Financial Aid Applications Could be Simplified
The Financial Aid Simplification and Transparency Act, a bill proposed by U.S. Sen. Michael Bennett (D-Colo.) and Sen. Lamar Alexander (R-Tenn.) would streamline the current federal aid application process and encourage more college students to apply for federal aid. Additionally, the FAST Act would give students information about their financial options earlier to help them make more informed financial decisions.
Currently, the Free Application for Federal Student Aid, or FAFSA, is the primary tool used to determine a student’s federal aid eligibility. The FAST Act would cut the current 100-page questionnaire to a postcard-sized document called the “Student Aid Short Form” that asks two simple questions: What is your family size? What was your household income two years ago? These two questions, along with information already collected by the IRS, would provide 95%-96% of the information that’s needed from all students, according to Bennet.
However, Stephen Dietz, Associate Dean of Student Services at Southeast Community College isn’t convinced the bill will have a big impact on the number of financial aid applicants. “If a student wants financial aid, they will fill out the FAFSA form. I don’t think it prevents a student from receiving financial aid.”
However, Dietz does admit that some students who do not apply may be missing out. “Sometimes students will assume their parents make too much money for them to qualify, and I wonder why these students don’t go through the effort. I always encourage students to at least fill out the form.”
The National Association of Student Financial Aid Administrators reports that first-year full-time college students who fill out a FAFSA form are 72% more likely to remain in college than their counterparts who fail to file. For lower-income Pell Grant-eligible students, the effect is more notable, with a 122% increase in odds of college commitment.
On top of streamlining the application process, the FAST Act will notify students of their aid status much earlier, possibly during their junior year of high school. Helping students get financial aid faster will possibly discourage over-borrowing by limiting the amount that students can borrow based on their enrollment. Undergraduate students would have an annual loan limit of $8,000 while their graduate counterparts would be limited to $30,000 in federal loans per year. Part-time students would be offered a pro-rated rate that reflects their enrollment status.
According to Alexander, by getting financial aid information to families sooner, the FAST Act will also protect taxpayers by keeping them from lending more money to students than they’re able to repay. The bill also proposes consolidating the six different federal loan programs into three different loans: one undergraduate loan program, one graduate loan program, and one parent loan program.
“Under a simplified system we can expect more students will enroll and stay in school,” says Bennet. Other bill measures include restoring year-round Pell grant access and simplifying loan repayment to two basic options, 10-year repayment or an income based plan.