A Simplified FAFSA? Yes—and Yet, Not Yet

Last week I sat in a room filled with enrollment management leaders from across the country. This group, which represents public and private, large and small colleges, accounts for hundreds of years assisting students and families with the admissions and financial aid process. They are knowledgeable, caring and forward-thinking professionals who place students first in a complex process. Yet, during a briefing on the new, simplified Free Application for Federal Student Aid, or FAFSA, scheduled to be implemented next fall for students entering college in the fall of 2024, I found myself among a group with many questions and deep concerns about how well the new application will serve families.

In short, without attention to some identified and anticipated deficiencies, it won’t. I use the word “anticipated” because professionals like the ones I was with last week simply don’t have enough information about what FAFSA simplification will involve. This is really uncomfortable territory for those of us who have already received invitations from high schools and other organizations to discuss the changes. No one in that room felt remotely confident to discuss FAFSA simplification with high school counselors, parents or students, many of whom expect us to be providing service of this nature to high school juniors and rising seniors.

It’s important to acknowledge broad and enthusiastic support for finding ways to simplify the FAFSA. After years of hearing that “it takes a Ph.D. to complete the FAFSA” and knowing that the current complexity of the process likely contributes to the increasing trend of nonconsumption of college, it’s easy to gain support for efforts that make accessing financial aid for college easier. But we also want to proceed with caution to make sure students and families are better served.

First are some questions related to some big unknowns. How will these changes impact eligibility for financial aid—favorably and unfavorably? The National Association of Student Financial Aid Administrators launched a tool to enable colleges to do some stress testing of what FAFSA simplification may mean to current enrollment. The tool was designed to provide some sense of how student eligibility for financial aid may change. It provides the best test we have to identify who may get more or less financial aid because of the simplification. The early signs are that FAFSA simplification will make some happy and others angry, though it seems more people will be happy, because they will see an immediate increase in eligibility for financial aid. Some colleges that have completed this stress test have seen a 10 to 30 percent increase in students who would be eligible for the Pell Grant. We won’t know whether these projections are accurate until we are well into the cycle, but If we do see that range in increase in eligibility for Pell, will the funding be there? Or the political will to increase funding? Or will more students get less support through Pell? Only time will tell.

We also identified three primary flaws that need to be addressed before the new FAFSA is implemented. Each potential flaw could negatively impact access and unnecessarily complicate rather than simplify.

• Flaw No. 1 is the inclusion of farm or small business value in the formula. This will undoubtedly increase the perceived availability of a family’s resources for college. Living in Iowa and working in Illinois, I know firsthand how punishing this will be for family farmers and small business owners. There’s an old saying here in the Midwest that many farmers are “land rich but cash poor.” Without addressing this known issue with the simplified FAFSA, students from rural areas may simply opt out of higher ed because the family can’t sell valuable, working farmland to send a kid to college. There are recent moves by some in the House of Representatives to address this flaw, but it remains to be seen whether or not it will gain traction and be addressed in a timely manner.
• Flaw No. 2 is the omission of the number of students in college. This results in a dramatic overstatement of what a family can afford to pay, should the family have more than one family member enrolled or attending. While there are many ways colleges, especially private colleges, can address this, this flaw will reduce eligibility for other important federal and state financial aid programs. Families with more than one child enrolled will feel this the most, but so will families with an adult returning for upskilling or reskilling. This is an easy fix and should be addressed.
• Flaw No. 3 is more complicated but incredibly important. Because FAFSA simplification is possible due to a much better interface with the Internal Revenue Service, there may be some unintended consequences that delay FAFSA submission and identification of the Student Aid Index. This potential flaw has to do with the need for a student to gain parental approval/permission to access IRS data for custodial and noncustodial parents’ information. Imagine the nightmarish scenario of a student required to track down a noncustodial parent living in a foreign country, or begging permission from a parent who has been previously abusive, or asking a stepparent for permission to access their tax returns to see how much money they have to contribute, even when they’ve made it clear they are not willing to help with the cost of college. This flaw is detrimental to students and families. It plays with very complex family dynamics and seems ignorant of the world we live in. It will present barriers and slow the process and may result in an increase in nonconsumption of higher education. While it’s possible the Department of Education is addressing this already, professionals simply don’t have enough information.

Sadly, these flaws are statutory and can only be fixed by Congress. These flaws are not unknown, but there has been little movement on the part of Congress, and time is running out. Legislators who care about access to higher education and keeping the U.S. competitive need to take action quickly to address these flaws or delay implementation until they can be fixed.

Speaking of timing, no one I’ve encountered believes that a new, truly improved and simplified FAFSA will be ready to go by Oct. 1, which has consequences for the entire student recruitment cycle. Every week there’s another article about delay. The group of pros I was with last week think this December or January 2024 is more likely than October or November, and that is a problem.

Simplification is long overdue, but it’s important to get it right rather than get it done quickly. It’s critically important to fix these known flaws before implementation. Students and their families deserve better.