Higher Poverty Means Lower FAFSA Completion, New Data Show

April 19, 2017

By Carrie Warick, Director of Policy and Advocacy

In most states, high school seniors in higher-poverty school districts complete the FAFSA at lower rates than students in wealthier districts. To someone not familiar with the inequities of higher education, this may sound counterintuitive. However, new research demonstrates it is indeed the case.

For every 10-percentage-point increase in the proportion of children living in poverty, a school district’s FAFSA completion rate declines by about 3 percentage points, according to research published by NCAN and conducted by the University of Pittsburgh’s Lindsay Page, Danielle J. Lowry and Aizat Nurshatayeva. In most states, having a higher level of poverty in a district actually suppresses FAFSA completion. The researchers observed this trend both across and within states.

Completing the FAFSA is the best predictor that a student will continue her education; therefore, the more students who complete the FAFSA at a high school, the better. Lower-income districts have more poor students who need higher amounts of aid; thus, those districts should have higher FAFSA completion rates. Yet the opposite is true, demonstrating that low-income students are still facing barriers in accessing financial aid for college.

Where do the individual states stand in terms of FAFSA completion? It varies dramatically. Only four states – California, Minnesota, Nevada, and New Hampshire – are successful in overall FAFSA completion and in closing equity gaps. These states have above-average FAFSA completion rates in school districts at the median poverty level, and also do not show a gap in the rate of FAFSA completion between lower- and higher-poverty districts. (NCAN is planning additional qualitative research to determine why these states do well.)

The two tables below summarize the performance and equity of FAFSA filing by state. The first table looks at FAFSA filing rates in states’ median-poverty-level districts, and compares them with the average national filing rate among high school seniors by graduation (44 percent), and shows that most states surpass this measure. The second table looks at the difference in completion between higher-poverty and lower-poverty districts. (Read on for recommendations.)

This new research is yet another argument for why more students should file the FAFSA, but it also shows that completion efforts must be targeted toward low-income communities where the financial aid dollars can make the biggest difference in whether a student enrolls in postsecondary education. In their report, Page, Lowry, and Nurshatayeva suggest three policy recommendations:

  1. Increase statewide FAFSA filing rates in states with low overall completion rates: States where overall FAFSA filing is low will benefit by focusing on increasing FAFSA completion across the socioeconomic spectrum. For example, some states have an average FAFSA completion rate of less than 30 percent.
  2. Decrease the FAFSA filing gap between school districts in states where gaps are large: For states where large gaps in FAFSA completion rates exist between the poorest and wealthiest school districts, policymakers may wish to specifically focus FAFSA completion efforts within districts serving low-income student populations.
  3. Increase the national average FAFSA filing rate: At the national level, policy should focus on efforts both to simplify the FAFSA filing process and to increase awareness and support for timely FAFSA completion.

One strategy to increase FAFSA filing overall is to simplify the form, which NCAN recommends doing through the Streamlined FAFSA. As low-income students are less likely to complete the form, NCAN suggests simplifying it in a way that makes it much easier for students to access aid rather than fail to apply due to bureaucratic barriers. The Streamlined FAFSA would not ask financial questions of any student receiving one of several federally means-tested benefit programs, instead awarding them an Expected Family Contribution of zero dollars.

Another strategy to address this issue without federal action would be for states to distribute individual FAFSA completion statuses to school districts, and for districts to target their FAFSA completion efforts specifically on students who have not yet completed the form, rather than just generally encouraging all students to do so. A list of states that already do this is available at NCAN’s website.

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