Columnist Dick Mendel
Even in the midst of the great recession, tuition at public four-year universities rose 6.5 percent nationwide this year, continuing an alarming trend that has seen tuition and fees more than double in the past decade, even beyond inflation. Costs at private universities and two-year colleges have grown almost as fast.
Yet rising tuition isn’t the only high hurdle to higher education for low-income students. Just as daunting is the federal government’s byzantine financial aid application process.
An important new study from the National Bureau of Economic Research provides the strongest evidence yet that the financial aid process is a major impediment to college for millions of low- and moderate-income students. Released in September, the study also shows that providing help and simplifying the application process can significantly boost enrollment.
“Making college aid applications almost effortless to complete had an extremely powerful impact on the number of low-income students who made it to college,” says Philip Oreopoulos of the University of Toronto, who co-authored the study with fellow economists Eric Bettinger of Stanford University and Bridget Terry Long of Harvard University.
To qualify for federal Pell Grants (worth up to $5,350 in 2009) or subsidized Stafford loans – and also for many state-based college aid programs – every student must submit the Free Application for Federal Student Aid (FAFSA).
The FAFSA form comprises six pages and 153 questions – more detail than anything required by the Internal Revenue Service. In addition to questions about taxable wages and income of both students and their parents, FAFSA requires information about child support, welfare and disability income; tax-exempt interest; housing and food allowances (for clergy and military); and veterans’ benefits. FAFSA also requires applicants to sum up the balances of their checking, savings, and investment accounts, plus any equity they have in a business or any real estate other than the family home.
The average time to complete the FAFSA, according to the study: 13 hours.
When prospective students stagger across the finish line of this form-filling marathon, they are told … well, nothing. Only weeks later will the federal government mail a letter informing applicants of their “expected family contribution” to college expenses, and months may pass before they learn the value of grants and loans they’ll receive.
The American Council on Education has estimated that 1.5 million low-income enrolled college students are eligible for federal Pell Grants each year but don’t apply. Federal education data show that more than 30 percent of full-time community college students with family incomes under $50,000 do not submit FAFSA applications – and therefore don’t get federal aid.
Even more worrisome is the untold number of would-be students who don’t attend college because they’re scared off by the complexity of the FAFSA and never apply for available financial aid. A recent study in Chicago found that one-third of high school seniors who had been accepted to a four-year college didn’t submit their FAFSAs before the end of the school year. Students submitting the FAFSA were far more likely (84 percent vs. 55 percent) to attend a four-year college in the fall.
The new study by Oreopoulos, Bettinger and Long finds that helping would-be students complete financial aid applications alongside their own or their parents’ tax returns substantially increases the number who submit the FAFSA – and also the number who actually attend college and receive financial aid. The study provides a glimmer of hope – and the beginning of a roadmap – for policymakers, youth organizations and others seeking to boost college affordability and attendance in these cash-strapped times.
The study focused on 156 H&R Block tax-preparation offices in Ohio and North Carolina and examined 17,000 low- and moderate-income tax clients with at least one family member between 17 and 30 years old who lacked a bachelor’s degree. (For more details, see “Project Offers Help for Getting Aid” at http://www.youthtoday.org.)
The researchers randomly assigned study participants to three groups. A treatment group of taxpayers received hands-on help from their tax advisers in completing and submitting the FAFSA application, plus information about the value of available aid they would likely receive. An information-only group got estimates about how much aid they would likely be eligible for, but no help with the FAFSA. A control group received no additional assistance from H&R Block.
The study found no meaningful outcome differences between the information-only and control groups. But study participants offered hands-on help completing and filing the FAFSA proved far more likely to submit applications, and also to attend college, than either of the other groups.
Among families with a child still in high school, those offered FAFSA assistance were 40 percent more likely to submit financial aid applications, and these youth were 29 percent more likely to enroll in college and one-third more likely to receive Pell Grants than youth in the control group.
For young adults with an interest in college but no prior college experience, the FAFSA assistance also increased financial aid applications, college attendance and receipt of Pell grants. In fact, FAFSA applications increased nearly threefold among this population. Young adults with prior college experience proved no more likely to attend college if they were offered assistance with the FAFSA, but they, too, were more likely to apply for and receive financial aid.
Those receiving FAFSA assistance were also much more likely to file their FAFSA applications early in the year – allowing students to maximize state and institution financial aid awards. (The federal FAFSA deadline is June 30, but many states and colleges have earlier deadlines, and most dispense available aid on a first-come, first-served basis.) All results were strongest among the least affluent would-be students.
By importing data directly from participants’ just-completed income tax forms, the H&R Block staff members were able to complete the FAFSA applications in just eight additional minutes.
“So in less than 10 minutes we were able to address a major educational problem and had a substantial impact on aid applications and college enrollment,” said Long, the study co-author.
More simplification needed
On the policy level, the study provides a shot in the arm for the growing number of advocates – backed by the Obama administration – who are seeking to simplify the FAFSA or automate it entirely by using data that taxpayers already provide to the IRS each year.
In February, President Barack Obama identified boosting college graduation rates as one of three core goals of his presidency (along with reforming health care and acting on climate change). Since then, his administration has taken small steps to simplify the online FAFSA application, and it has asked Congress to approve deeper changes in the FAFSA aid formula. Beginning in January, the administration will test a pilot system allowing FAFSA applicants to retrieve income information from their tax returns online.
These efforts “are headed in the right direction,” says financial aid expert Mark Kantrowitz, creator of the respected website FinAid, but “much more simplification is necessary in order to have a meaningful impact on application rates by low- and moderate-income students.”
Susan Dynarski and Judith Scott-Clayton of the University of Michigan and Harvard University respectively, have proposed a radical simplification of the FAFSA that would allow students or parents to apply for financial aid just by checking a box on their income tax forms. Like many similar proposals, their plan would discard the vast majority of questions now on the FAFSA, including those about family assets and income earned by students still dependent on their parents. Dynarski and Scott-Clayton say that these changes would have little impact on the aid available to most students: Pell Grant amounts would change by less than $100 for 77 percent of applicants, and only 12 percent would see changes of $500 or more.
Options for youth organizations
Whatever the ultimate results of the policy debate over FAFSA in Washington, youth organizations can do plenty right away to help participating youth navigate the financial aid process.
An obvious step, in the handful of metropolitan areas where H&R Block offers free FAFSA assistance to its tax clients – Atlanta northern Georgia; New York; Charlotte, N.C.: Missoula, Mont.; Baltimore; Jacksonville, Fla.; and McAllen and Harlingen, Texas – is to make youth and their parents aware of the company’s FAFSA services. But keep in mind that while the FAFSA assistance is free, H&R Block’s tax preparation fees average $187 per customer.
Another option is to contact a local volunteer tax preparation project to see if its volunteers might provide assistance with the FAFSA. Volunteer income tax assistance projects operate in about 600 communities nationwide, providing free tax preparation for 1.3 million low- and moderate-income taxpayers this year.
The Center for Economic Progress, which provides free tax preparation throughout Illinois and coordinates a national coalition of similar projects, began offering FAFSA assistance in the Chicago area this year for tax clients and for would-be students recruited to financial aid workshops. The effort served about 800 participants, and it will expand to seven other cities during the 2010 tax season.
Local youth programs can also connect with the YMCA’s College Goal Sunday project, which offered free FAFSA assistance to 25,600 aspiring students in about 700 sites nationwide in 2009.
At the very least, youth-serving organizations should provide young people with information about the FAFSA process and help filling out and filing financial aid applications.
“Any effort to simplify the process will be positive,” says Bettinger, a co-author of the H&R Block study. “All it can do is help students and their families.”