I'm glad Secretary Spellings is taking a step forward: developing specific examples and proposals forces people to think and be creative in response. But I have to admit that the sample form raises a lot of questions about what the Department's proposal is, and whether it will require legislation to implement. Are a student's own earnings going to be completely eliminated from the eligibility formulas? The form asks for the student or the parent's income, not both.

One minor point about the "26" questions: in some cases the numbers were removed but the number of questions remained the same (for example, the two questions about selective service registration have one number on the new form but two numbers on the old form). Counted by the same method as the 106 on the old form, the sample form has 41.

But focusing on the raw number of questions is sort of like looking at test scores without context. Families don't mind having to answer easy questions like their street address or whether they have other children already in college. The goal should be to eliminate the difficult, show-stopper questions that require the applicant to do research or to be a tax expert. To accomplish that goal, the Department will have to go beyond this first step.

Congress last year paved the way for the Secretary to work with the IRS on a system that, with the taxpayer's permission, would feed information directly from the tax form into the financial aid application process. Yet there is no evidence in this announcement of any IRS cooperation. The form still asks applicants to find numbers on particular lines on their tax forms.

-Bob Shireman

Posted by bob shireman at 1:34 PM | Permalink

On April 1, the U.S. Department of Education released the FAFSA4caster, an online tool intended to help families plan for college by providing early estimates of their federal financial aid eligibility. To get an early aid estimate, students and their parents have to answer 96 questions from the actual FAFSA.

Positives: For students and parents who are not put off by the volume and complexity of questions in the FAFSA4caster, it will be a useful tool. It can give them a good sense of what they will be expected to pay towards college costs and what federal aid they may be eligible for. In addition, the data they enter will be used to pre-populate many elements of the full FAFSA when they are ready to officially apply for aid. This is a good use of technology that will allow aid applicants to pick up where they left off, rather than starting from scratch.

Negatives: The FAFSA4caster requires students and parents to answer all of the most difficult and error-prone income questions that make the actual FAFSA so intimidating. You still have to track down all the tax documents, make various calculations, and transfer the answers from one form to another by hand.

Suggestion: The way to make this tool easy and inviting is to significantly reduce the number of high-stakes questions that applicants have to answer themselves. That can be accomplished -- without diminishing the accuracy of the aid estimate -- by letting users authorize the IRS to answer 31 of the questions automatically. We encourage the Department to take this opportunity to simplify the FAFSA4Caster as soon as possible. Because the estimate it produces is non-binding, the Department could use whatever year of income data is available from the IRS at the time students and parents use the new tool. For more about how this approach could make the whole aid application process easier, see Going to the Source: A Practical Way to Simplify the FAFSA.

FYI: To get a sense of how hard it is to create a simple aid estimation tool given the income data that applicants are currently required to provide themselves, see these valiant attempts by FinAid! and the College Board.

Posted by Edie Irons at 4:41 PM | Permalink

The most inefficient and intimidating part of the financial aid process is requiring students and families to transcribe, calculate, and submit piles of income information that the government already has. An article in today's Inside Higher Ed describes how researchers are conducting an experiment with H&R Block that pre-fills the FAFSA with selected clients' tax data.

Over the past year, The Institute for College Access & Success has been exploring a way that all students and families could benefit from a similar approach. We've found that it's both technologically feasible and perfectly legal for financial aid applicants to give the U.S. Department of Education access to the needed income information in their tax records. People already do this whenever they apply for a mortgage and in many other situations. For more about this approach, see our testimony before the Advisory Committee for Student Financial Assistance.

Posted by Lauren Asher at 10:57 AM | Permalink

One well-documented obstacle to economic diversity is the financial aid application process itself: the FAFSA is incredibly long, confusing and intimidating. When low-income students don't apply for financial aid, they miss out on resources that could increase their chances of success in college by allowing them to go to school full time, work reasonable hours, and attend more supportive institutions.

In a paper published this April, Harvard economists Susan Dynarski and Judith Scott-Clayton examine how the FAFSA can be a barrier to access and aid. Among their findings: "the basic step of locating financial records is an obstacle for poor students, due to higher mobility rates and family dysfunctions such as divorce and separation of children from parents." A recent ACE report found that nearly two million Pell-eligible students did not apply for financial aid in 2003-04. For the lowest income students, financial aid application rates are flat (for dependents) or declining (for independents), even as overall aid application rates rise.

Calls for FAFSA simplification usually focus on changing the formula that determines aid eligibility, so that it requires less data from students and parents. These proposals rarely make headway because they require difficult and politicized choices about eligibility, equity and cost.

The good news is that there's a very practical way to make the FAFSA easier for students and families to use, regardless of the underlying formula. That's because the government already has some of the most important information used to calculate eligibility.

Instead of having to dig through piles of tax records and do complex calculations, applicants could simply provide access to their IRS transcripts. The data could be processed electronically, eliminating many of the most difficult FAFSA questions and worksheets. People routinely give this permission when they apply for loans, and many commercial entities use this tool to verify income information. There's even a line on the IRS transcript request form that says: "If the transcript or tax information is to be mailed to a third party (such as a mortgage company), enter the third party's name, address, and telephone number."

The private contractors running the Federal Direct Loan Program already use a consent form to access Income Contingent Repayment Plan users' IRS data. And some local governments have incorporated the IRS form into applications for benefits for working poor families. So, why not build it into the FAFSA itself, and lower a barrier to access?

Posted by Lauren Asher at 9:01 AM | Permalink