Inside Higher Ed. November 14, 2013. Today the Senate is holding a hearing on student aid and college access with a focus on simplification, in advance of the upcoming reauthorization of the Higher Education Act. Focusing on streamlining federal student aid and making the various programs more flexible is a well-reasoned approach in a fiscal environment where increases in federal funding for the programs appear unlikely. Here are three recommendations policy makers can apply immediately to simplify programs and increase college access:
1. Better align financial aid applications with college admissions by using prior-prior year
Each year a student is enrolled in postsecondary education, he or she must submit a FAFSA to be considered for federal student aid (grants, loans, work-study). Under the current structure, the FAFSA becomes available Jan. 1 and requires tax information from the prior year (PY). However, most students and families haven’t even filed their taxes by then, making it difficult to complete the form in totality. This delay can cause an unfavorable chain reaction: a delay in submitting the FAFSA due to lack of tax information can result in a delayed financial aid award letter, which in some cases could lead to a reduced amount of financial aid, at least when it comes to aid that is awarded on a first-come, first-served basis.
The use of prior-prior year (PPY) income on the FAFSA would have multiple benefits for students and families. These benefits include the ability to: file the FAFSA earlier, often at the time they are applying to college; make better use of the current IRS data retrieval tool, which allows automatic population of a student’s tax return data; receive notification of a financial aid package earlier; and streamline the college-going process by applying for financial aid the same time they are applying for admissions.
This would be welcome news for students who need financial aid the most -- who also happen to be the most likely to miss current financial aid deadlines and overestimate college costs, according to a study by researchers at the University of Illinois at Chicago and an Illinois financial aid official.
The best part? The U.S. secretary of education was already given the authority to implement PPY over five years ago, so Congressional action is not needed to implement this idea.
While there are some concerns about using PPY as a proxy for current financial strength, it is important to remember that prior year information is also a proxy. The National Association of Student Financial Aid Administrators recently released a study on the impact of using PPY data and found that for most of the lowest-income students, using PPY versus PY did not greatly impact the amount of Pell that a student received.
2. Implement an early Pell notification, or “Pell Promise”
Low-income students often decide at an early age that college is too costly and therefore just “not for them.” Enrollment data underscore this pattern, with 52 percent of low-income high school graduates enrolling in postsecondary education compared to 82 percent of high-income graduates, according to the National Center for Education Statistics. Even for low-income students who do go on to college, many are self-selecting out of competitive or elite schools that would have been less expensive than where they ultimately attend. (This issue of "undermatching" has recently attracted significant attention from President Obama, as well as the first lady.)
One recent study of a sample of high school valedictorians found that only 50 percent of those from low-income backgrounds even applied to a selective university, compared to roughly 80 percent of the valedictorians from upper-middle and high-income families. Unfortunately, when a student decides early on that higher education is not an option, it impacts their high school coursework choices and college enrollment behaviors.
A “Pell Promise” -- a commitment of funds from the federal government as early as the ninth grade -- would make low-income students aware of their Pell grant eligibility in much the same way that the Social Security Administration disseminates information to citizens about the amount of social security they can expect in retirement.
While not technically a promised income, Social Security statements allow individuals to plan for an eventual retirement. A Pell promise would assure low-income students that a specific amount of funds would be available to them upon successful completion of high school and incentivize early college-going behaviors and patterns. Early studies from similar state-based programs, such as the 21st Century Scholars Program in Indiana, have shown that when students and parents know there are funds available to them for higher education, there are noticeable increases in college preparatory coursework and college going rates.
Identifying low-income students early would not be difficult given IRS data and other federal and state means-tested benefit programs. This change would also be easy to implement since the Higher Education Opportunity Act (HEOA) already authorized a similar demonstration program, although funds were never appropriated to fulfill the program.
3. Provide flexibility in the Pell Grant program through a “Pell Well” of funds.
The current system of Pell Grant delivery is based on the traditional spring/fall calendar and the traditional student. A student may wish to move through their program at an accelerated pace by taking courses each summer, yet under the current Pell Grant rules, that student would run out of Pell eligibility and be forced into loans to cover academic costs or defer additional enrollment until the next year. This structure is outdated and confusing to families, particularly as nontraditional students and innovative programs with nonstandard academic calendars proliferate.
To increase flexibility and encourage students to complete at a quicker pace, lawmakers could implement a Pell Well system, whereby a student’s lifetime Pell Grant eligibility would be calculated when the student initially applies for aid. The student would then be able to draw funds from their well of Pell Grant at their own pace, not to exceed a certain amount per payment period.
This is different than how Pell eligibility is currently calculated, which is based on telling students annually how much they qualify for in Pell funds and then trying to explain future Pell eligibility as a percentage of full time enrollment. Students and parents understand dollars, not percentages, and they increasingly require predictability and flexibility. Such a change would both simplify and streamline the program, and incentivize continuous enrollment and higher retention and graduation rates.
As Congress considers various proposals through HEA hearings, and as grant makers and college access advocates continue to think of ways to reimagine student aid, we should remember that manageable and realistic changes like these could have a huge impact on college access and success.