Enter the amounts for your parent[s]. Payments to tax-deferred pension and retirement plans (paid directly or withheld from earnings), including, but not limited to, amounts reported on the W-2 forms in boxes 12a through 12d, codes D,E,F,G,H and S. Don’t include amounts reported in code DD (employer contributions toward employee health benefits).
Imagine being a high school student. This question stands between you and an affordable college education. For many students, particularly low-income and first-generation students, the 108 complicated and lengthy questions pose an insurmountable barrier in receiving financial aid. These students complete FAFSA at lower rates than their more economically fortunate peers. However, in total, only 44 percent of high school students will fill out the FAFSA by graduation, leading to eligible yet unclaimed Pell Grants worth $2.8 billion dollars.
The importance of the FAFSA form in increasing access to education is clear. According to a report written by the National College Access Network, high school graduates who fill out the FAFSA are 63 percent more likely to enroll in college and those who file a FAFSA form are 72 percent more likely to finish college. Undoubtedly, increasing FAFSA completion rates will increase college attendance. But in order to elevate completion rates, the form must be simplified.
FAFSA simplification is no new concept. Many proposals have been introduced, and some of which, like a simple check-box solution or a significant reduction in questions, have received bipartisan support. So what’s the hold up in Washington?
Like almost any political issue, inaction on FAFSA reform has an intricate explanation. Although the proposed changes address the length and complexity of the FAFSA, they overlook some complications in convoluted family situations. While they provide straightforward solutions to a fixable problem, they raise the crucial question surrounding the debate on FAFSA simplification: how simple is too simple?
Simplified proposals, like those mentioned above, have not been able to ensure the four major necessities for success: security against identity thieves, incentives against abusers of the system, political timing in Washington, and universality across the requirements of aid awarders. However, a potential solution exists that works within the boundaries of the current system and finds middle ground for all players in higher education: the Streamlined FAFSA created by NCAN.
A Closer Look at Simplistic Solutions
There have been many proposed plans to simplify the FAFSA form in the past two years. In January 2015, Senator Lamar Alexander (R – Tenn.) sponsored the Financial Aid Simplification and Transparency Act, known as the FAST Act. This legislation aimed to reduce the 10-page FAFSA form to two questions: what is your family size, and what was your household income two years ago?
The same year, Susan Dynarski, a professor at the University of Michigan, gave a TED talk offering her own solution to condensing FAFSA: eliminating the form altogether. In Dynarski’s plan, parents simply check a box when they are filing their tax forms to be considered for federal student aid. Because household information is already in federal databases when families file their taxes, Dynarski believes even the two-question form is redundant. In her opinion, a simple check-box solution could accurately sum up the 103-question FAFSA form because the government only needs the information on tax forms to calculate a student’s aid award.
More recently, Representative Lloyd Doggett (R – Texas) proposed a bill designed for the lowest income students called the Equitable Student Aid Access Act. His plan exempts students already qualifying for public assistance from filling out the FAFSA form, as they are already Pell Grant-eligible. But since these plans were introduced, no further action has been taken. While all offer reasonable solutions, they cannot simultaneously address all of the logistical roadblocks that come with reforming the federal financial aid system.
Arguments for technologically simplistic FAFSA forms, like Dynarski’s check-box solution, took a hit this year when the IRS’s Data Retrieval Tool was used for a scam that stole over $30 million dollars from the federal government. Co-created by the IRS and the Department of Education in 2009, the DRT tool helps students and parents transfer information from their tax returns to their FAFSA forms.
Identity thieves used the DRT to find parents’ adjusted gross incomes, which they needed to file fraudulent taxes in order to receive sizable tax returns. This year, the tool was taken offline in order to strengthen the system. “The IRS is very nervous about making sure that the new system is secure, which is why any of these easy check-box technological solutions are up against bigger hurdles,” NCAN director of policy and advocacy Carrie Warrick told the HPR.
The revamped tool is expected to be released this fall when the next round of the FAFSA application opens. Its upgrade ensures that all of the financial statistics are greyed out on both the DRT and the FAFSA. Since some families may not know the hard numbers of their finances from two years prior, they won’t have an estimate of the amount of aid they should expect to receive. So while there will be more security, the new system could cause more anxiety.
Even if the government could create a flawlessly secure DRT, the check-box reform fails to address the laws surrounding the sharing of tax information by the IRS. When creating the DRT, “[the] IRS emphasized that when you are in the FAFSA and you go to get your tax information, you the taxpayer are leaving the Department of Education, going to the IRS, requesting your information from the IRS,” Warrick said, “and then you are transferring it yourself through a back-end technology setup that allows the IRS to say ‘we did not give your information to the Department of Education. You moved it yourself.’”
If a check-box solution like Dynarski’s was passed, one of two logistical routes would have to be taken. First, a similar back-end technological tool like the current DRT would have to be created, where the taxpayer “self” transfers their information between forms by only clicking a box. However, this setup might be impossible without having the IRS directly share information. In which case, laws would have to be changed to permit the IRS’s sharing of information with the governmental agencies that award educational financial assistance. But even this situation overlooks the difficulty of understanding how states and institutions would get the necessary information to award their own aid.
Waste, Fraud, and Abuse
Besides barring identity theives from stealing information, a simplified FAFSA must prevent federal aid from reaching those who are looking to take advantage of the system. With fewer questions, families could lie about their wealth in order to receive more funding. On the other hand, a simplified form could incentivize an increase in Pell-runners, students who take advantage of the system by pocketing the remaining cash from grants after tuition has been paid without attending classes.
Although the exact number of people who take advantage of the system remains unknown, the total is assumed to be small. Republicans’ larger concern in the financial aid system is determining what is included in the cost of attending college. Less than half of the higher education student population is enrolled full-time at a four-year residential college. For example, students who attend community college in a city or town where there is no public transportation need a means to get to school. Currently, transportation is included in the calculation for cost of attendance. “When you have people who are writing policy who have only ever had the traditional experience where their parents dropped them off at 18 and they lived on campus, they think ‘you are just using the system to use this money.’ No, that is how they get to campus,” Warrick explained. “We hear from our students all the time after asking them why they didn’t attend class or dropped out for a semester. They say ‘my car broke down and I didn’t have the money to fix it, so I had no way to get to campus.’”
In Washington, FAFSA simplification serves as a means to begin the debate over higher education financing in general. If the goal of FAFSA simplification is increasing the accessibility of college for lower income students, more people will be qualifying for Pell Grants, which will inevitably increase government expenditures. There is no way to accurately predict how FAFSA simplification would raise the budget because predicting how much FAFSA completion would rise is strictly speculation.
Processes on Capitol Hill
Aside from security, one logistical problem persists that none of these proposals can solve: politics on Capitol Hill. Although Congress is at an all-time low in recent years in terms of passing bills, other political logistics have kept FAFSA simplification from gaining traction in Congress. “You can have all the bipartisan support for something, but if there is not policy window to move the legislation to make it happen, it is not going to happen,” Warrick said.
Warrick believes Alexander is the strongest advocate for FAFSA simplification in the Senate. Alexander is the chairman of the Senate Health, Education, Labor, and Pensions Committee. With the national spotlight on health care, Alexander and his fellow committee members have their attention focused away from education. In the House of Representatives, Warrick accredited the hold up to what she called “territorial issues.” Every bill is assigned to a committee, where they are edited and amended before they are put on the floor. “If I am a member that is passionate about FAFSA, but I am not on the Education and Workforce Committee, I am going to be very careful about the type of bill I introduce because it is not considered friendly to step on the toes of your colleagues who are on that committee,” Warrick said. “That is why you will only see a couple of bills that will address one specific thing.”
Many senators and representatives will support bipartisan bills to take something home to their constituents. However, many of those education bills will also serve as potential considerations when the Higher Education Act is renewed. The Higher Education Act is the single piece of legislation that oversees all of higher education. Many see its renewal as the opportunity to reform FAFSA and other problems confronting the higher education system. “It is certainly not getting as much buzz as a whole lot of other things for Congress to tackle, but [the renewal] is kind of the larger conversation is about a lot of stuff surrounding oversight and regulation of higher education, and FAFSA completion is just one part of the broader financing higher education conversation,” said Angela Romans, director of the Annenberg Institute for School Reform at Brown University, in an interview with the HPR. The act has been up for renewal since its expiration in 2013.
Too Short a Form
Even if Washington’s sole priority turned towards FAFSA reform and the Higher Education Act, a simplified FAFSA would need to provide enough information to remain universal across all universities. When the FAFSA was created in 1992, it was revolutionary. Prior to FAFSA, institutions, states, and the federal government all had separate forms that students would complete to apply for financial aid. At the time, none of these forms were electronic. Moreover, the FAFSA was free, so students no longer had to pay to discover if they could afford college.
Three-hundred of the most well-known universities across the country already require students to submit the CSS profile in addition to FAFSA. The CSS profile is a more complex financial questionnaire run by the College Board. The form aims to provide a clearer picture of financially elaborate family situations in order to ensure that institutional aid is going to the students who need it most. Warrick attributes this need for a more comprehensive image to the “much higher percentage of families who might have wealth that is not just directly from income” at these colleges. Although the number of institutions using the CSS profile is low compared to FAFSA, Warrick also mentioned that some colleges are adding the CSS profile because they feel that FAFSA isn’t thorough enough. This circle of opinion could form a huge roadblock to any FAFSA reform.
Maintaining the form’s universality stands as the biggest roadblock to reforms like Dynarski’s check-box method and Alexander’s FAST Act. A check-box solution would not be able to give information to institutions and states without huge changes in IRS information-sharing laws, so inevitably all universities and states would either switch to the more complex CSS profile, or they would have to create their own forms. With a two-question form like the FAST Act, universities might have all of the information they need, but they could still incorporate the CSS profile to ensure their aid is going where it should. Although these reforms simplify the FAFSA for the federal aid process, they do not address a universal solution for states and institutions who are also awarding significant aid packages to low income students.
NCAN has created its own FAFSA simplification program in order to combat the problem of universality. After research of how students were interacting with the FAFSA form, NCAN created a prototype of a new FAFSA online platform: Streamlined FAFSA. Through research with control and testing groups of prospective college students, NCAN has proven that their form reduces the time it takes to complete FAFSA, increases accuracy, and receives stronger reviews by students. They argue that the form also meets the needs of institutions and maintains the “integrity and universality” of the current FAFSA form. “Ultimately our goal with FAFSA simplification is to make certain that institutions do not run to the CSS profile in droves,” Warrick said. “I was very blunt with [the College Board] when we had our conversation. I said, ‘Look, if you go from 300 users to 400 users, I’m okay. If you go from 300 [CSS profile] users to 1,000 [CSS profile] users, I didn’t do my job properly.’” Although NCAN cannot guarantee that all schools will use the form, they are the only ones who have crafted a solution that thoroughly addresses this issue.
The Streamlined FAFSA eliminates the number of eligibility and demographic questions at the beginning and uses an updated Federal Student Aid ID. It allows the DRT to fill in more questions in order to reduce errors without changing the technological method. Additionally, the form automatically adapts to students’ unique circumstances by guiding them down one of three pathways determined by their identified financial situation. For example, parents with higher incomes cannot surpass more in-depth questions about their finances. Students in families who receive benefits from one of most federal means-tested programs are only required to fill out as few as 20 questions, skipping all financial questions because they already qualify for maximum Pell Grant awards. Students who do not participate in means-tested federal programs and do not file tax schedules with their taxes answer as few as 23 questions. Lastly, students who file tax schedules with their taxes complete as few as 25 questions. Unlike a check-box solution on a tax return, NCAN’s simplified form also provides a method for students whose families do not have enough income to file taxes. NCAN is currently shopping their proposal around Washington.
Although the Streamlined FAFSA cannot change the situation or political timing in Washington, when the policy window opens, NCAN has representatives like Warrick advocating in Washington, statistical support of their plan, and the sway of a large organization. NCAN’s proposal is not as simplistic as other solutions, but it works within the system’s security constraints while providing enough information for any institution to award aid. It is a simplified, thorough solution to a bipartisan issue that could help thousands of low income students if acted upon.