Can the FAFSA® be fixed?
Bill Gates thinks so, and we have $90 billion reasons not to doubt him.
(Yes, we know about Bing. And Zune. Can we please get back to the point?)
In 2015, The Gates Foundation issued a 32-page proposal to simplify and fix the ways students file for federal financial aid. The proposal did not call for a massive overhaul, but it did recommend a few tweaks to eliminate some questions. As for simplification, Frank’s got you covered with our own version of the application.
The FSA, the branch of the Board of Education that oversees the FAFSA®, has been listening. They’ve implemented some of the items in The Gates Foundation’s proposal in an effort to streamline the process.
Here are three things the FSA changed on the FAFSA® in response to Bill’s proposal:
1. Allow students and families to use tax information from two years prior
The first issue The Gates Foundation took aim at was the requirement that students must report tax information from the year prior. This meant that students and families had to file their taxes, have their tax documents processed by the IRS, and file their FAFSA® all in the span of a few months. Any bumps in the road meant a delay in their application, which could easily result in a lesser financial aid offer.
Starting with the 2017-2018 application, that changed. The FSA now requesting tax information from two years prior. For the 2017-2018 FAFSA®, students reported their tax information from 2015, where previously they would’ve been asked for their 2016 tax returns.
2. Open the application earlier
In conjunction with the move to use tax information from two years prior, the FSA also opened the application three months earlier — on October 1 — beginning with the 2017-2018 FAFSA®. Thanks to Pell Grant and loan estimation are given on the Student Aid Report, students and families now have a few extra months to prepare for the next school year.
3. Expanded IRS Data Retrieval Tool use
The Gates Foundation’s biggest push revolved around the IRS Data Retrieval Tool. In an effort to eliminate questions that did not apply to all students, the foundation proposed that the IRS DRT pull more data than just the standard 1040 forms most individuals use to file their taxes.
That, too, has now be implemented, and when the IRS DRT finds other tax documents for a student or his or her family, the student is given additional questions about their assets. Students who only file the standard tax documents no longer see questions that do not pertain to their finances.
The changes made by the FSA are a major improvement, but there’s still work to be done.
Here are three suggestions Frank has to further fix the way students file for federal aid money:
Even with all its complexity, perhaps the question that most baffles students is, “My parents don’t pay for my tuition, why are they factored into my financial aid offer?” The answer is that financial aid offers are based on the Expected Family Contribution, which, as the name suggests, is what the family is expected to pay.
The problem, as is so often the case, is that expectation does not always align with reality. There are too many students who qualify as a dependent but are, in reality, financially independent. How can we make exceptions for them?
2. The FSA ID
The aim of the FSA ID is to create an extra layer or two of security around your financial aid documents. The ID is tied to your social security number and is considered your electronic signature for all things FAFSA®. So what’s the problem?
Well, it’s a username and password combination that students and parents only use once a year, so it’s easy to forget. The FSA’s website doesn’t help matters, failing to remind users what the requirements are when they try to log in. After three failed login attempts, you’re locked out. And the username and password recovery process aren’t easy, requiring multiple steps, and featuring atypical password recovery questions.
3. Household size / Number in college
Similar to the dependency issues outlined above, the FSA has its own expectations of whom families should support, and who should be considered “enrolled in college.” Once a child has reached 24 years of age, they are no longer considered part of the household for FAFSA® purposes, regardless of whether or not that’s the family’s financial reality.
Going a step further, parents of dependent filers are not factored into the “number in college” formula, regardless of whether or not they themselves are also enrolled in college. The form doesn’t think those parents should count as being enrolled, which significantly impacts the child’s EFC score.
How would YOU improve the FAFSA®?
Bill continues to champion the simplification of the form. Do you have any recommendations? Let us know on Twitter and Facebook, or in skywriting. Just take a picture and tag us in it. We’ll get the message.