Simplifying the FAFSA is More Important Now than Ever

In order to qualify for financial aid and afford college, completing the FAFSA is essential for low-income students. At the same time, the FAFSA has long served as a barrier to many. Calls to simplify the overly complicated process have grown in recent years, but FAFSA simplification means more than simply making the form shorter. It must also take into account changes in Pell eligibility to ensure students who are struggling to pay for college can actually afford it. 

The one-two punch of inequity and lack of affordability, exacerbated by family income losses due to the COVID-19 pandemic, make this conversation about federal student aid all the more urgent. Here are three steps policymakers can take to simplify the FAFSA.

Remove Unnecessary Questions

The high school class of 2018 left nearly $2.6 billion on the table in unclaimed Pell Grant dollars by not completing the FAFSA. Many students miss out on the Pell they deserve because the form is so unduly complicated that some students require assistance to complete it. For students whose parents never attended college or who lack sufficient advising and counseling services, the task can be daunting. 

The December 2019 passage of the FUTURE Act will eliminate up to 22 questions on the FAFSA. While this is an important change, the form can be simplified even furtherl. One-quarter of the questions -- 30 in total -- on today’s FAFSA are answered by less than 1% of applicants. Of those questions, seven are transferred through the IRS Data Retrieval Tool as part of the FUTURE Act. An additional two have been removed due to tax code changes. Sixteen of the remaining questions, however, provide little useful information and should be removed.

Further, there are 15 questions that are not required for the current federal methodology, particularly questions related to selective service and drug convictions. Those should also be considered for removal. Our research has found removing these questions improves completion time by 3%, and, more importantly, reduces the error rate by 56%. 

Simplify Pell Grant Eligibility Formula

The Pell Grant has been the cornerstone of financial aid for low-income students since 1972. This need-based grant provides crucial support for around 7 million students each year, or about one-third of all undergraduates. A simplified formula that ties Adjusted Gross Income and family size to federal poverty levels can ensure that even more low- and moderate-income families are able to afford college, regardless of how many children they have enrolled.

There should also be a clear path to full Pell Grant eligibility for students receiving means-tested benefits such as the SNAP program. Those students have already demonstrated that they come from a low-income family. Students from families receiving means-tested benefits should be placed into the auto-zero Expected Family Contribution category and asked no further financial questions beyond what is transferred from the IRS under the FUTURE Act.

Even with this formula change, however, the Pell Grant will continue to lose its purchasing power. At its peak in the mid-1970s, the maximum Pell award covered more than three-fourths of the average cost of attendance for a four-year public university. Today, it covers less than 30 percent. Given the extraordinary economic downturn brought on by COVID-19, Congress should respond by immediately doubling the maximum Pell award.

Streamline Verification 

Each year, about 25 percent of all filers -- and roughly half of all low-income filers -- are flagged for a process known as verification. While this process aims to reduce improper payments made by the federal government, it unintentionally and quietly wreaks havoc on financial aid applicants, particularly low-income students. Students facing verification must deal with a litany of obstacles, including obtaining and completing different forms, suffering long waits for mailed IRS documents, and enduring painful visits to records offices for death certificates. 

The student’s FAFSA is not complete or actionable until this verification process is resolved, often causing missed deadlines and missed opportunities for first-come, first-served state and institutional aid. These barriers lead to "verification melt," a phenomenon in which students who were otherwise on track to attend college fail to complete the verification process, derailing their pursuit of financial aid and, quite possibly, their postsecondary education.

Only 56% of Pell-eligible students selected for verification complete this process and receive a Pell Grant. In comparison, 81% of Pell-eligible students not selected for verification receive a Pell Grant. Better targeting those selected for verification will lessen this burden while still being fiscally responsible.

Simplifying, streamlining, and improving the FAFSA process is key to ensuring untold numbers of students can afford college during the pandemic and beyond.