Washington, D.C. – Simplifying the Free Application for Federal Student Aid (FAFSA) would lead to small changes in the distribution of federal and state grant awards and the general integrity of the aid programs would be retained, suggests a new study, Simplifying Student Aid: What it Would Mean for States, released today by the College Board Advocacy & Policy Center.
The College Board, with support from Lumina Foundation for Education and assistance from researchers at the University of Michigan, undertook the study to examine the implications of further simplification of the FAFSA for state grant programs. The goal of the study was to estimate the impact of removing FAFSA data elements, including all assets and financial information not included on federal income tax forms. The study also explored ways to mitigate the effects of these changes to achieve eligibility results that would be essentially neutral from a financial and distributional perspective.
“The results of the study are encouraging and should allay concerns about FAFSA simplification at the state level and increase support for moving toward a simpler federal financial aid system that is more effective in providing educational opportunities to students with limited financial resources,” said Sandy Baum, Independent Policy Analyst for the College Board.
The College Board requested data and advice from five representative states: Kentucky, Minnesota, Ohio, Texas and Vermont. Simulations were used to estimate the impact of data and formula changes on expected family contributions (EFCs) and eligibility for Pell and state grants. The analysis examined both shifts in overall eligibility for Pell and state grants among FAFSA filers and the magnitude of changes in the grant amounts for which recipients would be eligible.
“Simplifying the student aid process is an essential part of making college affordable and accessible for all students,” said Christen Pollock, Vice President, College Board Advocacy & Policy Center. “The Advocacy & Policy Center is committed to providing the most up-to-date research as well as practical solutions for rethinking our financial aid system.”
This study investigated the potential effects on federal and state grant aid of simplifying the FAFSA, with emphasis on two approaches: (1) eliminating all assets in the calculation of EFCs, and (2) limiting the calculation of EFCs to a small number of data elements available from federal income tax returns.
The findings suggest that if assets were eliminated:
- Expected contributions for most dependent students would decline, with the largest decreases occurring among those from higher-income backgrounds. These students are generally not eligible for federal or state need-based grants.
- The impact of removing assets on dependent students’ eligibility for Pell and state grants would be relatively small (the share of FAFSA filers in each state eligible for a Pell Grant would increase by between 1 and 3 percentage points and the proportion eligible for state grant programs would increase by roughly 1 to 2 percentage points).
- Changes in independent students’ contributions would be modest if assets were eliminated, and changes in their Pell and state grant eligibility would also be minimal.
If only a small number of IRS data elements were utilized:
- The impact of relying only on AGI, federal taxes paid and number of exemptions from the IRS would be similar to the impact of just removing assets for dependent FAFSA filers. Large decreases in expected contributions would occur only at relatively high-income levels.
- Using only IRS data would lead to small changes in the proportion of independent students eligible for a state grant in the five states studied.
The College Board Advocacy & Policy Center was established to help transform education in America. Guided by the College Board’s principles of excellence and equity in education, the Center works to ensure that students from all backgrounds have the opportunity to succeed in college and beyond. Critical connections between policy, research and real-world practice are made to develop innovative solutions to the most pressing challenges in education today. Drawing from the experience of the College Board’s active membership consisting of education professionals from more than 6,000 institutions, priorities include: College Preparation & Access, College Affordability & Financial Aid, and College Admission & Completion.