Experts Urge Simplifying the Financial Aid Process

Updated Dec 13, 2011
Dr. Sandy Baum is a Senior Fellow at the George Washington University Graduate School of Education and Human DevelopmentDr. Sandy Baum is a Senior Fellow at the George Washington University Graduate School of Education and Human Development

WASHINGTON, D.C. – Simplifying the FAFSA to require only data already captured by the IRS would have little effect on state grant programs, but state grant programs still need to get more strategic about their purpose and role, a leading financial aid expert said on Capitol Hill on Wednesday.

“We’ve got to get state grant programs that fit within a larger financial aid strategy for higher education and are fairly explicit about the particular goals that they’re expected to meet,” said Jane Wellman, executive director of the Delta Project on Postsecondary Costs, Productivity and Accountability.

“Most of them don’t operate with any coherent goal other than making sure that the aid goes to students who are eligible for it,” Wellman said.

While some favor need-based aid and others favor merit-based aid, Wellman said the best course is to pursue a “blended approach.”

Wellman made her remarks on Wednesday at a College Board-led discussion titled “Can Simple Be Equitable? Lessons from State Grant Programs.”

The event served as a platform for the release of an executive summary of a new College Board report by the same name.

Although a full version of the report is still in the works, thus far, the report has found that shifting the FAFSA to require only information already captured by the IRS would lead to increases or decreases of $51 or less in state grants per student. The report says many students would see decreases in grant eligibility, but with one exception, those decreases represent .5 percent of the eligible population or less.

“Certainly, the good news from this research is the potential for simplifying financial aid in a way that’s not disruptive of state programs,” Wellman said.

Other panelists said that even though the FAFSA has gotten simpler to fill out under the Obama administration, the path to college would still be made easier for many students if the form got even simpler if it only asked for data asked for on tax forms.

“We want to have a more simple, efficient system,” said Zakiya Smith, senior advisor for education at the White House Domestic Policy Council. Smith said that the administration has done all it can do to simplify the FAFSA—such as using skip logic technology to eliminate redundant questions—without an act from Congress. A recent bill to modify the FAFSA to require only IRS data failed.

Even if the FAFSA gets simpler, behind a simpler form lurk questions about what the impact of simplification could be on diverse socioeconomic groups.

For instance, the report released Wednesday states that making the FAFSA mirror tax forms would not change most families’ EFC—financial aid-speak for “Expected Family Contribution”—except for higher income families, whose EFCs would be reduced due to not counting assets and using limited IRS data.

“If desired,” the report says, “the reduced EFC generated by the removal of assets and use of limited IRS data could be counteracted through minor modifications to the assessment rate structure in the Federal Methodology and/or by creating a more robust formula which includes more data elements from the IRS.”

Dr. Sandy Baum, Senior Fellow at the George Washington University Graduate School of Education and Human Development and lead author of the College Board report, said the point of simplification of the FAFSA is not to manipulate the EFC to benefit one group or another, but to make it easier for students to readily get the aid they need to get through school.

“We’re not trying to say this is a way to increase money,” Baum said. “The point is we want to make it so students understand the aid system and can access it easily.”

For the report, Baum and several colleagues ran various “simulations” on what would happen to financial aid eligibility for various students in five states—Kentucky, Minnesota, Ohio, Texas and Vermont—if the system shifted to one in which the FAFSA relied only on data that already had been captured by the IRS.

Among other things, the report found that dependent students would benefit more than independent students under such a scheme.

In Texas, the report found, the EFC for dependent students from families that make less than $15,000 per year would decline by only $99 if they go to public universities, but would go down by $515 for middle income families who earn between $45,000 and $60,000 per year, and by $2,756 among those who earn more than $75,000 per year. Similar patterns played out in the other four states.

The report also found that using only IRS data on Pell grants for each FAFSA filer would lead to slight changes in the percentage of students eligible for Pell grants. With the exception of Vermont, which would see a 1.1-percent increase in Pell eligibility, the changes in the other states would increase or decrease by .6 percent or less.

Of the various changes modifying the FAFSA to mirror tax forms would have, Baum said: “Even though the changes are small, any impact could have an impact on the budget, and we think it’s important to think about what difference this could make and to think about ways that, if people were not happy with the difference it made, there was something we could do about it.”