The Chronicle of Higher Education. August 15, 2013. By Sara Goldrick-Rab and Robert J. Kelchen. Despite the many problems with financial aid, the forthcoming reauthorization of the Higher Education Act is unlikely to fundamentally overhaul the system. Fortunately, a relatively small change in the application process could make a significant difference in the number of students who go on to graduate.
The change involves the Free Application for Federal Student Aid (Fafsa), the 100+-question obstacle course confronting the families of collegebound students across the nation. A rigorous randomized experiment led by top economists demonstrated that helping students complete that form increases their rates of college attendance and completion. Susan Dynarski, a professor of economics and public policy at the University of Michigan, and her colleagues have shown time and again that simplification of the application is possible and desirable.
But despite this evidence and significant efforts devoted to making policy changes, the form hasn’t gotten much shorter or easier to complete.
So if we cannot get rid of the Fafsa entirely or even simplify it, what should we do? Ensure that students have to file it only once.
Completing the Fafsa is notoriously challenging. It requires filing taxes, a process that remains difficult, especially for people with complicated work arrangements or family situations. It also requires a lot of information, and therefore assistance, which is why there are hundreds of organizations providing help to high-school seniors. But that help is not readily available to refilers, so many must cope with completing the Fafsa on their own after that initial filing.
Moreover, the act of refiling tends to be unproductive. For example, our analyses indicate that millions of Pell Grant recipients refile a Fafsa year after year to get a very similar financial-aid package to the one they got the year before. Significant upward trends in income are increasingly rare for most people receiving financial aid. And each time refiling occurs, there is the possibility that the applicants will file late, the form will be incomplete, or the form will be flagged for verification. These bureaucratic procedures can be frustrating and off-putting for students, as revealed by a 2010 report from the Institute for College Access and Success. In that study, 22 percent of Fafsa applicants made an error on their form, and 54 percent were flagged for verification.
What’s more, many students don’t even realize that it’s necessary to refile. Based on data from several sources (both national and at the institutional level) we estimate that about 15 percent of Pell Grant recipients who re-enroll in college still fail to refile their Fafsas, and that the failure to refile is more common for dependent students who are getting some Pell aid but not a full Pell Grant. These students are closer to the expected family contribution cut-off for Pell eligibility (which determines eligibility for other state and institutional grants), and may get less time and attention from their colleges when compared with the most disadvantaged students who often receive support from supplemental programs.
For students who are sensitive to the price of college, and studies suggest that many students are, fluctuations in the price can cause trouble. There are many causes of price fluctuations, including rising tuition and other costs of attendance; the “front loading” of grants directed at first-year students that are removed in later years of college; and changes in the availability of federal, state ,and institutional aid. Re-evaluating aid eligibility every single year contributes to the volatility in the price students face, and like the known negative impacts of income volatility on low-income households, could further compromise chances of degree completion.
Importantly, renewal is an expensive exercise. Research by Dynarski and Judith Scott-Clayton, an assistant professor of economics and education at Columbia University’s Teachers College, suggests that the cost of our current complex financial-aid system is at least $4-billion per year, split between the opportunity costs of time spent completing the Fafsa and the cost to colleges of auditing so many aid applications. There is no reason why this drag on the American economy cannot be reduced without substantial harm to taxpayers.
Therefore, as students return to college this fall, we urge Congress to start an effort to end the requirement for FAFSA renewal. As part of the reauthorization of the Higher Education Act, financial-aid eligibility should be fixed with students’ initial aid application. That application could be modified to include information on the three previous years of family income, so that eligibility would be based on a more stable estimate of real family need. Students could refile if they experienced a decline in their income, changed their family status, or transferred institutions. If they leave college for a year or more, they could refile upon return. But for students who seek to simply re-enroll at least half time the following year, colleges should simply automatically roll over their expected family contribution from the first application.
All of the same rules for retaining eligibility for aid would remain. Students would still have to make satisfactory academic progress, continue to take at least six credits a term, and still have to go through the process of accepting their aid (and making decisions about loans). If their incomes declined, students would still be allowed to refile—they simply wouldn’t be required to do so. But the paperwork for both students and colleges would be reduced, freeing both to allocate their time and resources to improving academic success.
Simplifying the financial-aid process in this way will prevent the students most at risk of dropping out—those in possession of the least amount of financial-aid knowledge—from falling through the cracks. This would be a smart move for a country focused on increasing degree attainment.
Changes like this one ought to be priorities. If we want students to complete college, we have to provide the certainty and stability that fixing aid eligibility based on the initial Fafsa application can provide. A floor of support is the least they deserve.