Simplifying Student Aid: The Case for an Easier, Faster, and More Accurate FAFSA

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EXECUTIVE SUMMARY

Each year, more than 16 million college students and their families complete the Free Application for Federal Student Aid (FAFSA). They spend hours answering needlessly complicated and intrusive questions that undermine the fundamental goal of student aid: to help more students attend and graduate from college. In this report the Council of Economic Advisers (CEA) and the National Economic Council (NEC) discuss the need to simplify the process of applying for federal student aid, describe President Obama’s plan for simplification, and analyze the potential impact of such improvements on Pell grant recipients.

The current aid application process is needlessly complicated, burdensome and difficult to verify.

  • The current FAFSA includes 153 questions and requires families to report detailed information about income and assets, much of which has little or no impact on student aid eligibility but is difficult to understand and pull together.
  • With more than one million students who likely qualify for aid failing to complete an application, it is clear that a central goal of student aid programs – ensuring that college is within the financial reach of all qualified students – is not being met.
  • The questions on assets and savings are complex and largely unverifiable, providing opportunities for gamesmanship. Moreover, their inclusion in the financial aid formula for some students can penalize families who have saved for postsecondary education expenses.

The Obama Administration is taking three steps to make it easier for students to apply for aid and to make college more accessible:

  • The online application is being streamlined, with millions of students already using a shorter, simplified form; more improvements are on the way.
  • In January, some students and parents will be able to electronically retrieve their tax information from the Internal Revenue Service (IRS) and transfer it into the online FAFSA.
  • Congress is considering the Administration’s proposal to simplify the eligibility formula. This would make it possible to remove 29 of the most difficult FAFSA questions regarding savings and income adjustments that are not available on tax returns.

Together, these reforms will create an application that is simple to complete, requiring only easily obtainable personal information, and results in verifiable eligibility determinations.

President Obama is also seeking historic investments in student aid, including over $115 billion in Pell grants over the next 10 years. 1 Virtually all students eligible for Pell grants – 99 percent – would receive larger Pell grants under his proposals. The President’s plan to reform the federal financial aid application will help millions more students benefit from these investments.

1. Executive Office of the President. Office of Management and Budget (2009).

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