pell of Rhode Island, to honor his role as the leading advocate for college students in Washington politics during the 1970s. Pell’s initiatives expanded access to the BEOG program while he also championed larger grant awards for college students across the nation.

Today, most financial aid administrators and experts consider the modern Pell Grant the core of a student’s financial aid package—the essential element to which other forms of aid might be added. NCAN says that 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 seven million undergraduates from low- and moderate-income backgrounds receive Pell Grants, which currently max out at $7,395 annually.

The U.S. Department of Education uses a standardized formula to calculate Pell Grant awards based on a student’s and their family’s financial need. The Department determines ability to pay for college—expressed as the student’s Expected Family Contribution or EFC—solely through financial data reported on an online form known as the Free Application for Federal Student Aid, or FAFSA.

This form has been in the news lately because of a “simplified” update of the form introduced by the Biden Administration. The purpose of the update was to boost the number of applicants by 1.5 million or more each year by encouraging more students and families to apply. However, numerous delays and technical problems ensued that disrupted financial aid processing for the 2024–25 academic year.

A Pell Grant award also remains one of higher education’s hallmarks of student disadvantage, along with first-generation status and membership in an underrepresented minority group. That’s because under federal financial guidelines, this grant is only available to undergraduate students who “display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree.” It often covers a significant portion of tuition at community colleges and state universities—and since it’s a grant, unlike student loans, it usually doesn’t need to be repaid.

Filling out the FAFSA form completely is the only way to receive federal need-based financial aid such as Pell Grants. And when it comes to college affordability, a lack of access to that crucial federal aid can become a student’s dealbreaker. Yet NCAN also disclosed in its most recent 2025 report that more than 830,000 college-bound high school graduates didn’t fill out the FAFSA for the 2023-2024 academic year, even though almost half of those incoming college students were probably eligible to receive Pell Grants—nearly 415,000 students.

Incredibly, NCAN’s analysis reveals that the graduating class of 2024 alone left a staggering $4,398,591,106 in unclaimed Pell Grants on the table. That works out to an average of $5,339 per eligible student nationwide.

However, such low completion rates are not unusual. FAFSA completion rates have remained stubbornly low for years, hovering between the most recent 57 percent and 61 percent since 2017, according to NCAN.

“While the increase in available federal aid is undeniably positive, substantial work is needed to ensure that students make use of it,” says a NCAN statement accompanying the 2024 report. “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.”

A chart provided by NCAN breaks down unclaimed aid and FAFSA completion rates by state. For example, in 2024, California students wasted the most at $557 million, with Texas students a close second at $547.9 million. The states with the lowest FAFSA completion rates were Alaska (34 percent), Utah (38 percent), Idaho (43 percent), Vermont (44 percent), Oklahoma (45 percent,) and Florida (45 percent). NCAN provides data on the web for these and the other states through an interactive dashboard driven by the Tableau data analysis system.

So why don’t students and their families fill out the FAFSA? In 2018, the National Center for Education Statistics issued a report titled “Why Didn’t Students Complete a Free Application for Federal Student Aid (FAFSA)? A Detailed Look.”

The NCES study found that three of the most common reasons were based on limiting beliefs or unjustified assumptions, not hard disqualifiers. From the results:

• 33 percent thought they or their family could afford school or college without financial aid
• 32 percent thought they or their family may be ineligible or may not qualify for financial aid
• 28 percent did not want to take on debt
• 23 percent did not have enough information about how to complete a FAFSA
• 22 percent did not plan to continue their education after high school
• 15 percent did not know they could complete a FAFSA
• 9 percent thought the FAFSA forms were too much work or too time-consuming

In view of these results, NCAN argues that filling out the FAFSA is usually well worth a family’s time and effort. That’s especially true when “for most families, completing the FAFSA should only take about 20 or 30 minutes,” according to San Diego student loan expert Robert Farrington.

Possibly NCAN’s most compelling argument is that filling out the FAFSA can help prevent students from incurring excessive risk. That’s because students who don’t apply may end up working excessive hours, which research shows can risk damaging academic performance. They also face greater pressure to take out student loans—often the riskiest form of financial aid. Instead, completing the FAFSA ensures that the students who qualify receive the Pell Grant and all other need-based grants to which they’re entitled.

FAFSA completion is also one of the strongest predictors of whether a student will go to college at all. High school seniors who complete the FAFSA are 84 percent more likely to enroll in college immediately. Among the lowest-income students, FAFSA completion correlates with a 127 percent increase in college attendance. Because most students from those families qualify for substantial Pell Grant awards, failing to submit the FAFSA often means forfeiting thousands of dollars in aid.

But when students walk away from financial aid, states walk away from long-term economic growth; when Pell Grant funds go unclaimed, these four-billion-dollar missed opportunities don’t only hurt college students—they damage state economies. Why? Compared with high school graduates, college graduates are powerful financial contributors who earn more, spend more, pay more in taxes, and support the creation of many more jobs.

For example, in California each marginal (additional) college graduate adds on average over $210,000 annually to the state’s gross domestic product, and their average boost to the state’s GDP over their lifetime will exceed $2.3 million in present value dollars. What’s more, they will generate 8.5 supporting jobs and expand the tax base by nearly $6,000 per year. And in Illinois, average home values are $123,000 higher for households with college degrees compared to those without them.

Accordingly, policymakers in 12 states that are home to 44 percent of the nation’s public high school students have made FAFSA completion a high school graduation requirement not only for college-bound seniors, but for all graduates. Kicked off by a novel experiment in 2016 by the State of Louisiana, this new movement is called “universal FAFSA.” It requires seniors in public high schools to either complete the FAFSA or expressly opt out of any college financial aid offers.

In February 2025, the Century Foundation released one of the most comprehensive recent studies of mandatory statewide FAFSA policies. TCF discovered that when compared with most new state policies that yield snail-paced changes in K-12 student outcomes, enacting mandatory FAFSA policies yielded rapid, drastic impacts. For example, in their first year, three of the seven states that adopted universal FAFSA mandates (Louisiana plus Alabama, California, Illinois, Indiana, New Hampshire, and Texas) posted year-over-year increases greater than 23 percent in the number of public high school students who completed the form.

The effects didn’t stop there. TCF observed the following additional results:

• In 2020, Louisiana’s boost in FAFSA completions closed the gap between high-income and low-income school districts. In five of the seven states that gap narrowed during the launch year, and in Texas the low-income districts actually pulled ahead.
• All those states outperformed the national average for average annual change in public high school FAFSA completions during the first year. The median state of Illinois outperformed the nation by 10.6 percent. In one year, those seven states counted nearly 87,000 new FAFSA filings.
• In four of five states, boosted numbers of Pell Grant awardees outperformed increases across the nation. This aggregate surge translated to 27,500 new Pell recipients across these five states during the policy’s first year.

On balance, the Century Foundation concluded that mandatory FAFSA policies significantly increased not only Pell Grants but also undergraduate enrollment. TCF summed up their findings this way:

Higher education is plagued by information asymmetry: families whose members would benefit from attending college the most also struggle the most in navigating the complex process of obtaining aid. After several years, evidence is mounting that mandatory FAFSA policies can help close crucial information gaps, increasing enrollment and take-up of financial aid.