The reason for the law is well-intentioned. Many, many students who would benefit from filing the FAFSA do not do so, leaving money on the table and/or assuming they cannot afford college when maybe they can. In my state, the governor has issued a FAFSA challenge, and schools are competing to try to get the highest completion rate. A nonprofit that traditionally assists high schoolers with FAFSA completion is helping schools with this, as are local colleges.
I like the push to get students to file, but I think requiring FAFSA for graduation goes too far; if it’s done, the option to opt-out should be well-publicized and simple to complete.