FAFSA SIMPLIFICATION Easy As 1, 2, 3

Gloria T. GreenDirector, Financial Aid Services

May 2010

FAFSA SIMPLIFICATIONEasy As 1, 2, 3

Session Overview

HIGHER EDUCATION STUDENT ASSISTANCE AUTHORITY2

Historical BackgroundEasy As

1. Student Perspective 2. Institutional Perspective 3. Aid Administrator’s Perspective

Future of Simplification

Historical Background

HIGHER EDUCATION STUDENT ASSISTANCE AUTHORITY

The “Advisory Committee on Student Financial Assistance” issued a mandated simplification study in January 2005 entitled

“The Student Aid Gauntlet” Includes ten recommendations:

Create a system of early financial aid informationMake federal need analysis transparent, consistent & fairExpand existing simplification to more studentsAllow all students to apply for financial aid earlierMake the FAFSA relevant and understandable

3



“The Student Aid Gauntlet” (cont’d)

Create a simpler paper form for low-income studentsPhase out the full paper form and increase the use of technology Simplify and streamline FAFSA on the WebSimplify the verification processCreate a national partnership to make access simple and certain

4

Historical Background“The entire financial aid system – including federal,

state, institutional, and private programs – is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.”


“A Test of Leadership”Issued by the Commission on the Future of Higher EducationReleased on September 26, 2006



Higher Education Reconciliation Act of 2005 (HERA) Federal means – tested benefit program as an

alternative to a tax returnSupplemental Security Income (SSI)Food stampsFree or reduced price lunch Temporary Assistance for Needy Families (TANF)Special Supplemental Nutrition Program for Women, Infants and

Children (WIC)

6



The College Cost Reduction and Access Act (CCRAA) 2009-2010 Need Analysis excludes the following

sources of untaxed income:Welfare paymentsEarned income creditSpecial fuel tax credit Foreign incomeUntaxed social security benefits



Higher Education Opportunity Act of 2008 (HEOA)Required Government Accountability Office to issue a

report on efforts to simplify the FAFSA“Highlights of a Study Group on Simplifying the Free Application for Federal Student Aid” October 2009 Expert panel participants said:

Using federal income tax data and revising the FAFSA could reduce applicants’ burden

Changes to the design and contents of the form could streamline the application

Reducing the financial information required by the need analysis formula could ease the applicants’ burden, but some aid redistribution is likely

Technology and public outreach are central to implementing changes

8



Health Care and Education Reconciliation Act of 2010 (HCERA)

Provisions of the Student Aid and Fiscal Responsibility Act of 2009 (SAFRA) were included as a rider to HCERADirect LendingIncreases the Pell GrantExpanded income based repaymentLoan forgiveness after 20 yearsCollege Access Challenge Grant Program



Provisions in SAFRA not included in HCERA

Changes to federal need analysis formula eliminating assets

The introduction of asset caps for Pell Grants and subsidized Stafford loans

The elimination of the Perkins Loan ProgramChanges to drug-related offenses and eligibility for

Federal Student Aid

10

Impact of Simplification on Students


New FAFSA Web Form with Enhanced Skip Logic Compared to Current Form

Source: Executive Office of the President. Council of Economic Advisors. “Simplifying Student Aid: The Case for an Easier, Faster, and More Accurate FAFSA.” September 2009

Student Perspective


Enhanced skip logicSelective Service registrationDependency status questions for applicants over 24

years oldHomeless screening questionFirst –time college students will not be presented with

drug conviction questionIRS Data Share

VoluntaryTax filers

Student Perspective


Pell Grant award estimate on Student Aid Report (SAR)

Potential loan eligibility on SARLink to College Navigator

Programs offeredTuition ratesRetention ratesGraduation rates Transfer rates

Graduate Students13

Institutional Perspective


Federal expendituresPell shortfallLimits annual increases

State expendituresSome states impose earlier deadlines, reduce awards,

change eligibility standards Additional state specific questionsStatutory requirements

14

Institutional Perspective


Institutional packaging formulasReevaluate parametersIncreased loan offeringsIncrease in the number of loan programs

Institutional aid Unable to keep pace with demand

EFC changesEndowments affected by economic downturn

15

Aid Administrator’s Perspective


Individual students and familiesAll FAFSA filers benefitted from expanded use of

technology and fewer questionsMore families qualify for auto-zero EFC and SNT

Increased number of eligible applicants and their level of need

Increased the number of verification casesFunds managementEquity

Future Simplification


IRS Data ShareExpected to begin with system start-up in January 2011

Within days of electronic tax filingWithin weeks of paper tax filing

Data retrieval process added to Corrections on the WebTax filing status to be added to data retrieval and transfer process

Spanish version Verification requirements

ISIR flags identify when income data obtained directly from IRS versus self-reported

Verification on Negotiated Rulemaking agenda17

Future Simplification


Potential links from FAFSA On The Web (FOTW) to state and institutional websitesMay permit collection of state/institution specific data

Simple FAFSASavings and investment threshold

Statutory amendments required


Discussion/Questions

Documents

FAFSA SIMPLIFICATION Easy As 1, 2, 3