For students who do not have college savvy parents, paying for college seems an impossible and unattainable task. Misinformation abounds in every community where college is not the norm. Even the relatively affluent and diverse folks in a middle class suburban community near where I live in Maryland today think that every college costs $40,000 a year and that there are no other options.

For students who do not have college savvy parents, paying for college seems an impossible and unattainable task. Misinformation abounds in every community where college is not the norm. Even the relatively affluent and diverse folks in a middle class suburban community near where I live in Maryland today think that every college costs $40,000 a year and that there are no other options.

What this misinformation tells us is that we need to break out of the box we have been in since the system for determining a family's need for financial aid was designed -- first by the College Scholarship Service in 1954, to serve an elite group of schools, and later by the Higher Education Act. This system required long application forms filled with many confusing and arcane questions. Financial aid programs  are not reaching enough poor or first generation college students and their families.

Of course, more money would help. Money always helps. But could the process of applying be part of the problem? Here is an idea that would improve students' and parents' awareness of the financial aid options, simplify the application and awards process, and ease delivery of funds -- without a large federal cost.

Each year the Social Security Administration sends every American worker a statement of his or her previous year's earnings, gleaned from data filed with the IRS. This document also lays out what the individual can expect to receive in Social Security benefits when he or she retires. This is a government form, filled with basic, verifiable, and free information, but it also tells a story. Some people read it and say, "Wait, I can't live on that benefit alone. I need to sock money away on my own." Others are assured that they will someday be able to cease working. But as citizens we are armed with information that we can choose to act on, by saving, working harder or longer, or deciding that we're in good shape.

Telling a Story

Why not clone this type of statement, and use it to tell families another type of story -- a story about how much financial aid a family member could receive if he or she went to college now or 10 years in the future? We could use the federal income tax system to generate these reports for those who file tax returns.  Each year, families would be asked on the 1040, 1040A or 1040 EZ form if they would like a College Benefit Statement (CBS). That data would be transmitted to the Department of Education, which would, on the basis of the income tax information alone, generate a CBS with Pell Grant, student loan and state aid possibilities.

It could illustrate, for example, various scenarios of how much aid a student in that family could receive at schools costing $3,000, $15,000 and $25,000. That way, a family could learn when the children are young that they will not qualify for need-based dollars, or more importantly, that they will qualify for all they need to attend.  And that is information that they can then act on -- using it to plan a savings strategy, or simply to motivate them and help them realize that college is possible. 

A similar process could work for families with no taxable income but who are recipients of untaxed federal or state benefits, such as SSI or TANF. The agency that they work with would submit their names and data to request a similar College Benefit Statement.

The application becomes easy. When a family member decides to attend college, they could fill in the schools they plan to attend on the back of the statement, and send it to a central processor, which would then send the verified eligibility information to the   schools, eliminating the application completely.

I can already hear some of my colleagues reacting with shock to my idea, and listing all of the subtle factors that go into today's calculations of aid eligibility. But my heresy in suggesting we toss out those complexities is based on a simple reality: The system we use today is not only complicated, but flawed. The formulas are based largely on  income, not true wealth. Families' most significant assets -- homes and retirement accounts -- aren't generally counted. And the complex application is a barrier to college attendance.

Congress could design a formula that uses actual income, and maybe some data reported on the tax return as a proxy for wealth, to determine a family's need and establish an index for grant and loan eligibility, without increasing the government cost of student aid.

The present system is imperfect and complicated. My system wouldn't be perfect, and some colleges would want to collect more information to use in their decisions about their own aid dollars. But my system is no more flawed than the current one -- and its simplicity could send a powerful statement to students we want to enroll, and students who deserve to know their options.