Exploring the Link Between Poverty and FAFSA Completion

August 18, 2017

By Courtney Argenti, Graduate Policy Intern 

NCAN released a report this spring demonstrating that, generally, higher-poverty school districts experience lower FAFSA completion rates than wealthier school districts. To give more context to the research by the University of Pittsburgh’s Linsdsay Page and her colleagues – and the "why" behind the results – we would like to highlight some important findings from another NCAN study published last fall, which was based on a survey of low-income students.

As we know, FAFSA filers attend college at much higher rates than non-filers. Specifically, from the aforementioned survey:

  • 64 percent of individuals who applied for financial aid were enrolled in college, a certificate program, or a technical program.
  • Just 33 percent of those who did not apply for aid were enrolled.

So, why aren’t low-income students applying for financial aid?

NCAN's survey, conducted in partnership with Huge, found that in short, students who do not apply for financial aid often do not view it as a viable option. This is because of two key reasons:

  1. Students are completely unaware of financial aid options; or  
  2. Students are misinformed about financial aid and eligibility requirements.

For example, when students were asked to identify the types of financial aid options they knew about, 64 percent of those who did not apply for financial aid said “none,” or shared inaccurate sources, such as “food stamps” or “food/housing.” Additionally, when asked how to obtain financial aid, most were “unsure.”

Throughout a three-day online discussion board, low-income students who recently graduated high school or completed their GED discussed their education goals, their attitudes toward higher education and college planning, and their knowledge of financial aid and the FAFSA. The majority of students who were completely unaware of financial aid options mentioned how they decided not to attend a postsecondary institution because of the costs. One student explained: “It only took me a few months to decide I wouldn’t be able to [attend college] due to financial reasons.” Similarly, from another student: “I would probably be more motivated to go [to college] in the fall if I knew I could afford it.”

Many students who did not complete the FAFSA are fearful about applying for aid. They view it as an end-all, non-reversible transaction that will incur debt: 46 percent of survey respondents believed that if they applied for financial aid, they would only receive loans. The same number of students agreed that once they apply for financial aid, they cannot change their minds. These rates were much higher than those who did apply for financial aid (23 and 25 percent, respectively).

In the online discussion forum, most people who did not apply for aid expressed this fear and apprehension surrounding financial aid, debt, and loans. One student referenced seeing a family member struggle to repay: “I just got scared about trying to get financial aid from hearing about the experience that my mom had … My mom got two grants but the rest she had to take out from salle mae [sic]. She wishes she never did that cause now she is in debt with them after all these years. I don’t think I will take out a loan because of her experience.”

Similarly, another student said: “I don’t see me being able to afford [college] unless I just save up money from paychecks and do it that way. I’m too afraid of getting myself into debt for loans.”

In fact, more than half (55 percent) who did not apply for financial aid conflated loans and grants, incorrectly indicating that a grant must be paid back. In comparison, only 12 percent of students who have applied for financial aid agreed with the same statement.

These misconceptions and uncertainties surrounding financial aid have lasting impacts on students’ college and career decisions -- and outcomes.

“I did not take any steps to prepare [for college]. I basically went into everything blind,” one respondent said. Another commented: “I applied for college my senior year. I didn’t do anything else to apply … I thought I wouldn’t qualify for [financial aid] then.”

So, what do these findings tell us? If low-income districts want to increase FAFSA completion, they also need to educate students on what financial aid is. A specific focus on increasing awareness should help students understand the differences between loans, grants, and scholarships, and the eligibility requirements for each of these aid sources.

Additionally, it is very important that students understand: Completing the FAFSA does not bind them to any form or amount of aid! Students should not miss out on the nearly $3 billion in federal grant money that's left on the table each year out of fear that completing the financial aid application will tie them to student loans and debt.

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