Gates Foundation: Now is the Time to #FixFAFSA

July 8, 2015

Carrie Warick, Director of Partnerships and Policy

Today the Bill & Melinda Gates Foundation is out with a new report detailing how the Foundation proposes to make the financial aid process less complicated. "Better for Students: Simplifying the Federal Financial Aid Process" is a road map to #FixFAFSA. The Foundation calls to for eventual elimination of the form as we know it today and proposes replacing the aid determination process with information already available through the tax filing process. The goal is to simplify the process and change it to one focused on how much aid a student will receive, not how much money they will pay.

For those who have closely watched the FAFSA simplification discussions, the individual specifics of the proposal are not new. What is new, however, is the combination of multiple ideas and the research behind how implementing the ideas would actually work. The Foundation recommends the following changes:

  1. Simplify the FAFSA by sorting filers based on the tax schedule they file and removing seldom answered questions,
  2. Streamline the process by using data already on file with the IRS, and
  3. Stretch the timeline by using prior prior year income.

The first solution would sort filers based on if they file an asset based tax schedule. 75% of FAFSA filers do not file an asset-based tax form, meaning they would complete a much simpler formula based on adjusted gross income, family size, and the number of students in college. This change would yield one of the most exciting results for college access advisors: a Pell Grant look-up table that could estimate the size of the Pell grant based on family income. 

The second solution would increase the data sharing available with the IRS Data Retrieval Tool. Doing so would allow the entire process to be done with IRS data, preventing students from needing to reproduce documents for the FAFSA and their schools.  By expanding the data elements in the IRS data retrieval tool, students are less likely to need to go through the verification process, which any where from 30% to 100% of students can be required to do, depending on the institution. 

Using prior prior year (PPY) tax information (or taxes filed the year before a student applies to school) will greatly benefit students as well because they will know how much aid for which they are eligible before they apply to colleges. NCAN strongly supports the use of prior prior year tax information. Using PPY would also allow for virtually all filers to use the IRS Data Retrieval Tool, effectively eliminating the FAFSA "form" as we know it.

This report takes the next step of just explaining the problem and what the solution is to how to implement the solution. The question flow for the simplified process and Pell Grant look up table are all included. As are the list of 30 questions fewer than 1% of filers currently answer and the list of non-EFC related questions that have been added to the form. 

The combination of these recommendations allows for a better overall financial aid process that focuses on how much of aid (in the form of a Pell Grant) a student will receive, not an expected family contribution of how much they will pay and improves the timeline from start to finish. Having a Pell Grant look-up table improves early awareness of aid benefits. Using prior prior year tax information and increased data sharing with the IRS allows students to apply earlier and more accurately. Using a simplified formula allows for a mobile filing option. Reducing rates of verification increases the time advisors and aid officers can spend on helping students make informed decisions. And the overall simplification should help increase re-application rates, contributing to college persistence. 

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