FAFSA's replacement system nearly doubled in cost and isn't finished
Summary
The Department of Education's Office of Federal Student Aid processes nearly 18 million FAFSA forms and distributes about $120.8 billion in aid every year. The system built to run that process, the FAFSA Processing System, launched in December 2023 missing 18 of its 25 contractual requirements and carrying 55 identified defects, seven of them unresolved and critical -- including one that erroneously excluded family assets from some students' aid calculations. By September 2024, nine requirements remained undeployed; by May 2025, Education told GAO it had stopped tracking them and could not report the system's complete status. The contract awarded in March 2022 at an estimated $121.7 million now carries an estimated total cost of $236.9 million through 2032, and GAO's second review found FSA still had not validated its own contractor's performance data or built a plan for future system testing.
A 30-year-old system, replaced
is the largest provider of student financial aid in the nation. It processes nearly 18 million FAFSA forms and distributes approximately $120.8 billion⧉ in grant, work-study, and loan funds every year. In February 2021, the agency initiated a project to replace the Central Processing System that had handled those forms for decades, and in March 2022 awarded a contract⧉ to build the FAFSA Processing System (FPS) -- the back-end that determines aid eligibility and generates records for colleges and state aid offices. FPS deployed in December 2023 to process the 2024-2025 FAFSA cycle.
What launched, and what didn't
GAO's first review⧉ found that had planned 25 key requirements for the December 2023 launch, then decided not to address 18 of them -- among the omissions, the capability to determine final aid eligibility and distribute results to schools. Post-deployment documentation compiled in March 2024 identified 55 defects, seven of them unresolved and classified critical; one such defect initially overestimated some students' aid eligibility by erroneously excluding their families' assets from the calculation. authorized system acceptance testing to begin with 26 of 48 readiness indicators still incomplete, and never established independent verification and validation for the project. Education has had six Chief Information Officers since the effort began in February 2021, without a permanent one in place.
View data as table
| Total defects identified | 55 | |
|---|---|---|
| Unresolved and critical | 7 | one erroneously excluded family assets from aid-eligibility calculations |
The cost of getting it working
The FPS contract, originally valued at approximately $121.7 million⧉ if all options were exercised, has been modified twice -- first in April 2023 to extend the base period from September to December 2023, then in September 2024 to add a second option period and raise the contract's value. As of May 2025, 's Table 1 puts the estimated total cost, across the base period and nine option periods running through September 2032, at $236,895,311 -- nearly double the original figure -- with about $100.3 million obligated so far.
View data as table
| Base Period (Mar. 2022 - Dec. 2023) | 20.9 | actual |
|---|---|---|
| Option Period 1 (Dec. 2023 - Sep. 2024) | 13.9 | actual |
| Option Period 2 (Sep. 2024 - Sep. 2025) | 72.5 | actual + estimated |
| Option Periods 3-9 (Sep. 2025 - Sep. 2032) | 129.6 | estimated |
Eighteen months later
GAO's second review⧉, published in September 2025, found nine of the original 25 requirements still undeployed as of its September 2024 testimony -- and by May 2025, Education could not report the complete system's status because said it was no longer tracking requirements. The agency had established a process to monitor its contractor's performance but had not validated the data behind it; contracting officer's representatives and project management staff could not be shown to have met federal certification requirements; and 's test cases lacked the information needed to trace testing back to requirements, with no plan to guide future testing. made seven new recommendations. disagreed with portions of the report, agreed with four recommendations, and took no position on the remaining three -- while separately telling that the report's methodology was itself outdated. disagreed with that characterization and maintained that all seven recommendations stand.
View data as table
| Total contractual requirements | 25 | |
|---|---|---|
| Not addressed at Dec. 2023 launch | 18 | |
| Still not deployed, Sept. 2024 | 9 | Education later said it had stopped tracking this count |
The cycle that didn't break
The report also documents a contrast: ahead of the 2025-2026 FAFSA cycle, ran a four-phase beta test from October to November 2024, expanding from about 680 submissions in the first phase to 10,000 in the third and a further 4,000 in the fourth, reaching 122,340 submissions once the form opened to any interested applicant. identified and resolved roughly 30 defects during that testing and reported the resulting form launched with no known critical defects. 's caution: has no documented plan to guide future beta testing efforts, a gap the report says is compounded by reductions to Education's staff in 2025.
View data as table
| Phase 1 | 680 | |
|---|---|---|
| Phase 3 | 10,000 | |
| Phase 4 (additional) | 4,000 | |
| Total after opening to all interested applicants | 122,340 | no known critical defects at launch |
The takeaway
- The system missed nearly three-quarters of its launch requirements and still hasn't caught up 18 months later. 18 of 25 requirements were unaddressed at the December 2023 launch; 9 remained undeployed as of September 2024, and Education has since stopped tracking the count.
- The price of finishing the job has grown faster than the job itself. The FPS contract's estimated total cost rose from $121.7 million to $236.9 million -- about 95 percent -- while 's second review found the same oversight gaps largely unresolved.
- A single successful test cycle does not settle the oversight question. The 2025-2026 beta test scaled to 122,340 submissions with no known critical defects, but still lacks a validated contractor-performance process, documented staff certifications, or a plan for testing future releases -- the exact gaps 's seven new recommendations target.
Figures are drawn from two reports read directly: -24-107783 (September 2024, preliminary testimony) and -25-107396 (September 2025, the completed audit). The $236.9 million figure is 's own Table 1 total ($236,895,311); a rounded reference elsewhere in the same report describes it as "approximately $236.8 million." disputed portions of the 2025 report's findings and methodology; its full written response is reprinted in the report's Appendix II. maintains all seven of its 2025 recommendations are warranted.
Sources(2) ▾
- U.S. Government Accountability Office, Department of Education: Preliminary Results Show Strong Leadership Needed to Address Serious Student Aid System Weaknesses (GAO-24-107783) (2024-09-24) — the 25 launch requirements and the 18 not addressed at the December 2023 FPS launch, the 55 post-deployment defects (7 critical), the erroneous aid-eligibility defect example, the incomplete readiness indicators, the missing independent verification and validation, the six CIOs since 2021, and 's six recommendations gao.gov · original document
- U.S. Government Accountability Office, Department of Education: Gaps in Federal Student Aid Contract Oversight and System Testing Need Immediate Attention (GAO-25-107396) (2025-09-03) — 's program scale ($120.8B/year, 18M forms), the FPS contract's cost growth (Table 1: $121.7M original estimate to $236.9M current estimate), the 9-of-25-requirements-still-undeployed finding, Education no longer tracking requirements, the unvalidated contractor performance data, the certification/training and testing gaps, the seven recommendations and 's disagreement, and the 2025-2026 beta testing results gao.gov · original document
Comments
Always open. Logged-in readers can annotate paragraphs in place.
For three decades, the Department of Education processed the Free Application for Federal Student Aid on a legacy system had already flagged, in 2019, as among the ten most critical federal systems needing modernization. In February 2021, the Office of Federal Student Aid () began building its replacement, the FAFSA Processing System (FPS). It launched in December 2023 missing 18 of 25 required capabilities and carrying 55 known defects. A year and a half later, nine requirements remain undeployed, Education has stopped tracking them, and the contract's estimated total cost has grown from $121.7 million to $236.9 million. This is the record of that program, drawn from two reviews a year apart.