The Free Application for Federal Student Aid for the 2025-26 academic year won’t be fully available, in large part, until Dec. 1 — two months later than the form’s usual debut, the U.S. Department of Education announced in September. Photo from Getty Images.

By Niki Kelly
Indiana Capital Chronicle

INDIANA — Thousands of Hoosier students could see lower state college financial aid under a recommendation approved by the Commission for Higher Education Thursday, Nov. 14.

The panel approved reduced awards for the Frank O’Bannon grant after changes to the Free Application for Student Financial Aid caused more students to become eligible.

The cuts ranged from between 14% and 86% depending on where a student goes to college and their specific financial needs.

“It feels like we’re put in a position to do the least harm. You know, we were trying to do the greatest good, but this is do the least harm,” said commission member Nancy Jordan.

She said she is concerned about optics after celebrating enrollment in other financial aid programs “and now we’re having to cut. It’s just it kind of goes counter to that.”

The recommendation now moves to the State Budget Committee, where it could change. Theoretically, lawmakers can add to the funding pot during the legislative session — though staff said not to expect that.

“So, we never like reducing awards, but … it is still one of the most generous programs in the nation,” said Josh Garrison, chief of staff for the commission.

The Frank O’Bannon Grant is designed to provide access for Hoosier students to attend eligible public, private and proprietary postsecondary institutions. Eligibility for the grant is based on financial need as determined by the FAFSA. The grant may be used toward tuition and regularly assessed fees.

To be eligible, students must be full-time and earn at least 24 credit hours; their award goes up if they earn 30 or more credit hours.

Federal changes to the FAFSA means more students are qualifying for federal, state and institutional aid.

According to the approved draft, the maximum award for a student with the highest need attending a public institution would drop from $6,200 a year to $5,300. Similarly, the maximum award for a high-need student attending a private institution would drop from $12,400 to $10,600.

The last category is those attending Ivy Tech Community College or a proprietary institution dropping from $4,700 to $4,050.

Mary Jane Michalak, senior vice president for legal and public affairs at Ivy Tech, said a preliminary analysis suggests that Ivy Tech students will lose $6 million, with 7,200 students impacted and 400 a total loss of eligibility.

Commission staff said they will still issue the same number of awards — around 30,000 — at a total cost of roughly $175 million.

The cost for this year jumped to about $225 million because data was unavailable during a botched FAFSA rollout last year, so commission members kept the awards at the same amount. The state is covering the increased costs with a reserve surplus.

Commission member Molly Kitchell said she was kind of terrified as she began crunching numbers on the draft provided.

Garrison noted several times that, even with reductions, the amounts are higher than they were in 2022-23 schedule, and overall the program is spending $44 million more than two years ago.

That was when the commission increased awards by 35%.

“If we find a pot of money we will increase it again at that point in time,” he said. “But this makes sure we stay within appropriation while awarding the most students that we possibly can.”