Who Is Really Benefiting From Early Access to Federal Student Aid?

New data from the Department of Education suggests that Obama administration efforts to improve the process of applying for financial aid are beginning to take hold.

This fall, for the first time ever, students were able to complete the Free Application for Federal Student Aid (FAFSA) months earlier – using 2015 tax returns, rather than waiting until the next tax season to learn about their aid eligibility. And, in October, the first month for students to submit the new FAFSA, over two million students submitted their applications.

The administration's rationale for “early FAFSA” was simple and ambitious. Without a clear understanding of what they can be expected to pay for college, too many students defer altogether. Today, nearly 40% of low-income students accepted to college in the spring don’t attend in the fall. If colleges are able to let students know about aid sooner, needy students will be more likely to enroll.

But like so many ideas that sound great at the federal level, early FAFSA addresses just one piece of the puzzle. The new data is positive but overlooks the reality on the ground at colleges and universities charged with communicating with students and bridging the last-mile divide between aid and enrollment.

So as the data rolls in about the impact of early FAFSA, here are three critical questions for policymakers to consider as they evaluate the effectiveness of the new policy.

Who is really applying sooner?

The goal of early FAFSA was to make applying for financial aid easier for first-generation students and low-income families. But the Department’s early data suggests that first-generation and low-income students may not be the primary beneficiaries of early FAFSA.

When comparing FAFSA applications, students who have submitted applications early are more likely to be younger, higher-income, dependent students with parents who have completed college or beyond. The data from early FAFSA seems to indicate this trend is accelerating.

• In 2015, 58 percent of all FAFSA applicants were Pell grant eligible. 52 percent of those who applied for FAFSA in the first quarter of 2015 were Pell eligible. But the Department’s latest data suggests that only half of early FAFSA students in 2016 qualify for Pell grants.
• This year’s early FAFSA applicants were also more likely to be dependents (with the help and support of parents) than the 2015 applicant pool.
• Early FAFSA applicants were also more likely to have parents who attended college: 29 percent compared to 24 percent overall in 2015.

These numbers beg the question: will early FAFSA truly benefit the students it set out to help?

When are schools actually communicating with early FAFSA students?

Early access to FAFSA data doesn’t necessarily mean that colleges and universities can—and will—award and communicate aid significantly earlier. A recent survey by the National Association of Student Financial Aid Administrators found that although 57 percent of institutions intend to communicate aid offers earlier than last year, communications may only come two weeks earlier – despite a three-month advance on FAFSA timelines. Only 30 percent indicated that they will include need-based aid offers in their admission offer letters.

There are three big reasons that early FAFSA may not equate with early award letters from schools:

First, providing aid to those who need it most requires understanding which students will actually attend. This means that most financial aid offices only package an award after a student has been admitted. Admissions deadlines, more than FAFSA, dictate when students receive their financial aid information.

Second, while the Department moved-up the FAFSA timeline, they failed to accelerate the Pell disbursement schedule. Federal budgeting only compounds the problem. With a continuing resolution rather than a new budget in place, Pell grant charts and campus funding levels may not be available until a new budget is passed in the spring, meaning schools may not have a clear picture of how much Pell funding their students will receive until then.

Finally, not all states have altered their financial aid deadlines. Only 17 states thus far have changed their application window to reflect the new FAFSA timeline. Students relying on state aid will be unable to make decisions any earlier.

What are they communicating to families?

On its own, early isn’t necessarily better. Research suggests that what institutions communicate is just as important as when. Financial aid award letters are notoriously difficult to understand, with complex terminology and dense content. As a result, students dramatically misunderstand the amount of student debt they are incurring. A recent Brookings study found that over a quarter of students with federal loan debt didn’t even realize that they had government loans. Without a clear and concise award letter that includes federal, state and institutional grants and loans, many families will still struggle to make an informed financial decision.

Millions of students are taking advantage of early FAFSA, and, while they may skew slightly younger and wealthier, large numbers of them are still low-income and first-generation. Early FAFSA is a good first step, but it is only one component of the much larger financial aid process. To call early FAFSA a success, we need to ensure that students most at risk of skipping out on college altogether receive the information they need concerning aid and admissions early and often.

Gregg Scoresby is founder and CEO of CampusLogic, which helps colleges and universities improve the student financial aid experience.