News: State Policy & Advocacy

Estimating the Potential Impact of Mandatory FAFSA in Texas

Tuesday, August 6, 2019  
Posted by: Bill DeBaun
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In July, this blog reported that Texas will become the second state (after Louisiana) to mandate FAFSA completion for high school graduation. The policy will go into effect during the 2021-22 academic year. This is big news, mostly because Texas is, well, big. Anything that affects FAFSA completion in the nation’s second-most populous state is likely to have an effect on the national FAFSA completion cycle. How big an effect? That remains to be seen, but we can look to Texas’ eastern neighbor, Louisiana, and try to estimate.

Before we get to that, let’s review the most recent FAFSA data. For the 2018-19 academic year, national FAFSA completion was anemic compared to the previous year. More specifically:

  • Year-over-year there were 10,248 fewer FAFSAs completed, representing a -0.5% decrease.
  • Despite this, the percentage of high school graduates who completed the FAFSA actually ticked up (61.2%, up 0.3% last year), due partially to a decrease in the estimate of graduates from the National Center for Education Statistics (NCES).
  • Looking at the number of high school seniors, we see an estimated decrease of -0.4% (from 57.4% last year, to 57% this year).

Read more about FAFSA completions during the 2018-2019 academic year on NCAN’s blog.

During the 2017-18 academic year, Louisiana implemented a policy similar to the one Texas just passed (including liberal opt-outs for students not wanting to complete a FAFSA). Louisiana’s policy change led to some significant early success.

In the first year in which Louisiana’s mandatory FAFSA policy was in effect, Louisiana led the way in terms of percentage of high school seniors completing and percent increase in completions. A whopping 25.9% more high school seniors (7,778) completed a FAFSA in the 2017-18 academic year than in 2016-17, representing an estimated 77.1% of seniors completing a FAFSA in the state. Louisiana’s percent increase represented over 19% of the entire nation’s increased number of FAFSA completions in that academic year. Those increases persisted into the 2018-19 academic year; an estimated 78.3% of Louisiana seniors from the class of 2019 had completed a FAFSA as of June 28.

NCAN ran the numbers to see what the impact of mandatory FAFSA in Texas could be based on the effect it has had in Louisiana. Let’s look at it in two different, but related, ways: 1) effects on year-over-year FAFSA completions and 2) effects on the percentage of seniors completing a FAFSA.

First, what if Texas’ policy has the same effect year-over-year that Louisiana’s did? Louisiana in the 2017-18 academic year saw its FAFSA completions jump 25.9% over 2016-17. If Texas had seen the same gains in this past academic year (2018-19), the state’s number of completions would have risen from 196,798 to 247,769, a gain of 50,971 additional FAFSA completions.

To put that in context, in the 2018-19 academic year, a gain of 50,971 students would have been equal to a 2.3% increase year-over-year nationally. These additional completers would have shifted the national figures, absorbing the -0.5% change year-over-year NCAN actually observed, and put the year-over-year percent change nationally at +1.8%.

Consider also that in the 2017-18 academic year, there was a year-over-year percent change nationally of +1.9%; that was equal to about 40,000 more students completing the FAFSA than in 2016-17. NCAN’s estimate of what an increase to FAFSA completions in Texas could have looked like is 25% more than the gains the entire nation saw in the 2017-18 academic year, and that year included the big jump from Louisiana’s own policy implementation! “Texas is big” is hopefully the theme readers are picking up on.

It is certainly possible that mandatory FAFSA will not have the same impact in Texas as it did in Louisiana. NCAN also took a look at the increased number of FAFSA completions based on Texas experiencing some percentage of the Louisiana effect:

(Click here for the full-size table.)

The chart above shows that even if the mandatory FAFSA policy only has 25% of the effect in Texas that it did in Louisiana, there would still be more than 12,000 additional completions. This is a big number and, again, would have set the nation on a net positive percent change year-over-year for the current academic year. The policy has the potential to do much more than that modest estimate. This is the impact of policy change in big states.

Next, NCAN considered what the effect on FAFSA completions would be if Texas’ new policy got the state to the same percentage of seniors completing a FAFSA that Louisiana now reaches. Texas has a lot of room for growth in its percentage of seniors completing a FAFSA. In the current academic year, just an estimated 55.2% of seniors have completed a FAFSA, ranking the state 31st nationally. In the 2017-18 and 2018-19 academic years, Louisiana averaged a 77.9% senior class FAFSA completion rate, so this analysis uses that as the target for this hypothetical. Texas’ 12th grade enrollment projection for the 2021-22 academic year, when this policy goes into effect, is 361,535 students.

For sake of analysis and assumptions, assume that Texas’ FAFSA completions are static for the next two cycles before estimating the cycle in which the policy goes into effect. If Texas were to raise its percentage of seniors completing to 77.9% like Louisiana has averaged over the past two years, that would generate an additional 84,838 FAFSA completions compared to the current FAFSA cycle. That number of completions would have been equal to 3.9% increase over completions in the current academic year. Even if the mandatory FAFSA policy does not have the same effect and only increases Texas’ FAFSA completion rate among seniors by 10 percentage points (to 65.2%), that is still an additional 38,923 FAFSAs completed.

All of this said, one good reason why we might see a moderation of the effect in Texas is the high percentage of undocumented students who will complete a Texas Application for State Financial Aid (TASFA) rather than a FAFSA. The Pew Research Center estimates that in 2016 13.3% of K-12 students had at least one unauthorized immigrant parent, compared to 2.7% for Louisiana.

MorraLee Keller, NCAN’s director of technical assistance, notes, “The FAFSA numbers/percentages in Texas are not likely to reach the same heights as Louisiana based on the high percentages of undocumented students completing the TASFA. From my experience in Texas, you can estimate about 10% of the graduating class each year to complete a TASFA, and that number is probably on its way up.”

Still, even with the demographic differences between the two states, NCAN’s analysis estimates the effect on FAFSA completion under modest hypotheses. Even with these, it seems likely that Texas’ mandatory FAFSA policy will make a big splash in the 2021-22 academic year. This is all coming in a state that was trending upward (+3.6% year-over-year in the current cycle, good for third in our national ranking).

NCAN will continue to monitor states in which mandatory FAFSA for high school graduation is being considered. In Illinois, Gov. J.B. Pritzker signed similar legislation into law last week. California and Indiana are considering similar policies.

(Photo via Tony Webster, CC BY-SA 2.0 license)