Towards a simpler FAFSA

One well-documented obstacle to economic diversity is the financial aid application process itself: the FAFSA is incredibly long, confusing and intimidating. When low-income students don't apply for financial aid, they miss out on resources that could increase their chances of success in college by allowing them to go to school full time, work reasonable hours, and attend more supportive institutions. In a paper published this April, Harvard economists Susan Dynarski and Judith Scott-Clayton examine how the FAFSA can be a barrier to access and aid. Among their findings: "the basic step of locating financial records is an obstacle for poor students, due to higher mobility rates and family dysfunctions such as divorce and separation of children from parents." A recent ACE report found that nearly two million Pell-eligible students did not apply for financial aid in 2003-04. For the lowest income students, financial aid application rates are flat (for dependents) or declining (for independents), even as overall aid application rates rise. Calls for FAFSA simplification usually focus on changing the formula that determines aid eligibility, so that it requires less data from students and parents. These proposals rarely make headway because they require difficult and politicized choices about eligibility, equity and cost. The good news is that there's a very practical way to make the FAFSA easier for students and families to use, regardless of the underlying formula. That's because the government already has some of the most important information used to calculate eligibility. Instead of having to dig through piles of tax records and do complex calculations, applicants could simply provide access to their IRS transcripts. The data could be processed electronically, eliminating many of the most difficult FAFSA questions and worksheets. People routinely give this permission when they apply for loans, and many commercial entities use this tool to verify income information. There's even a line on the IRS transcript request form that says: "If the transcript or tax information is to be mailed to a third party (such as a mortgage company), enter the third party's name, address, and telephone number." The private contractors running the Federal Direct Loan Program already use a consent form to access Income Contingent Repayment Plan users' IRS data. And some local governments have incorporated the IRS form into applications for benefits for working poor families. So, why not build it into the FAFSA itself, and lower a barrier to access?

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