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The Persistence Gap

According to the 2025 Public Policy Institute of California (PPIC) report, even after policy changes increased FAFSA completion rates across all groups, these rates for community college students still remain lower at 78%, compared with 85% for students at the University of California and California State University. This disparity is especially concerning for first-generation community college students because they are more likely to rely on financial aid to access higher education. Additionally, PPIC underscores that after California started requiring high school seniors to complete a financial aid application, first-generation students experienced larger gains in FAFSA completion – 19% increase from the class of 2022 to the class of 2023, compared to 16% for non-first-generation students. Yet this gap also suggests they had much more room to benefit from the added support.

Financial aid equity is not the only gap first-generation students face. Research from the Education Advisory Board (EAB) reveals a 33% dropout rate among first-generation college students within three years, compared to just 14% for continuing-generation students. 

These figures indicate that first-generation students are expected to navigate environments that offer them less guidance and far more obstacles than their peers. As one National Association of Student Financial Aid Administrators (NASFAA) report noted, first-generation students are actually much more likely to use aid services than continuing-generation students, 65% compared to 49%. However, the issue is that while first-generation students often turn to these services, accurately and successfully completing them proves to be more difficult. “When we think about first-generation students struggling with affordability, it starts with that access piece,” said Terrell Williams of NASPA's Center for First Generation Success, "How do we understand what our award letter is even talking about? Who's guiding us through the tuition cost, versus the amount of aid that I'm receiving?" Williams raises a pressing concern: financial aid confusion occurs because students lack sufficient guidance to understand and use the often-opaque information they receive.

Challenges Accessing Financial Aid

The Free Application for Federal Student Aid (FAFSA), which determines a student's financial aid eligibility, is the gateway to billions of dollars in financial support. However, this form is premised on questions that assume a traditional financial income and structure, which does not apply to many applicants' families. For example, a student who is unable to obtain financial information from an absent or uncooperative parent might just abandon the form rather than work through a bureaucratic process that assumes cooperative family relationships. According to a 2019 Consumer Reports, among applicants selected for verification, a process triggered disproportionately by the kinds of errors these situations invite, 25% dropped out of finishing the required paperwork, up from 13% just four years earlier. The problem isn’t a question of whether students have access to these systems, but whether they are responsive to applicants’ actual circumstances and whether applicants have the necessary guidance when they are not.

Although California has taken active measures to expand FAFSA completion, too many students are still excluded by systems that were not designed around their daily realities.

How can FAFSA Effectiveness be Improved?

First, California should mandate a statewide policy requiring each community college and four-year university to hold FAFSA and California Dream Act Application (CADAA) workshops throughout the academic term to guide students through each stage of the process. To make information available in various settings, these workshops could be offered virtually or in-person and should be advertised through student portals, email, reminder systems, and classroom announcements. To maintain student engagement across multiple sessions, faculty should offer incentives such as extra credit, one-on-one support, and food. The goal would be to create a minimum standard of support so that every student has repeated opportunities to receive assistance when completing or renewing their application, ultimately increasing financial aid accessibility.

Second, financial aid offers should distinctly separate direct costs (tuition, mandatory fees, and on-campus housing) from indirect costs (loan fees, off-campus housing, meals, textbooks, transportation, and personal expenses), while also displaying the full cost of attendance and the student’s estimated net cost. In current financial-aid materials, costs are often grouped under one broader category. Students deciding where to enroll deserve to know what they will actually be responsible for paying before committing to one of the most significant financial decisions they'll ever make.

Next Actionable Steps

Standardized award letters. Currently, the Department of Education's College Financing Plan, a federal disclosure form summarizing a student's financial aid package, is optional for colleges. Instead, California should require every public institution to use a standardized format that clearly separates grants from loans, and explains what the student or family will still need to cover out of pocket.

Proactive outreach that finds students, not the other way around. Some campus programs, such as Cal State Fullerton's Educational Opportunity Program, provide students with counselor check-ins and financial aid advisement. However, programs like these are selective, and those not admitted must also receive similar tools. California should mandate recurring workshops, tutoring referrals, career assistance, and other student services to support students through multiple formats. Such multifaceted guidance matters across all aspects of academic life, since accessing financial aid is not just a question of eligibility. It also depends on whether students are aware of deadlines, can interpret award information, and know whom to seek help from when facing complex personal circumstances.