Lifeline to Low-Income Students

That low-income Americans are far less likely to go to college than their peers are is a fact; less clear are the reasons why. But one oft-cited explanation is that potential college students from lower socioeconomic groups are either unaware of how much need-based financial aid is available or intimidated by the process of applying for federal student aid.

In a memorable stunt at a news conference in September where she discussed the need to simplify that process, Education Secretary Margaret Spellings unfavorably compared the length and complexity of the Free Application for Federal Student Aid (FAFSA) to the standard federal tax form, and the American Council on Education and the Lumina Foundation for Education have begun an aggressive public service campaign aimed, in part, at lowering low-income students' fear factor in applying for federal aid.

"We have all this financial aid, but it doesn't seem to be reaching the people who need it most," says Bridget Terry Long, an associate professor of education and economics at Harvard University, who has written widely about college access. "A lot of people just don't understand how the system works. And there are lots of calls for simplication, but what does that really mean?"

Long and some fellow researchers are taking an unconventional approach to the problem. The experiment, which is aimed at lower-income people who have teenage or college-age children or are potential college students themselves, seeks to gauge whether making it easier for low- and moderate-income families to apply for financial aid improves their college-going rates. What is unusual, however, is the research design -- offering taxpayers a painless way to turn the information on their tax forms into a financial aid application -- and the sponsor: H&R Block, the tax preparation company.

Here's how the project, which involves researchers at Case Western Reserve University and University of Toronto in addition to Long, works: Randomly selected taxpayers with incomes below $45,000 who seek help from their taxes from H&R Block offices in and around Cleveland, Ohio, will be offered help filling out their FAFSA forms (a control group will receive only a brochure with publicly available information about attending and paying for college).

H&R Block's tax preparers, working with software the company and the researchers jointly created, will help transport the applicants' tax information into the federal financial aid form (more than half of the FAFSA information comes from the tax form), and help them collect the information for, and complete, the rest of the form. The hypothesis is that using tax data to automatically fill in a large number of answers to the 108 questions on the financial aid form, and offering personal help in filling out the rest, will make the FAFSA less daunting than it might otherwise be.

Next, company representatives, trained by the researchers, will give study participants projections of how much state and federal financial aid they may qualify for, and how far that would go in covering the cost of attending selected colleges in the area. “When we finish that interview, we give them a piece of paper that says, based on the information we’ve gathered today, here’s the tuition and here’s the aid you’d be eligible for,” says Eric P. Bettinger, associate professor of economics at Case Western.

Over time, the researchers plan to collaborate with the Ohio Board of Regents and the National Student Clearinghouse, which works with colleges to track enrollments and other information, to monitor whether those who participate in the program (and their children) are more likely to attend college, receive financial aid, and earn degrees than are students in the control group. The results, they hope, will point the way to possible ways to build on the approach, perhaps through arrangements in which federal tax information would automatically be shared with the Education Department for financial aid purposes.

“This should certainly give us some information about at what point in the pathway could we invest money and time and see results,” Long says. “If we see there are families jumping at the chance to have someone help them with their FAFSA, that might be one way to invest our resources. If we find that we don't get much of a response at all, that may tell us there aren't as many problems with process as we thought, and we should invest in grant size.”

Identifying the Problem

Americans’ access to higher education varies widely by class. The Secretary of Education’s Commission on the Future of Higher Education cited this gap as a key problem facing American colleges and universities, noting that “low-income high school graduates in the top quartile on standardized tests attend college at the same rate as high-income high school graduates in the bottom quartile on the same tests. Only 36 percent of college-qualified low-income students complete bachelor’s degrees within eight and a half years, compared with 81 percent of high-income students.” (The picture isn’t much better for adults.)

That gap has been much on the minds of higher education policy makers and researchers – and it also found its way onto the agenda of officials at H&R Block, for whom low- and moderate income Americans make up about two-thirds of the company’s customers.

The company has an obvious self-interest in improving the financial situation (and assets) of its customer base, but it also has what Bettinger, the Case Western economist, calls a “strong public service orientation.” That led H&R Block, working initially with the Brookings Institution, to sponsor a series of randomized research projects in various realms (other projects deal with retirement savings and food stamps) aimed at finding “nationally scaleable” public policy solutions to under-researched problems affecting low and moderate income families.

“As cliched as it sounds, one reason we selected the FAFSA project is that education is the foundation and the cornerstone for so much,” says Jeremy White, vice president for business development and outreach at H&R Block, which is now overseeing the five research projects alone. “The idea of getting folks more information and then allowing them to make an informed decision seemed like a good one to test out, and one that we’re uniquely equipped to play a role in.”

White and the researchers acknowledge that H&R Block is an atypical sponsor of research. But its involvement seems unlikely to raise the sorts of conflict of interest concerns that some corporation-sponsored studies generate; H&R Block isn’t charging clients who agree to have the company translate their tax data into the federal financial aid form (in fact, study participants actually get either a discount on tax preparation or a gift card for their involvement).

White acknowledges, though, that a company benefits any time it can “provide an additional service or product to a client,” and that it is in H&R Block’s longterm interest if it can help its customers find their way to college. “The more educated anyone is, the higher their income, and the higher their income, the more freedom they have to start a savings program, and to be on the road to asset building.”

Like many research projects, it might be some time before the FAFSA research project produces the sort of verifiable results that can shape public policy. But Case Western’s Bettinger says he hopes that early results might give researchers some estimate of whether increased likelihood of filling out that FAFSA influenced whether participants were more likely to enroll in college next fall, or the amount of financial aid they received once there.

Despite the longterm curve for research results, the project’s impact, on a personal level, may be felt much sooner. As the researchers trained H&R Block’s tax preparers to help study participants with their financial aid forms, Long says, she could almost see the light bulbs going off in their heads. “They clearly saw this as a no-brainer,” Long says. “One said to me, ‘We could be doing a lot of good here.’ “