Chapter 9: Overhaul the FAFSA

Students wanting to obtain federal student financial assistance must complete the Free Application for Student Aid (FAFSA) form, which is also used for making decisions on financial aid by others, notably the colleges themselves.  In the 2009-10 academic year, the number of questions on the FAFSA form exceeded 100. Susan Dynarski and others have argued the marginal gain in knowledge about applicants from having an elaborate form was far more than offset by the adverse impact that the complexity of the form had on students’ willingness to apply, particularly in the case of low-income families. Some estimate well over 1.5 million aid-eligible low income people fail to apply for assistance, probably in large measure because of the complexity of the application process. Some small progress has been made in simplification, but the form is still complex and intimidating, particularly for people with limited educational backgrounds.  However, with the cooperation of other federal agencies (notably the Internal Revenue Service) and minor changes in law, it would be possible to abolish the FAFSA completely and still obtain the truly vital information needed to assess whether loans should be awarded to an individual. Another alternative would be a postcard-sized form asking for information regarding basic income, family size, and the age of children.

The problem with the FAFSA form is merely the most tangible indication of a broken, dysfunctional and byzantine system of federal financial aid. A strong case can be made for the federal government to abandon its role of providing loans and moving to alternative forms of financing. However, as long as the existing system is in place, the simplification of well over a dozen loan and grant programs into one or two would seem to be a top priority. At the very minimum, barriers to participation such as the FAFSA form should be broken down. See also our discussion of student financial aid reform in Chapter 22 of 25 Ways to Reduce the Cost of College.

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