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First Steps Toward Simplifying the FAFSA

Student aid policy experts have argued for years that the Free Application for Federal Student Aid (FAFSA) is too long and too complicated. The FAFSA form is a source of confusion and frustration for many families. The policy experts have proven that the current process of applying for financial aid is itself a problem that prevents millions of students from applying for student financial aid and ultimately graduating with a college degree.

The federal government listened, and is finally taking steps to simplify the FAFSA. Congress passed legislation to enable and encourage simplification of the financial aid application form. During his campaign, President Obama pledged to “simplify the financial aid application process so that we don’t have a million students who aren’t applying for aid because it’s too difficult.” On June 24, 2009, the US Department of Education announced three steps toward a simpler application form.

These first steps toward simplification are welcome and are headed in the right direction. They will reduce the time and anxiety associated with applying for financial aid. However, these efforts don’t go far enough along the path to simplification. Much more simplification is necessary in order to have a meaningful impact on application rates by low and moderate income students. The FAFSA form should be able to fit on the back of a postcard and to be completed in less than fifteen minutes. This will require simplifying not just the form but also the formula for determining financial aid eligibility.

Complexity as a Barrier to Access

The goal of federal student aid is to make it possible for all students, regardless of ability to pay, to pursue a college education. Two years after the passage of the Higher Education Act of 1965, President Lyndon B. Johnson wrote in his “Fifth Freedom” speech on February 5, 1968 that “[E]very man, everywhere, should be free to develop his talents to their full potential – unhampered by arbitrary barriers of race or birth or income.” The Higher Education Act of 1965 provides generous grants and guarantees low-interest loans to open the doors to educational opportunity to even citizen. Unfortunately, the process of applying for student financial aid is so complicated that it has become a barrier to access to a higher education.

The Free Application for Federal Student Aid (FAFSA) is long, intrusive and time-consuming. The FAFSA form is six pages long and contains 153 numbered and unnumbered questions, more than twice as many questions as the federal income tax return. The Paperwork Reduction Act notice on the form estimates that it takes an hour to complete the form. But the reality is that it takes most people several hours or even days to complete the FAFSA.

The FAFSA is so complicated that many students don’t apply for financial aid even though they would qualify for grants and low-cost loans. A public policy analysis paper by Mark Kantrowitz in April 2009 estimated that 2.3 million students would have qualified for the Pell Grant in 2007-08 but did not submit the FAFSA and that 1.1 million of them would have received a full Pell Grant. More than a quarter of students who do not submit the FAFSA would qualify for a Pell Grant. Another public policy paper by Mark Kantrowitz in June 2009 found that three-fifths of students who borrowed private student loans instead of the less expensive federal Stafford loan in 2007-08 did not submit the FAFSA.

The current FAFSA is long because it chases after a false sense of precision. It needlessly requires more than 95% of financial aid applicants to answer scores of extra questions just to tweak the assessments of a small minority of applicants.