The Right FAFSA Reform

Seemingly from the day it was created in 1992, the Free Application for Federal Student Aid, or FAFSA, has been a popular target for reform. The Obama administration shortened the time it takes to finish the form by two-thirds and created an automated tool so families can import their tax data. And now there’s a competition to see who can drop more of the FAFSA’s 105 questions. The president’s latest budget targets 30 questions for removal, while a bipartisan group of senators led by Lamar Alexander, the Tennessee Republican now in charge of the committee that covers higher education, wants to go even farther -- shortening the FAFSA to just two questions that could fit on a postcard.

Making the FAFSA less of a burdensome impediment to financial aid receipt and reform is a laudable goal. But the obsessive “who can go lower” approach to simplifying the FAFSA is misdiagnosing the disease. FAFSA’s problem is not its length -- it’s the frequency that it’s required.

Reducing the number of FAFSA questions gets at a very specific problem -- the annual burden associated with completing the form. Doing so would free families from the yearly process of digging up complex tax, asset and other income data.

But as Michael Stratford discussed recently in Inside Higher Ed, removing FAFSA questions comes with its own set of concerns. In particular, colleges and most states do not have unlimited entitlement funds for financial aid, so they want as much data as possible, in order to vary the price charged to students to a degree that would make the airlines jealous. Take away that data by bringing the form down to two questions and you may just drive the creation of additional forms like the dreaded and expensive CSS Profile.

Fortunately, there’s a middle path that accomplishes the goal of reducing burden while still giving colleges and states the data they need to make nuanced decisions: a one-time FAFSA.

Since students would still fill out a detailed form, colleges would have the data they need to parcel out resources. They just would not have new information to do so year after year.

For students, the FAFSA would become more like any other part of the college application process, which is full of one-time submissions like essays and transcripts. This includes the Department of Education’s master promissory note, which only needs to be filled out once to receive federal student loans. And it would reduce the chances that students would lose financial aid solely because they failed to reapply the following year -- a problem that professors Sara Goldrick-Rab and Robert Kelchen identified in a post on a similar proposal in 2013.

What families and students would get in return for this one-time burden is something that could never be earned in any annual application process, regardless of length: predictability. Few students entering college have any idea what their financial aid might be beyond the first year. And they will not know for sure until they actually apply for aid again. A shorter form can help families more accurately predict what they might receive -- but it’s still an estimate, not a given.

A one-time FAFSA would make it possible to promise a student on day one what their aid package would look like for the rest of their undergraduate career. Families could use that information to budget and plan for costs in a way they cannot today. It could also be a huge help for low-income students considering different college options, since they would know exactly what support they could count on from the federal government at the same time they submit applications.

Only requiring the FAFSA a single time is a required step for many proposals for reforming federal student aid. For example, House Republicans proposed last year to create a flex account for Pell Grants. Students would be told upon entering college the total amount of Pell aid they are entitled to throughout their whole education and then would be allowed to spend it down as they took classes. It’s an intriguing idea that could send a strong message to students about just how much money they can get for college. But it’s also an empty promise for students under the current system, since the account balance would have to be recalculated each year.

Many of the most common objections to a one-time FAFSA could be addressed with simple tweaks. For example, it should pull in multiple years of older data so families cannot manipulate their income for a single year to appear poorer and get better aid. Students who see significant downward financial changes, such as a parent losing a job, could either follow the existing process of appealing to the financial aid office or refile for federal aid. And while it would be better to worry less about the unlikely cases that students see massive income increases, a threshold test could be added to only require new FAFSAs if income went up by very large dollar amounts, such as $20,000.

More broadly, moving to a one-time FAFSA system sends a message of simplicity and flexibility that extends far beyond paperwork. It makes the financial aid system less about obsessing over one's ability to pay in a single year to a longer-term assessment of financial circumstances that are probably not changing a great deal on an annual basis anyway. It builds in a tolerance for some income growth without making families go back through the hoop-jumping process. And in a world where tuition increases are an annual uncertainty, it could be a welcome source of predictability for students.

If the goal of financial aid simplification is really to make the process easier and more predictable for students and families, then the emphasis should be predictability, not a postcard.