Fateful FAFSA Failure

It used to be shocking when classmates passed away. But you can only be shocked so many times; serial shocks give way to sadness, then nostalgia and appreciation. I just learned of the passing of my college classmate Lou Marotti. I wasn’t close to Lou but remember him as a gentle giant who wanted to become a doctor. I knew his roommate better, another aspiring physician, who, after failing to gain admission to a U.S. medical school, headed off to Argentina where, rumor has it, his medical training consisted of giving heart attacks to dogs. (In retrospect, it's hard to fathom how that could be the standard of care for any condition, animal or human.) Lou got himself into a U.S. medical school and became a respected neurosurgeon who bestowed new life by untangling spinal nerves to relieve torturous back pain. Patients conveying condolences to his wife Jill and two young children describe him as an “angel on earth” and “God’s gift to so many people.”

What I learned from Lou’s obituary and the many ensuing tributes is that he seemed to enjoy his limited time. Lou loved racing – “from dirt bikes and Mustangs in his youth to Ducatis and Ferraris” – as well as the finer things in life: an “insane” watch collection, clothing made of “the finest Italian fabric,” wines, spirits, and steaks. “No one knew more about beef than Lou.” One friend recalls marveling as Lou finished a 2½ pound ribeye at Bill Clinton’s favorite steak house. Another writes of Lou’s parties where the menu began and ended with whole roasted pig. “After the kids were in bed,” the obit said, “you could find Lou in the jacuzzi with a cigar, sipping an Islay scotch.” You get the idea.

Lou was also a handsome man. Early in his medical career, his hospital nickname was “Hottie Marotti.” And that could explain this possible blemish. Following his untimely passing, the mother of Lou’s first wife posted the following on Facebook:

He married my daughter in a beautiful wedding… on September 17, 2004. However I am perplexed by the dates in this obituary that state “He met the love of his life, Jill, in 2005,” since he was married. Another passage states “Lou and his wife Jill loved music and rocked out to countless live concerts in their almost 20 years together.”
Really? It is 2024.

There are three takeaways from Lou’s obituary. One, if you want to make a huge difference in the lives of thousands of people, become a back surgeon. Two, if you do, you can make scotch-and-cigars-in-a-jacuzzi money. And three, timing matters: timing matters for both major life decisions and their post-mortem recounting.

Timing also matters for federal financial aid. As in getting financial aid offers in April to make enrollment decisions in May. And as in completing a three-year IT project on schedule so as not to risk the financial health of thousands of universities and the education of millions of students.

If you’ve been busy enjoying the finer things in life, here’s the state of play. Despite the best efforts of many good people, the Congressionally-mandated simplification of the U.S. Department of Education-administered free application for federal student aid (FAFSA) – reducing the number of questions from 108 to 46 (some applicants will get through with as few as 18 questions) – remains a work in progress. The first delay was access to the form: usually October 1, this year not until January. Since January, an enervating glitch-drip has made it impossible for millions of students to submit, including those whose parents lack Social Security numbers. And submitting is no guarantee of successful completion; up to 30% of submitted forms include calculation errors while 16% have student errors. Colleges can’t issue aid offers until these problems are fixed (up to last month, completion was no guarantee ED would even process applications and send student information to colleges). As of April 12, submissions are down 25% YoY, completions are down 36%, and aid offers are likely down even more.

Under pressure from congressmen, senators, and pretty much anyone paying attention, the Department of Education (ED) declared last week a “ Week of Action” for FAFSA completion, which echoed in my ears like Trump’s “ Infrastructure Week” i.e., attempting to prove too much while not being nearly enough. Meanwhile the standard May 1 deposit deadline is next week, only 34% of colleges have even begun sending financial aid offers to students (54% say they haven’t even started), and Carnegie Mellon may be five months behind its regular process. Although schools like CMU won’t have any difficulty filling seats, the question is whether they’ll be filled with students who wouldn’t be there without financial aid. More important, will less selective schools serving the vast majority of low-income, underrepresented, and first-generation students be able to fill their classes and welcome back returning students? Or will college campuses this fall be even richer and whiter than normal? That would be an awful outcome in any circumstance, but especially cruel since the whole point of FAFSA simplification was to make financial aid more accessible for precisely these students e.g., students with parents without Social Security numbers. Adding insult to injury, FAFSA failure is an awful tech-bookend for a high school class that began its journey at a Zoom-school disadvantage.


The urgent task is to limit the damage and Lumina's Jamie Merisotis has provided a useful roadmap i.e., extending enrollment deadlines, allowing colleges to use earlier income data to set aid for returning students. But it’s also important to ask why it’s taken so long to modify an online form.

While most of the Sturm und Drang has blown around the continued leadership of Richard Cordray at Federal Student Aid (the Wall Street Journal asserts “if Mr. Cordray were a CEO, he’d have been sacked long ago” – a notable contrast with his official ED bio stating “since his appointment in May 2021, Cordray has overseen significant changes to the federal student aid program, including strong standards for performance, transparency, and accountability” – note: unlike FAFSA, Cordray’s ED bio page does work, but like FAFSA, it may not be error-free), it was only two weeks ago that someone first thought to question the contractor hired to do the work. That someone was Senator Warren, Cordray’s Miss Haversham-like benefactor, and the motive might have been to deflect attention rather than delve into the minutiae of federal contracting. So bear with me while I delve into the minutiae of federal contracting.

The contractor hired by ED is General Dynamics Information Technology (GDIT), a systems integrator subsidiary of the $40B+ defense contractor. I suppose the logic is that if they can make Gulfstreams and nuclear subs, they can fix a website. And to be fair, the FAFSA form consisted of millions of lines of COBOL code written over 40 years ago. But FAFSA simplification’s transmogrification into a politically embarrassing 6+ month slow-motion train wreck that will eventually cost Cordray and Secretary Cardona their jobs while GDIT still hasn’t been sacked evinces a problem of contractor management.

The proximate cause of this problem is that government isn’t a hotbed of technology expertise. This explains, as Glenda Morgan put it in the On EdTech blog, ED’s litany of “positive sounding updates that bear little to no relation to [reality].” It also explains why managers are overly dependent on contractors to answer questions about the project from their superiors. The result is what one former federal official described to me as “extreme vendor preference”; government contractors almost never get replaced. Contractors who do public sector work are willing to trade some margin for much lower (and usually no) churn. But they probably don’t need to trade much; most government contracts are cost-plus, meaning contractors have little incentive to control time (or perhaps meet deadlines) and government rules require payment regardless of whether work is completed. So while Lou Marotti and the rest of us might worry about timing, federal contractors don’t.

To wit, GDIT has held the master services agreement for FAFSA since 2015 and the FAFSA simplification statement of work for over two years. A decade ago, in the midst of the Obamacare site launch disaster, the COO of the Centers for Medicare and Medicaid Services – the office responsible for launching the site – said of the systems integrator contractor “if we could fire them, we would.” Replacing the contractor took a full-blown political crisis, a budget that had swollen from $292M to $2.1B, and more than three months from the site’s failure. Congresswoman Foxx, Chair of the House Committee on Education and the Workforce, isn’t always on the mark, but is when she noted of FAFSA “this is not a funding issue. This is a management one.”


ED’s management problem is a talent problem. Healthcare.gov was ultimately fixed by Jeff Zients, now President Biden’s Chief of Staff. So at least one person in the Administration knows how to manage contractors for technology projects (but perhaps not many more than that, and certainly not enough). Government’s talent problem sheds some light on the higher education system FAFSA and federal student prop up; as Angel Perez, CEO of the National Association for College Admission Counseling told CNBC’s Squawk Box, “we are overly reliant on student loans to fund higher education.” The fact that the system isn't producing enough people with the skills to oversee tech projects and manage contractors, or graduating qualified tech workers for contractors – colleges may have a point on AI or cybersecurity, but can’t say they haven’t had time to produce COBOL talent – is a metonym for a larger problem.

Between the FAFSA kerfuffle about how to pay for increasingly unaffordable college degrees and the increasingly expensive loan forgiveness kerfuffle about whether students should be required to pay for increasingly unaffordable college degrees (that’s a lot of kerfuffling), we’ve lost sight of the big picture, which is that the market has begun to shift from degrees to faster + cheaper alternatives. The new 2022-23 report from National Student Clearinghouse (NSC) found bachelor and associate degrees awarded fell for the second year in a row (2.8% after a decline of 1.6%) while the number of certificates earned grew for the second year in a row (6.2% after rising 6.5% last year). Certificates awarded to 18-20-year-olds grew a remarkable 11.3% (outside of a pandemic, any double-digit enrollment change is worth attending to). What’s even more remarkable is that NSC only tracks certificates from colleges and universities eligible for Federal Student Aid, thereby excluding thousands of certificates such as the Global Association for Quality Management’s Certified Information Technology Manager program, CompTIA’s Project+ program, and even IBM’s Mainframe Developer Professional Certificate where you could have become proficient in COBOL and helped get FAFSA done.

The assumption underlying our preoccupation with FAFSA and loan forgiveness is that degrees warrant significant subsidies while – in relative terms – training is taxed; federal loans are currently only available for programs lasting at least 300 hours over 10+ weeks while Pell Grants are for programs of 600 hours over 15+ weeks. Despite widespread acknowledgement that we need more skills training, it still costs more to borrow for training than college. Most training programs are paid for with high-interest loans, unsecured credit card debt, or out of pocket. It’s the uncollege penalty.

While we’ve been mesmerized by FAFSA and loan forgiveness, we’ve missed big news in postsecondary education financing. Meritize is the largest lender to skills-training-seeking students, funding over 20,000 trainees at 6,000 different providers in tech, aviation, skilled trades, and high return-on-investment healthcare programs like PrepMD (cardiac device technicians and remote monitoring specialists) and Medical Sales College (orthopedic device sales). Meritize doesn’t lend based on credit score entirely, but also on what it calls “grit score,” which forecasts likelihood of completion and employment outcome.

Meritize recently completed the first large-scale securitization of training debt. The $130M deal, managed by Goldman Sachs and rated by Morningstar, means Meritize was successful in selling rated pools of loans to investors and is now able to recycle that capital into more loans. It’s also the start of a new asset class that will open the door to far more investment into financing training. And it’s all happening without FAFSA, loan forgiveness, or any government involvement According to Meritize founder and CEO Chris Keaveney, “The signal this deal sends is the piece we’re most excited about. There are millions of good-paying and secure skills-based jobs available today in this country in fields like technology and healthcare. This securitization strengthens our ability to help people – many of whom have not been well-served by the current degree-centric model – to get access to the training they need to land jobs in roles and industries that are thriving and are in sharp demand. We view this as tremendous market validation that there are multiple pathways to a great career and economic stability that don’t involve the route of a traditional college degree.”

Meritize’s success leads one to suspect that by the time Congress finally gets around to passing short-term Pell, the market may have moved on, although even the most innovative financial product will have a hard time competing with free money.


The FAFSA failure demonstrates just how myopic and unsustainable our approach to postsecondary education has become. And while I don’t mean to litigate President Biden’s multi-pronged loan forgiveness efforts here (although perhaps the most brazenly political policy thrust of our lifetimes, it’s for a good and perhaps existential cause), if the purpose extends beyond saving democracy to doing something fruitful for postsecondary education – if we’re going to add hundreds of billions of dollars to the national debt for this – there are more productive uses.

Degree programs may well provide some of the most important skills required to manage and deliver technology projects. And I’m not suggesting that a single < 300 hour training program could forestall FAFSA-like failure. But a degree shouldn’t be the only pathway to managing contractors for a federal agency or moving a 40-year-old COBOL form to the Cloud – and definitely not the only subsidized path – particularly when the whole of government has ostensibly embraced degree-free hiring. Specialized training programs that don’t require four years, six figures, and eye-watering student loan debt – and therefore allow graduates to serve the public on a government salary (because not everyone can become a back surgeon) – merit everyone’s support, including (especially) the Department of Education.

Lou Marotti may no longer be with us. But if we want to continue to enjoy the finer things in life like scotch, cigars, and online forms that work, it’s essential to recognize that timing matters. So while it’s imperative that we minimize near-term disruptions from this exogenous (but by no means unforeseeable) shock, the time for a FAFSA-loan-forgiveness-degree-only approach to postsecondary education has come and gone.