The FAFSA Is Broken. Here’s How We Fix It.
Education after high school has become the dividing line between surviving and thriving in today’s economy.
In the 1970s, only about one quarter of all jobs in the U.S. required a postsecondary credential; by 2025, two thirds of the jobs in our economy will require an education beyond high school.
At current college enrollment and completion rates, the nation will fall short of meeting that demand for skilled workers — by a whopping 11 million. Failing to close that gap will have dire consequences for American economic competitiveness.
Today, more than forty percent of students who enroll in college don’t finish. That number is even higher among low income and first generation students and students of color. Unfortunately, today the odds are against many college students making it all the way to a certificate or degree.
Lack of access to the money to pay for their education — and a clear path to financial aid — is among the biggest challenges.
The Financial Aid Hurdle
The Free Application for Federal Student Aid (FAFSA) drives the process of applying for and receiving grants and loans for college. For anyone who has encountered the FAFSA before, I can imagine it doesn’t bring back great memories.
The FAFSA is a barrier today. Many students likely eligible for aid don’t even apply — roughly two million a year.
It’s overly complex. The FAFSA has more than 100 questions, nearly a third of which are answered by less than one percent of all applicants. It also contains terms such as “unaccompanied minor” and “emancipated minor” that are unfamiliar and confusing to many applicants.
It’s redundant. Students must manually re-enter tax information on the FAFSA that they have already provided to the government through their income tax returns, which is inefficient and increases the chance for mistakes. It also means that aid administrators often must verify this information, consuming time that could be spent helping students.
It’s poorly timed. The current FAFSA requires tax information from the year immediately past (prior year), which is not available until January of the year a student plans to enroll in college. This allows very little time for students to complete the FAFSA and other aid paperwork, review aid packages, and make important decisions about how and where to attend college.
Simply put, today’s FAFSA is a barrier to many students applying for and receiving aid. As a result, many students who are likely eligible for aid don’t even apply — roughly two million a year. And many of these students would likely qualify for the maximum Pell Grant. Getting more of these students into the aid pipeline would go a long way to closing the looming 11 million degree gap.
Three Simple Solutions
At the Gates Foundation we are obsessed with helping all students to succeed. We believe that when and wherever possible, we should be making life easier for students and responding to their needs rather than asking that students conform to rigid bureaucracy and outmoded systems.
This is why we released a paper today outlining a student-centered approach to fixing the FAFSA. Three thoughtful steps will make the aid application process more efficient and transparent, which will increase the number of students applying for and receiving aid:
Simplify. Start by sorting students according to the complexity of their financial situations and eliminate unnecessary application questions. Three quarters of all aid applicants do not have situations that would require them to file tax schedule documents; let’s stop making students jump through unnecessary hoops.
Streamline. Use the tax information students are already providing to the IRS. The technology exists to transfer tax return data directly to the FAFSA. Let’s take the burden off of students and families, while also making things more efficient and freeing up time for financial aid administers to advise students on their options.
Expand. Stretch the application window for students by allowing them to use tax information from one year earlier for their applications. This will allow students to apply for aid months earlier than they can now, giving them needed time to weigh their options and make informed decisions about where to attend college and how to pay for it.
To be clear, simplifying the FAFSA and the application process is a first step. It is just one part of a larger effort to make higher education more personalized, flexible, and affordable to meet the needs of today’s students.
Looking ahead, it will take even more innovation — in Washington, in statehouses, and on campuses — to ensure that even more students make it across the finish line and into one of those 11 million awaiting jobs.
But simplification represents a strong and necessary first step. More students applying for and receiving aid means more students enrolling in and progressing through certificate and degree programs.
Estimates indicate that fixing the FAFSA could boost enrollment by hundreds of thousands of students per year, and research shows that an additional $1,000 in grant aid increases student persistence rates by four percentage points.
The upshot: simplicity in processes and forms genuinely matters. Fixing the FAFSA will make a difference.