No Money Left Behind

Thursday, June 25, 2009
Cross-posted from Brainstorm

The U.S. Department of Education has finally announced some concrete plans to reduce the complexity of the Free Application for Federal Student Aid (FAFSA). After years of debate that largely focused on whether to kill the beast entirely (ditching the form and using IRS data instead) or cutting off some of its limbs (cutting some of questions but keeping the form), ED is starting with a middle-of-the-road approach. In spring they’ll pilot a program to use IRS data to populate forms for students who elect to go that route, and in the meantime cut back on asking questions about assets.

While most consumers agree that simple is best, and easy, transparent programs are notably more effective in reaching the families who need aid the most, these steps are not popular with everyone. Complex forms require specific knowledge, and those who specialize in them are nearly assured of keeping their jobs. Reduce the complexity, and paper-pushing jobs can be eliminated entirely. Increase the number of aid applicants, and financial aid officers worry about the increased workload on their end. Furthermore, some states and institutions are concerned that they will not have enough information from a simplified FAFSA with which to tailor their programs. There’s also the potential (unlikely, based on calculations by Sue Dynarski and Judy Scott-Clayton) that fewer criteria will mean that need-based aid will be only slightly less targeted.

But if our goal is to make sure that scarce resources are used efficiently and effectively, FAFSA simplification is one step in the right direction. Set aside the issue of targeting for the moment, and let’s consider how much financial aid money is currently left on the table. Each year, the American Council for Education estimates that each year more than one million students are Pell Grant-eligible but don’t get that money because they do not file a FAFSA. While some people like to blame individuals for inaction, and claim those who don’t file forms don’t “deserve” the money, there are many PhDs who themselves find the FAFSA overwhelming and would agree the time it takes to complete one is well-beyond what’s available in a working-class family’s day.

Ultimately there is no excuse for allocating resources and then not doing everything we can to make sure people can access them. We could do so much more. Right now, there are many programs available to help low-income students build human capital, but they are poorly coordinated or worse yet work at cross-purposes. Welfare reform (TANF) effectively took money for college off the table for poor women, at a time when tax credits for higher education were expanded and we were all implored to attend college. The Workforce Investment Act currently utilizes a byzantine system that makes accessing education and training, particularly at community colleges, harder than ever. Many states and institutions make money available to poor kids, but as they disburse it via the aid package they substitute it for existing resources. Did you know that if your kid gets a Rotary scholarship, their college will likely reduce the institutional aid they’re offering by a similar amount?

Better coordination of existing resources and a simpler, more transparent system – the best would be no application process at all—these things are essential to achieving the President’s goal of more college graduates. ED is going in the right direction—now let’s hope that conversations with Department of Labor and Health & Human Services are coming soon.