Obstacles to Student Financial Aid after FAFSA

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For years, the complexity of the student financial aid form known as FAFSA was considered the prime impediment to needy students getting the financial aid their need to pursue a college education.

Now that the form has been simplified, other problem lurking on the other side of FAFSA are coming into the forefront. A new report from the Institute on College Access and Success, After the FAFSA, How red tape can prevent eligible students from receiving financial aid, reveals that nearly one-third of students who are deemed eligible for financial aid never receive it. One main reason is that more than half of those initially deemed eligible were asked to submit additional information for verification and many simply didn’t know how to respond, so they didn’t.

The study, released this week, looked at applicants at 13 California colleges and found that while only 2 percent of the students asked for additional information ultimately were found ineligible for Pell grants, one-third of the group never received the financial aid.  

At the same time, the colleges surveyed spent millions of dollars to obtain additional information from the applicants, including information not sought by the federal government.

Proposed rule changes announced June 16 by the U.S. Education Department would reduce the number of students who are required to provide additional information to verify information on their FAFSA applications.

But the proposed rules do not address all the problems identified in the study.

Applicants who file the FAFSA initially may receive rejection notices if the forms aren’t signed, don’t include Social Security numbers or if the income numbers appear irregular. The report states that many of those receiving such notifications are among those in the lowest income brackets and those least able to navigate various bureaucratic passageways.

At this step, more than 17 percent of applicants never reapply, although applicants who do reapply are overwhelmingly approved for federal aid, the report says.

The second hurdle occurs when Education Department officials seek additional verification of information on the FAFSA – usually from those eligible for Pell grants. According to the report, the department routinely requires verification from 30 percent of all Pell-eligible aid applicants. The proposed rules would lower the number of applicants who must provide verifying information.

The authors say the verification process can be tantamount to a tax audit, with applicants having to supply earnings statements for several years. Nearly 30 percent of students who are probably eligible to receive aid never made it through this process, or never even start it. While some of these applicants no doubt have incorrect information on their FAFSA that would disqualify them, the study states that others simply are frustrated by the bureaucracy.

“Students who are asked to share personal financial data with the colleges may decide that the non-financial costs – including concerns about loss of privacy, legal status or parents’ reluctance to share income information with their children – outweigh the potential benefits, the scope of which may be unknown to students and their families at this point,” the report states.

“Just about every part of the financial aid process is hardest for the students who stand to benefit the most. … The back and forth many of the students go through even after completing the FAFSA could be yet another barrier to the financial aid that could help them complete a degree or certificate,” the report concludes.