Washington Update – Financial Aid Simplification: One Step Forward and More to Go

New changes are making it easier to complete the federal government’s financial aid form. But some experts are calling for more changes to simplify a multipage application that may deter students from seeking aid

“It is a move in the right direction,” says Mark Kantrowitz, publisher of the online resource, finaid.org, about recent improvements

He adds, however, “It’s a first step in simplification.” The Free Application for Federal Student Aid (FAFSA) is a linchpin of the federal aid system and a form that students must complete to become eligible for federal aid

Changes made by the Obama administration and Congress have removed about 20 questions and, in the online version, 17 web screens, according to the United States Student Association, another advocate of simplification

“No one should be denied financial aid because of invasive or confusing questions that overwhelm students and families,” says Gregory Cendana, president of the United States Student Association. “The revised FAFSA is a great step forward.” For the Obama administration, a simpler FAFSA is a key ingredient of the president’s goal that the U.S. have the highest percentage of college graduates by 2020

The Obama administration unveiled the new changes recently in a visit to a high school in Washington, D.C. Education Secretary Arne Duncan, Dr. Jill Biden, wife of Vice President Joe Biden, and Sen. Jack Reed, D-R.I., attended the session. “I know firsthand as a parent and as a former high school and current college instructor just how challenging and overwhelming all of the financial aid forms and paperwork can be,” Jill Biden said

The new changes add more “skip logic” to the online FAFSA, according to Kantrowitz

As a result, students can skip more questions automatically based on their responses to an initial query. The new form also eliminates questions about drug convictions for first-year students, even though the question remains on the form for older students

Still, there is a need for additional action

“The form needs to fit on the back of a postcard,” Kantrowitz says

The problem, Kantrowitz says, is that the process remains cumbersome with too many questions about family income and assets that either are not relevant or could be gleaned from other databases such as those at the Internal Revenue Service

About 2.3 million students do not fill out a FAFSA that would have qualified them for financial aid, he says, adding, “Students are leaving money on the table.” In addition, some students — instead of filling out a cumbersome FAFSA — will turn to more costly private loans

“They hear an ad for private loans in which they say the paperwork can be done in three minutes,” he says. By comparison, the FAFSA still takes most students nearly an hour to complete

“The FAFSA has to be so basic that it can be done in less than 15 minutes,” asking questions only about family size, family income and number of siblings in college, Kantrowitz says

Congress will have another chance to simplify the form in the Student Assistance and Financial Responsibility Act (SAFRA), which is under debate on Capitol Hill. Cendana says this bill would take additional steps to remove unnecessary questions about family assets and untaxed income

The House of Representatives has approved the SAFRA bill. The Senate is expected to mark up similar legislation once lawmakers finish debate on a health care bill that has taken months to complete and slowed down action on all other domestic policy legislation

But SAFRA would leave intact questions on drug convictions for students already in college, a query designed to ensure that students with such convictions do not receive aid. Groups such as Students for Sensible Drug Policy long have opposed the provision, saying it harms only lower-income students

Kantrowitz agrees that the question adds complexity to the form while targeting only a small number of students. “Anything that doesn’t affect your ability to pay for college shouldn’t be on the FAFSA,” he says

Moreover, he adds, the federal government could eliminate the question but still cross-check other federal databases to find information about drug convictions

“There are questions that have been added on by Congress even though it affects only a small fraction of applicants,” he says