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Feds simplify financial aid form

The Obama administration on June 24 announced its first steps toward making it easier to apply for federal college aid, and technology is playing a key role in the simplification process.

President Barack Obama wants to make the Free Application for Federal Student Aid, or FAFSA–which, at 153 questions, drives millions of families to give up before they finish it–much more user-friendly as part of a sweeping plan to put higher education within reach of more students.

Education Secretary Arne Duncan, who announced the changes at the White House, said the goal is to boost college enrollment among low- and middle-income students.

"We have to educate our way to a better economy," Duncan said in a statement.

The proposed changes come as demand for aid is rising. Last year, after the recession had begun, the number of applications rose by 12 percent to more than 16 million, according to the Education Department (ED). Detailed estimates are not yet available for last year, but of all full-time college undergraduates in 2007, 58 percent applied for aid, and 47 percent received it.

Still, many who are eligible do not apply. The American Council on Education, in a 2004 report, estimated that 1.5 million students probably would have been awarded Pell Grants had they applied for them. That was up from 850,000 such cases in 2000.

Students and their families must fill out the FAFSA to get any type of federal aid or loan. The form also is used for state and college aid programs.

The administration is taking three steps to simplify the form, which some consider more complicated than a tax return:

• Shortening and streamlining the online application, reducing the number of screens by about two-thirds;

• Creating a web application to use tax data that families already have submitted to the IRS, helping to eliminate confusion in answering questions; and

• Asking Congress to pass legislation that removes more than half of the financial questions on the form.

The proposal drew warm responses from two of the congressional committee chairmen who will help decide its fate, Rep. George Miller, D-Calif., and Sen. Edward Kennedy, D-Mass.

Since May, ED has provided instant estimates of Pell Grant and student loan eligibility, rather than forcing applicants to wait weeks. And beginning this summer, it says, enhanced skip-logic used in the new web-based FAFSA will reduce user navigation for many applicants by more than half.

The new college aid form likely will become part of a larger student aid bill centered on Obama’s plan to end a massive program of government-subsidized college loans in favor of direct lending.

That program provides an estimated $5 billion a year in subsidies to private banks, and Obama needs the money to pay for his massive expansion of federal aid. Obama wants to increase the Pell Grant program for low-income students by 75 percent over the next decade.

Lenders are gearing up for a fight over the administration’s direct-lending plan, however. (See "Duncan: Students, not banks, on ED’s agenda.")


Free Application for Federal Student Aid

American Council on Education

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