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National Association of Student Financial Aid Administrators
State of Student Aid2018
July 24, 2018
at22,000+Financial Assistance
Professionals
3,000Colleges, universities,
and career schools
Who We AreNASFAA member institutions serve 9 out of every 10 undergraduates in the U.S.
Our VisionShaping the future by promoting student
access and success in higher education
Our MissionNASFAA provides professional development and services for financial aid administrators; advocates for public policies that increase student access and success; serves as a forum on student financial aid issues, and is committed to diversity throughout all activities.
About NASFAA
Agenda
• New to the Profile
• Overview of Federal Student Aid Programs
• Need Analysis
• Pell Grant, Campus-Based Aid, Direct Loans
• Legislation, Budget, Appropriations
• Lifecycle of a Student: A Financial Aid Administrator’s Perspective
• Hot Topic in Student Aid: FAFSA Simplification & Verification
• Questions & Discussion
• Repayment, loan status, and delinquency data
• Public Service Loan Forgiveness data
• NPSAS data disaggregated by:• Gender
• Race/ethnicity
• Age
• Income
• Parent education level
• Undergraduate/graduate status
*NEW* to the Profile
Need Analysis
Concepts & Definitions
Cost of Attendance (COA)Estimate of the total annual cost (including direct and indirect expenses) of attending a particular institution.
Free Application for Federal Student Aid (FAFSA)Collects demographic, income, and asset information to determine eligibility for all Title IV programs.
Expected Family Contribution (EFC)Measure of a family’s financial strength calculated based on FAFSA responses; used by schools as one factor to determine federal and institutional aid awards.
See page
24
10
15
20
25
06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16
FAFSA Filings (in millions), 2006-07 to 2015-16
14.0M
21.9M
19.8M
Source: U.S. Department of Education, FAFSA Volume Reports, 2006-2016.
Overview: Federal Student Aid Programs
Federal Pell Grant Program 7.8MTotal Recipients, 2015-16
$26.6BTotal Federal Volume, 2016-17
$6,095Maximum Award, 2018-19
$3,760Average Award, 2015-16
70%Recipients with family incomes <$30,000, 2015-16
Distribution of Pell Grant Recipients by Type of Institution, Award Year 2015-16
Source: U.S. Department of Education, Federal Pell Grant Program End-of-year Report, 2015-2016.See page
4
Provides grants to low-income undergraduates with the greatest demonstrated financial need_________
32%
36%
15%
17%
Public 2-year
Public 4-year
Private nonprofit
Proprietary
Pell Grant Funding
$12,817
$35,677
$26,562
$15,157
$39,381
$26,562
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
Current
Inflation-adjusted
Federal Pell Grant Program Volume in Current and Inflation-Adjusted Dollars (in millions), 2006-07 to 2016-17
Source: The College Board, Trends in Student Aid, 2017.
See page
5
» Includes both discretionary (annual appropriations) and mandatory (set in law) funding
» Functions as an entitlement
» Funding levels subject to fluctuations in the economy and other unpredictable factors
Campus-Based Aid
Federal Supplemental Educational Opportunity Grant (FSEOG)
Federal Work-Study (FWS)
Federal Perkins Loan
FSEOG Program1.5MTotal Recipients, 2015-16
$1BTotal Federal Volume, 2016-17
$100 - $4,000Award Range, 2018-19
$649Average Award, 2015-16
68%Recipients with family incomes <$30,000, 2015-16
25%Minimum Institutional Funding Share
Distribution of FSEOG Recipients by Type of Institution, Award Year 2015-16
Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.
26%
31%
1%
22%
9%
11%
Public 2-year
Public 4-year
Private non profit 2-year
Private non profit 4-year
Proprietary 2-year
Proprietary 4-year
See page
6
Provides grants to undergraduates with the greatest demonstrated financial need (requires institutional match)_________
FWS Program 634,000Total Recipients, 2015-16
$1.1BTotal Federal Volume, 2016-17
$1,726Average Award, 2015-16
42%Recipients with family incomes <$42,000, 2015-16
25%Minimum Non-federal Funding Share *Some exceptions apply
11%
35%51%
1% 2%
Public 2-year
Public 4-year
Private nonprofit 2-year
Private nonprofit 4-year
Proprietary 2-year
Proprietary 4-year
Distribution of FWS Recipients by Type of Institution, Award Year 2015-16
Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.See page
8
Provides part-time jobs to financially needy undergraduate and graduate/professional students (requires non-federal match) _________
Federal Perkins Loan Program422,000Total Recipients, 2015-16
$2,479Average Award, 2015-16
73%of independent recipients withincomes <$20,000, 2015-16
33%Minimum Institutional Funding Share
Sept. 2017Statutory authority to make Perkins Loans expired
Distribution of Perkins Loan Recipients by Type of Institution, Award Year 2015-16
Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.
51%47%
2%
Public 2-year
Public 4-year
Private non profit 2-year
Private non profit 4-year
Proprietary 2-year
Proprietary 4-year
See page
13
Provided low-interest loans to financially needy undergraduate and graduate/professional students (required institutional match) _________
Campus-Based Aid | UndergraduatePercentage Distribution of Undergraduate Federal Campus-Based Aid Recipients by Race/Ethnicity, Gender, and Aid Type, 2015-16
Source: U.S. Department of Education, National Center for Education Statistics, 2015-2016 National Postsecondary Student Aid Study (NPSAS:16).
*New NPSAS Data*
See page
32
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Federal campus-based aid FSEOG Federal work-study Perkins loan
Asian female
Asian male
Black or African American female
Black or African American male
Hispanic or Latino female
Hispanic or Latino male
White female
White male
Other/More than one female
Other/More than one male
Campus-Based Aid | UndergraduatePercentage Distribution of Undergraduate Federal Campus-Based Aid Recipients by Attendance Intensity and Aid Type, 2015-16
Source: U.S. Department of Education, NPSAS:16
*New NPSAS Data*
See page
30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Federal campus-based aid FSEOG Federal work-study Perkins loan
Mixed full-time and part-time
Exclusively part-time
Exclusively full-time
Campus-Based Aid | GraduatePercentage Distribution of Total Graduate Federal Campus-Based Aid Recipients by Student Characteristics, 2015-16
Source: U.S. Department of Education, NPSAS:16
*New NPSAS Data*
See page
39
0% 10% 20% 30% 40% 50% 60% 70% 80%
Male
Female
Other/more than one
White
Hispanic or Latino
Black or African American
Asian
30 or above
24-29
15-23
$100,000 or more
$80,000-99,999
$60,000-79,000
$40,000-59,999
$20,000-39,999
Less than $20,000
Gen
der
Rac
e/et
hn
icit
yA
ge g
rou
ps
Ad
just
ed G
ross
Inco
me
(AG
I)Adjusted Gross
Income
Age
Race/Ethnicity
Gender
Federal Loan Programs
Federal Family Education Loan Program (FFELP): Utilized private and nonprofit funding alongside federal guarantees and support – ceased operations in 2010
William D. Ford Direct Student Loan Program:» Direct Subsidized Loans
• Undergraduate students only
• Must demonstrate financial need
• Gov. pays interest while student is in school, 6-month grace period, and deferment
» Direct Unsubsidized Loans • Undergraduate and graduate/professional students
• No income/need requirement
• Recipients charged interest at all times
» PLUS Loans• Parents of dependent undergraduates
• Graduate/professional students
• No income/need requirement (must pass credit-check)
See page
15
Federal Direct Loan Programs
Subsidized Loans Unsubsidized Loans PLUS Loans
Total Borrowers2016-17
5.8M 7.1M855,000 parent
403,341 graduate
Total Loan Volume2016-17
$22B $49B $22B
Average Loan2016-17
$3,743 undergrad$4,023 undergrad
$18,132 graduate
$14,665 parent
$23,228 graduate
See page
3
Origination Fees
» Direct Loan borrowers must pay an origination fee on every new loan disbursed:
• 1 percent (+ annual increase) for subsidized and unsubsidized loans
• 4 percent (+ annual increase) for PLUS loans
Origination fees on loans first disbursed on or after
Oct. 1, 2017, to Sept. 30, 2018 Oct. 1, 2018, to Sept. 30, 2019
Subsidized and Unsubsidized Direct Loans 1.066% 1.062%
PLUS Loans 4.264% 4.248%
See page
15
Interest Rates
See page
16
Subsidized/Unsubsidized
Undergraduate
Unsubsidized
Graduate
PLUS Loans
Parent/Graduate
2016-2017 3.76% 5.31% 6.31%
2017-2018 4.45% 6.00% 7.00%
2018-2019 5.05% 6.60% 7.60%
Loan Limits» Annual loan limits vary by dependency status and academic grade level
» Aggregate loan limits:
Dependent Students Independent Students(and students whose parents cannot obtain a PLUS loan)
Undergraduate Students $31,000No more than $23,000 can be subsidized.
$57,500No more than $23,000 can be subsidized.
Graduate Students N/A$138,500
No more than $65,500 can be subsidized. Undergraduate
borrowing counts toward graduate aggregate limit.
See page
17
Federal Student Loan Volume (Inflation-Adjusted Dollars, in millions), 2006-07 to 2016-17
$29,580 $29,201
$21,715
$28,793
$59,341
$49,852
$12,087
$18,303$22,240
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Stafford Subsidized
Stafford Unsubsidized
PLUS
Source: The College Board, Trends in Student Aid, 2017.
See page
19
Federal Student Loans| Undergraduate
47%
8%
13%
8%
6%
8%
4%2% 2%
None
$1-4,999
$5,000-9,999
$10,000-14,999
$15,000-19,999
$20,000-29,999
$30,000-39,999
$40,000-49,999
$50,000 or more
Cumulative Federal Loan Amounts for Undergraduates, 2015-16
Source: U.S. Department of Education, NPSAS:16
*New NPSAS Data*
See page
44
Federal Student Loans| UndergraduatePercentage Distribution of Undergraduate Federal Loan Recipients by Race/Ethnicity, Gender, and Loan Type, 2015-16
Source: U.S. Department of Education, NPSAS:16
*New NPSAS Data*
See page
37
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Subsidized Unsubsidized Subsidized andUnsubsidized
Parent PLUS Total federal loans(incl Parent PLUS)
Total federal loans(excl Parent PLUS)
Asian female
Asian male
Black or African American female
Black or African American male
Hispanic or Latino female
Hispanic or Latino male
White female
White male
Other/More than one female
Other/More than one male
Federal Student Loans| GraduateCumulative Federal Loan Amounts for Graduate Students’ Undergraduate and Graduate Education, 2015-16
Source: U.S. Department of Education, NPSAS:16
34%
6%
8%15%
12%
9%
5%
11%
None
$1-9,999
$10,000-19,999
$20,000-39,999
$40,000-59,999
$60,000-79,999
$80,000-99,999
$100,000 or more
*New NPSAS Data*
See page
45
Federal Student Loans| GraduatePercentage Distribution of Total Graduate Federal Loan Recipients, by Student Characteristics, 2015-16
Source: U.S. Department of Education, NPSAS:16
0% 10% 20% 30% 40% 50% 60% 70% 80%
Male
Female
Other/more than one
White
Hispanic or Latino
Black or African American
Asian
30 or above
24-29
15-23
$100,000 or more
$80,000-99,999
$60,000-79,000
$40,000-59,999
$20,000-39,999
Less than $20,000
Gen
der
Rac
e/et
hn
icit
yA
ge g
rou
ps
Ad
just
ed G
ross
Inco
me
(AG
I)Adjusted Gross Income
Age
Race/Ethnicity
Gender
*New NPSAS Data*
See page
41
Loan Repayment
$0 $50 $100 $150 $200 $250
Fixed Payments: 10 Yrs or Less
Fixed payments: More Than 10 Yrs
Graduated Payments: 10 Yrs or Less
Graduated Payments: More Than 10 Yrs
Income-Sensitive
Income-Contingent
Income-Based
Pay As You Earn
REPAYE
Alternative
Other
Direct Loan Portfolio ED-Held FFEL Portfolio
Dollars Outstanding (in billions) by Repayment Plan, as of September 30, 2017
Source: National Student Loan Data System (NSLDS), available from FSA Data Center
See page
20
Loan Status
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Direct Loan Portfolio ED-Held FFEL Portfolio
Repayment - Current
In-School
Deferment
Forbearance
Cumulative in Default
Repayment - Delinquent
Grace
Other
Dollars Outstanding (in billions), by Loan Status, as of September 30, 2017
Source: National Student Loan Data System (NSLDS), available from FSA Data Center
See page
21
Delinquency
Distribution of Direct Loan Dollars Outstanding (in billions) for Borrowers in Repayment Status, by Delinquency Status, as of September 30, 2017
Source: National Student Loan Data System (NSLDS), available from FSA Data Center
85%
13%
2%
Current Repayment
31-270 Days Delinquent
In default
• A loan becomes delinquent the first day after a borrower misses a payment
• At 90 days delinquent, loan servicers report borrowers to national credit bureaus
See page
22
Public Service Loan Forgiveness (PSLF)
• Established under the College Cost Reduction and Access Act of 2007
• After making 120 qualifying loan payments, eligible borrowers’ remaining balances are forgiven
• Must submit an “Employment Certification Form” (ECF) confirming public service requirement to receive forgiveness
• Fewer than 1,000 borrowers are expected to receive loan forgiveness in 2018
25,683
222,387
378,839
611,598
802,040
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2012 2013 2014 2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
Cumulative Borrowers with One or More Approved ECFs, 2012-17
Source: FedLoan Servicing, available from FSA Data CenterSee page
23
Legislation, Budget & Appropriations
Student Aid Legislation Introduced by Topic, 2017
30%
15%
14%
11%
8%
6%
5%
5%
5%2%
Loans & Repayment
Quality & Accountability
Consumer Information & Transparency
Pell Grants
Tax Issues
Military & Veterans Aid
Student Aid Funding
FAFSA Simplification
Immigration
Campus-Based Programs
Source: NASFAA Legislative TrackerSee page
25
FY 2018 Budget & Appropriations
• Increases:
• Pell Grant
• FSEOG
• FWS
• Children of Fallen Heroes Scholarship
• Public Service Loan Forgiveness funds
Program Change FY17 - FY18
Pell Grant (discretionary) $0
Pell Grant
maximum award+$175
FSEOG +$107 million
FWS +$140 million
See page
26
FAFSA Simplification & Verification
The Challenge of Verification
• The Department of Education (ED) requires schools to verify information submitted on the FAFSA.
• The concept of verification is important.
• Selection for verification is based on internal ED calculations, though Pell Grant recipients are most likely to be selected.
• Verification is inherently confusing, and for those students selected, the process may result in postponing college-going temporarily or permanently.
Source: “On the Sidelines of Simplification” – TICAS – 2016
Source: “On the Sidelines of Simplification” – TICAS – 2016
JUST ONE IN TEN FINANCIAL AID
ADMINISTRATORS SURVEYED SAID THAT
VERIFICATION OFTEN RESULTS IN A
SIGNIFICANT CHANGE TO A STUDENT’S AID
PACKAGE
Source: “On the Sidelines of Simplification” – TICAS – 2016
FAFSA Simplification
As Congress and the higher education community work toward the reauthorization of the Higher Education Act (HEA), broad themes have emerged, including the concept of simplification, with a particular focus on the federal student aid application process. The National Association of Student Financial Aid Administrators (NASFAA) has long been interested in ways to make the Free Application for Federal Student Aid (FAFSA) and the overall application process more efficient and streamlined for students and families.
Early FAFSA and Prior-Prior Year (PPY)In September 2015, President Obama and then-Secretary of Education Duncan announced their intention to use their existing authority in HEA [Sec. 473(a)(1)(C)] to adjust the year of income tax data used to determine federal aid eligibility, a move supported by NASFAA and other higher education advocates. Before, the Federal Methodology (FM) calculated a student’s financial need using prior year income data. Beginning on October 1, 2016, FM will use income data from the prior-prior year (“PPY”) and the FAFSA release date will move up from January 1 to October 1 (“Early FAFSA”).
With Early FAFSA and a switch to PPY, students and families can:
• File the FAFSA earlier than they do now. Historically, the FAFSA has been made available January 1 of each year, yet it is uncommon for a family or individual to be prepared to file an income tax return in January. Because the FAFSA will now be made available on October 1 using income data from two years prior, students can use already-completed income tax returns.
• More easily submit a FAFSA. The IRS Data Retrieval Tool (DRT), which allows automatic population of a student’s FAFSA with tax return data and decreases the need for additional documentation, can now be used by millions more students and families under PPY.
• Receive notification of financial aid packages earlier. If students apply for aid earlier, colleges can provide aid notifications to students earlier, ensuring that students and families have more time to prepare for college costs. Early notification also means more time for financial aid offices to counsel students and families.
NASFAA Work on FAFSA SimplificationNASFAA has been pleased with FAFSA improvements over the past few years, including “smarter” skip-logic and the implementation of the IRS Data Retrieval Tool (DRT). In July 2013, NASFAA released initial recommendations for HEA reauthorization with several recommendations focusing on simplifying the FAFSA. Recent proposals within the context of reauthorization led NASFAA to revisit simplification with an eye toward making the application process more targeted and efficient through the expansion of existing technology.
In July 2015, NASFAA released a FAFSA Simplification report, a result of NASFAA’s FAFSA Working Group, which was composed of practicing aid administrators. The working group developed a model—predicated on enacting PPY—that would simplify the aid application process while still ensuring program integrity and accurate targeting of federal funds. With PPY now in place, NASFAA’s FAFSA simplification proposal represents a logical next step.
NASFAA Proposal: A Three-Level Application ProcessNASFAA recommends instituting a three-level application process where, after answering demographic and dependency status questions, applicants would be steered down one of three paths based on their responses to screening questions.
PATH 1After answering the initial questions on identifiers, demographics, and dependency status, all applicants would be asked if a parent (for dependent students) or anyone in their household (for independent students) was a recipient of Supplemental Nutrition Assistance Program (SNAP) and/or Supplemental Security Income (SSI) benefits. If the answer is “yes,” the applicant would list the chosen school codes, sign and date the FAFSA, and the FAFSA would be complete. No further financial information would be gathered and the applicant would automatically be eligible for the maximum Pell Grant.
If the answer is “no,” then the FAFSA asks if the applicant filed a tax return or was required to file. For non-filers, the FAFSA would ask about income earned from work and child support received only. All asset questions would be eliminated. Tax filers would proceed further to path #2.
PATH 2Applicants who do not meet the conditions for path #1 would be directed to the IRS DRT. If the tax return is a 1040A, 1040EZ, or a 1040 without any line items that resulted from the completion of a form or schedule, then Path #2 applies.
Information retrieved via the DRT would include:
• Tax filing status
• Untaxed portions of IRA distributions
• Adjusted Gross Income
• Untaxed portions of pensions
• Taxes paid
• Education tax credits
• Income earned from work
• Payments to tax-deferred pension and retirement savings plans
• Tax exempt interest income
• IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans
The question on child support received would be retained.
Related to assets, the FAFSA would ask only about cash, savings, and checking. This question would apply only to dependent students (not parents of dependent students), and independent students without dependents.
PATH 3Having not qualified for paths #1 nor #2, applicants who filed a 1040 with forms and/or schedules will be steered toward Path #3. All of the taxable and untaxed income questions are the same for Path #3 as for Path #2, along with the same expanded use of the DRT.
However, under Path #3, the following adjustments to income would be made:
• Negative numbers carried over from a schedule to the front of the 1040 will not be allowed. The AGI reported through the DRT will be adjusted to account for any negative income and that adjusted AGI will be used in need analysis.
• Any dollar amount listed in line 21 of the 1040 with “Form 2555,” for
foreign income not subject to taxation, would be counted as untaxed income.
For assets, the cash, savings, and checking question would be asked of all applicants. The other existing asset questions on investments and business/farms would be presented if a specific line item on the 1040 is populated, which indicates the potential for assets. For example, if line 12 on the 1040 is populated, that may indicate a business that should be reported on the FAFSA, and the appropriate FAFSA question would then be presented to that applicant.
YES
Did any of the following individuals receive SNAP and/or SSI benefits?
• You (the student) and/or spouse
• Your parent (dependent students only)
• Any other member of your household
Did the following tax filer complete a 1040A, 1040 EZ or 1040 without forms or schedules?
• You/spouse (independent students only)
• Your parent (dependent students only)
Did the following individuals file a tax return?
• You/spouse (independent students only)
• Your parent (dependent students only)
Applicant eligible for maximum Pell Grant. No additional financial information requested
Applicant must provide limited financial information
Applicant must provide limited income and asset information
Applicant must provide complete income and asset information
YES
NO
YES
NO
PATH 1 PATH 2 PATH 3
NO
As Congress and the higher education community work toward the reauthorization of the Higher Education Act (HEA), broad themes have emerged, including the concept of simplification, with a particular focus on the federal student aid application process. The National Association of Student Financial Aid Administrators (NASFAA) has long been interested in ways to make the Free Application for Federal Student Aid (FAFSA) and the overall application process more efficient and streamlined for students and families.
Early FAFSA and Prior-Prior Year (PPY)In September 2015, President Obama and then-Secretary of Education Duncan announced their intention to use their existing authority in HEA [Sec. 473(a)(1)(C)] to adjust the year of income tax data used to determine federal aid eligibility, a move supported by NASFAA and other higher education advocates. Before, the Federal Methodology (FM) calculated a student’s financial need using prior year income data. Beginning on October 1, 2016, FM will use income data from the prior-prior year (“PPY”) and the FAFSA release date will move up from January 1 to October 1 (“Early FAFSA”).
With Early FAFSA and a switch to PPY, students and families can:
• File the FAFSA earlier than they do now. Historically, the FAFSA has been made available January 1 of each year, yet it is uncommon for a family or individual to be prepared to file an income tax return in January. Because the FAFSA will now be made available on October 1 using income data from two years prior, students can use already-completed income tax returns.
• More easily submit a FAFSA. The IRS Data Retrieval Tool (DRT), which allows automatic population of a student’s FAFSA with tax return data and decreases the need for additional documentation, can now be used by millions more students and families under PPY.
• Receive notification of financial aid packages earlier. If students apply for aid earlier, colleges can provide aid notifications to students earlier, ensuring that students and families have more time to prepare for college costs. Early notification also means more time for financial aid offices to counsel students and families.
NASFAA Work on FAFSA SimplificationNASFAA has been pleased with FAFSA improvements over the past few years, including “smarter” skip-logic and the implementation of the IRS Data Retrieval Tool (DRT). In July 2013, NASFAA released initial recommendations for HEA reauthorization with several recommendations focusing on simplifying the FAFSA. Recent proposals within the context of reauthorization led NASFAA to revisit simplification with an eye toward making the application process more targeted and efficient through the expansion of existing technology.
In July 2015, NASFAA released a FAFSA Simplification report, a result of NASFAA’s FAFSA Working Group, which was composed of practicing aid administrators. The working group developed a model—predicated on enacting PPY—that would simplify the aid application process while still ensuring program integrity and accurate targeting of federal funds. With PPY now in place, NASFAA’s FAFSA simplification proposal represents a logical next step.
NASFAA Proposal: A Three-Level Application ProcessNASFAA recommends instituting a three-level application process where, after answering demographic and dependency status questions, applicants would be steered down one of three paths based on their responses to screening questions.
PATH 1After answering the initial questions on identifiers, demographics, and dependency status, all applicants would be asked if a parent (for dependent students) or anyone in their household (for independent students) was a recipient of Supplemental Nutrition Assistance Program (SNAP) and/or Supplemental Security Income (SSI) benefits. If the answer is “yes,” the applicant would list the chosen school codes, sign and date the FAFSA, and the FAFSA would be complete. No further financial information would be gathered and the applicant would automatically be eligible for the maximum Pell Grant.
If the answer is “no,” then the FAFSA asks if the applicant filed a tax return or was required to file. For non-filers, the FAFSA would ask about income earned from work and child support received only. All asset questions would be eliminated. Tax filers would proceed further to path #2.
PATH 2Applicants who do not meet the conditions for path #1 would be directed to the IRS DRT. If the tax return is a 1040A, 1040EZ, or a 1040 without any line items that resulted from the completion of a form or schedule, then Path #2 applies.
Information retrieved via the DRT would include:
• Tax filing status
• Untaxed portions of IRA distributions
• Adjusted Gross Income
• Untaxed portions of pensions
• Taxes paid
• Education tax credits
• Income earned from work
• Payments to tax-deferred pension and retirement savings plans
• Tax exempt interest income
• IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans
The question on child support received would be retained.
Related to assets, the FAFSA would ask only about cash, savings, and checking. This question would apply only to dependent students (not parents of dependent students), and independent students without dependents.
PATH 3Having not qualified for paths #1 nor #2, applicants who filed a 1040 with forms and/or schedules will be steered toward Path #3. All of the taxable and untaxed income questions are the same for Path #3 as for Path #2, along with the same expanded use of the DRT.
However, under Path #3, the following adjustments to income would be made:
• Negative numbers carried over from a schedule to the front of the 1040 will not be allowed. The AGI reported through the DRT will be adjusted to account for any negative income and that adjusted AGI will be used in need analysis.
• Any dollar amount listed in line 21 of the 1040 with “Form 2555,” for
foreign income not subject to taxation, would be counted as untaxed income.
For assets, the cash, savings, and checking question would be asked of all applicants. The other existing asset questions on investments and business/farms would be presented if a specific line item on the 1040 is populated, which indicates the potential for assets. For example, if line 12 on the 1040 is populated, that may indicate a business that should be reported on the FAFSA, and the appropriate FAFSA question would then be presented to that applicant.
YES
Did any of the following individuals receive SNAP and/or SSI benefits?
• You (the student) and/or spouse
• Your parent (dependent students only)
• Any other member of your household
Did the following tax filer complete a 1040A, 1040 EZ or 1040 without forms or schedules?
• You/spouse (independent students only)
• Your parent (dependent students only)
Did the following individuals file a tax return?
• You/spouse (independent students only)
• Your parent (dependent students only)
Applicant eligible for maximum Pell Grant. No additional financial information requested
Applicant must provide limited financial information
Applicant must provide limited income and asset information
Applicant must provide complete income and asset information
YES
NO
YES
NO
PATH 1 PATH 2 PATH 3
NO
NASFAA’s FAFSA Simplification Proposal
Following demographic/dependency questions, filers directed to:
NASFAA’s FAFSA Simplification Proposal
Number of Questions by Pathway (minus demographics):
» Path 1: 6-30 questions
» Path 2: 24-35 questions
» Path 3: 26-37 questions
Current maximum number of questions for a dependent student is 136
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