FAFSA Completion Rates and School District Poverty

An Examination of the Relationship between School District FAFSA Completion Rates and District Poverty Levels

Authors: Lindsay C. Page, Danielle J. Lowry, Aizat Nurshatayeva

April 19, 2017

NCAN sought the answer to a seemingly obvious question: Do communities with more children living in poverty complete the FAFSA form at higher rates than communities with lower rates of poverty? In this paper, An Examination of the Relationship between School District FAFSA Completion Rates and District Poverty Levels, Lindsay Page and her colleagues demonstrate that in most states the opposite is true: The higher the rate of poverty for children 5 to 17 years old in a particular school district, the lower the FAFSA completion rate for that district.

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Executive Summary

The Free Application for Federal Student Aid (FAFSA) is the gateway application to federal financial aid (as well as other sources of financial aid) for postsecondary education in the United States. In this report, we describe how school district-level FAFSA completion rates are related to district-level poverty rates across and within states in the US. Given that students from low-income backgrounds may be particularly dependent on financial aid, such as the Pell Grant, to make postsecondary education affordable, it might be reasonable to guess that districts that serve higher-poverty student populations have higher FAFSA filing rates than their wealthier counterparts. Unfortunately, we find the opposite – that, in most states, districts in higher-poverty areas have much lower FAFSA completion rates. We observe this trend both across states and within states.

In most states, higher child poverty levels are associated with lower FAFSA completion

For most states, on average, we find that FAFSA completion rates tend to be lower in school districts with higher poverty levels. The relationship between FAFSA completion and poverty is statistically significant and, for many states, quite substantial. On average, for every 10 percentage point difference in the percent of children 5 to 17 living in poverty, the district FAFSA completion rate is about 3 percentage points lower.

The gap in FAFSA filing between the poorest and wealthiest districts is quite large within states. At its most extreme, for example, this FAFSA completion gap is approximately 19 percentage points in Vermont, Wisconsin, and Ohio. In contrast, certain states, such as Maine and New Mexico, have narrow gaps – on the order of 1 percentage point – in FAFSA completion between the wealthiest and poorest districts.

In four states, high poverty is associated with slightly higher FAFSA rates

Counter to the overall trends that we observe, Alabama, California, Minnesota, and Montana have slightly higher rates of FAFSA completion among low-income districts than wealthier districts. In these four states, poorer districts outperform wealthier districts by 0.6-3.5 percentage points.

FAFSA completion across states

The gaps in the FAFSA filing rate between the poorest and wealthiest school districts should be interpreted differently for states that have high overall FAFSA filing in contrast to the states that have low overall FAFSA filing.

Although school district child poverty is a significant predictor of FAFSA completion, due to differences between states in overall FAFSA completion, we observe variation in FAFSA completion rates even among districts with similar levels of child poverty across states. Most notably, in Tennessee, despite the FAFSA filing gap between poor and wealthy school districts, poorer districts achieve high rates of FAFSA completion in comparison to other states.

Policy recommendations

Increasing FAFSA completion among low-income school districts creates opportunities for more equitable access to higher education and to better subsequent labor market opportunities. Therefore, policies aimed at increasing FAFSA completion rates are powerful potential mechanisms for reducing economic inequality and social inequality. The findings of this study provide guidance on where concentrated effort may yield the highest return in terms of improved FAFSA completion rates.

  1. Increase statewide FAFSA filing rates in states with overall low FAFSA 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%.
  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.