Easing a College Financial Aid Headache

The Obama administration is moving to simplify the Free Application for Federal Student Aid, or Fafsa, a notoriously complicated form that asks students seeking financial aid for college as many as 153 questions.

The administration’s proposal, to be announced Wednesday, comes in several stages.

In January, when next year’s form goes online, about 20 percent of the questions will be eliminated, mostly by avoiding redundancies. For example, students who are at least 24, or married, will automatically be able to skip the 11 questions about their parents’ financial information, and low-income students will be able to skip the questions about assets, which are not used to determine their aid eligibility.

The administration will also seek legislation to simplify the form further.

“The Fafsa improvements will reduce the burden on the 16 million students and families who apply for federal financial aid every year,” Arne Duncan, the secretary of education, said, “and are designed to help increase college enrollment among low-income and middle-income students by making it easier to apply for financial aid.”

Every year, millions of students and families must fill out the Fafsa form to apply for Pell grants, Stafford loans, Perkins loans, work-study programs and much state aid. But many are scared off by the form. Federal authorities estimate that 1.5 million students eligible for Pell grants did not apply.

And because the form is so complicated, a growing industry of paid consultants has sprung up to help families complete it.

Secretary Duncan plans to create an easy process for families to click on their online application to automatically fill in the financial data they have already filed with the Internal Revenue Service as part of their tax returns.

That process, which has long been under discussion, had been expected to take several years. But in recent months, when Education Department officials discussed it with I.R.S. officials, it seemed to be something that could be started in January, for students going into the spring or summer college semester.

Those applying for aid to start college next fall will not be able to have the I.R.S. import their information, because the tax returns that determine their eligibility will not be filed in time.

While the Education Department can proceed with some of the changes, Congressional approval will be required for Mr. Duncan’s plan to eliminate more than half of the form’s financial questions, which often seek data not on the federal tax form.

The department said most of the questions to be eliminated, like one regarding untaxed income earned by members of the clergy, would affect few applications.

Indeed, officials say, the six questions about assets affect aid to only 3 percent of Pell grant recipients, while penalizing families saving for college and opening loopholes for sophisticated applicants to game the system.

Margaret Spellings, the secretary of education in the Bush administration, had proposed bigger changes, seeking to eliminate all financial data except adjusted gross income and the number of tax exemptions. Department officials say the Obama administration’s more moderate proposal may be more palatable to Congress.

“Confusing paperwork shouldn’t stand between qualified students and a college degree,” said Representative George Miller, Democrat of California and chairman of the House Committee on Education and Labor. “Secretary Duncan has put forth common-sense proposals for streamlining the Fafsa.”

The Higher Education Opportunity Act, passed in the last Congress, made some progress toward simplifying the Fafsa form, by, among other things, creating a two-page EZ form for some low-income families, and streamlining the reapplication process.

But some critics argue that the proposed simplification does not go far enough. “The whole form should be able to fit on the back of a postcard,” said Mark Kantrowitz, publisher of FinAid, an online guide to student aid. “And they need to simplify not just the form but the formula for determining aid.”

Others, meanwhile, argue that the form does not get enough information to measure financial worth adequately because it excludes assets like cars, homes and some family businesses and does not factor in the high cost of living in areas like New York. (The New York Times)

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