The Financial Aid Information Gap
WASHINGTON -- The last two presidential administrations have focused significant attention and energy on trying to simplify the process by which would-be college students apply for and receive federal financial assistance, given the prevailing view that the complexity of the system deters some young people from higher education.
A study to be released during an event on Capitol Hill today shows just how large the information gap is. The report from the College Board's Advocacy and Policy Center, "Cracking the Student Aid Code," finds that many parents have little understanding of how much it costs to attend college and of financial aid options -- and that the knowledge deficit is biggest for those who already have the least access to higher education: students from Latino families and from low-income backgrounds.
The study -- which is based on 10 focus groups; six interviews with representatives of organizations that represent immigrant and non-English-speaking communities; and a survey of 1,000 parents, 250 college students over age 24, and 1,000 younger college students -- highlights the need for better tools to understand the financial aid process. Among survey respondents, over 75 percent of parents and more than 85 percent of college students agreed that student financial aid should be a “top priority for the federal government.” Yet it found nearly half of parents surveyed did not know the cost of attending a public college in their home state, and only 44 percent of Latino parents who responded were aware of the Pell Grant program, the federal government's primary need-based assistance grant for low-income students. Such lack of knowledge about financing a university education creates a “barrier that is difficult to overcome for many students and families,” the study asserts.
One of the report’s subheadings, “The System is Too Complicated,” reveals how differently various groups understand financial aid. In addition to the 44 percent of Latino parents who indicated awareness of Pell Grants, only 62 percent of parents with a high school education or less were aware of Pell Grants, compared to 85 percent of parents with an associate degree. Seventy percent of parents with incomes less than $28,000 were aware of Pell Grants, compared to 84 percent of those with incomes of $48,000 or more.
The study also notes the disadvantages that the financial aid system as it is currently structured creates for non-English-language speakers and “new Americans,” who are defined as "immigrant families, including those for whom English is not their first language."
“Much about the current financial aid application process presumes understanding of and comfort with American culture,” the study says. “Those interviewed expressed the view that sensitivity to the needs of immigrant Americans is missing from the process.” According to the study, some of the crucial areas neglected by the current financial aid system are language barriers, a way of addressing wariness on the part of “new Americans” to provide information to the federal government due to status issues, and education about the difference between how the U.S. government handles private information compared with other countries -- especially those from which immigrants have fled.
The survey also examined respondents' reactions to attempts to ease confusion surrounding financial aid, many of which were put forward by a College Board-convened panel in a 2008 report called Rethinking Student Aid.
An initiative to send families information about financial aid earlier received broad support. The proposal would, from a child’s earliest years, “provide all tax-filing households with information about how much Pell Grant support the children in the family would receive if they were currently enrolled in college ... and [give] information about costs to attend public institutions in their state and about eligibility for other types of financial aid, including loans, state grants and federal tax credits.” According to the survey, 89 percent of parents, 92 percent of college students and 93 percent of nontraditional college students (those 24 years and older) supported this proposal.
A college savings account to encourage planning also received broad approval from respondents. This idea would have the “federal government create and contribute annually to college savings accounts for students from low- and moderate-income backgrounds.” Seventy-seven percent of parents and 75 percent of younger college students were somewhat or very supportive of this proposal. Support was particularly strong among nontraditional students (81 percent), as well as lower-income parents (85 percent), parents who had no education beyond high school (81 percent) and African American parents (89 percent).
The study also looked at novel ways to restructure the financial aid system. It says it found “cautious support for the proposal to eliminate the Free Application for Federal Student Aid and instead use tax information from the Internal Revenue Service to determine how much federal financial aid a student would be eligible to receive.” It also reports that because of increased reluctance by families to take on debt and borrow money for college, “a more generous income-based repayment plan received broad support from survey respondents [to make] student loans a more viable financing option.”
The policy path for success, the report concludes, requires overhauling the financial aid system, which it notes was largely created in the 1960s and '70s. “Policymakers, elected officials and higher education administrators” should strive for a financial aid system that prioritizes “simple, clear communications in the parents’ native language starting when the children are young.”
In addition to its comprehensive proposal -- for a savings account, eliminating the FAFSA, earlier information delivery about financial aid options, and a restructured loan payment system -- one theme, the report repeatedly urges, is evident: “It can no longer be acceptable for prospective students from low- and moderate-income backgrounds and their parents to have such difficulty understanding and navigating the nation’s student aid system.”
In conjunction with the release of the survey today, the College Board Advocacy and Policy Center will join MTV to announce three finalists in its “Get Schooled College Affordability Challenge” -- a contest, with a $10,000 prize, to come up with a way to educate the public about financial aid and college tuition costs. In a prepared statement, Jason Rzepka, MTV’s vice president of public affairs, called for an easier-to-understand financial aid system. “A college degree is increasingly imperative, yet far too many young people are struggling to navigate the financial aid maze,” he said.
The three finalists in the “Get Schooled” challenge were heavy on interactive social media. They included an interactive gaming experience “that helps students navigate the process of securing grants, scholarships and loans"; an online and SMS program designed to organize financial aid and admissions information; and an interactive Facebook application “offering an intuitive, step-by-step guide on how to fill out the FAFSA, as well as apply for grants, scholarships and loans.”