Using FAFSA Against Students

Some colleges are using the federal government's form for student aid, the FAFSA, to deny admissions and perhaps decrease financial aid awards.

October 28, 2013

Some colleges are denying admission and perhaps reducing financial aid to students based on a single, non-financial, non-academic question that students submit to the federal government on their applications for student aid.

Millions of high school students and their parents probably have no idea this happens after they fill out the ubiquitous Free Application for Federal Student Aid. The form, known as the FAFSA, is used by nearly every American who needs help paying for college.

It turns out students’ pleas for help are now being systematically used against them by some colleges.

When would-be college students apply for financial aid using the FAFSA, they are asked to list the colleges they are thinking about attending. The online version of the form asks applicants to submit up to 10 college names. The U.S. Department of Education then shares all the information on the FAFSA with all of the colleges on the list, as well as state agencies involved in awarding student aid. The form notes that the information could be used by state agencies, but there is no mention that individual colleges will use the information in admissions or financial aid -- and there is no indication that students could be punished by colleges for where they appear on the list.

But the list has turned out to be very valuable to college admissions offices and private enrollment management consultants: They have discovered that the order in which students list institutions corresponds to students’ preferred college.

Now, some colleges use this “FAFSA position” when considering students’ applications for admission, which may affect decisions about admission or placement on the wait list, said David Hawkins, director of public policy and research for the National Association for College Admission Counseling.

So the institution is disinclined to use up a precious admissions slot for a student who is unlikely to enroll. 

“The student has no idea that this information is being used in this context,” Hawkins said. The federal government "doesn’t indicate it. Institutions certainly aren’t telling students they are using it. Certainly, this is a concern from this association’s standpoint.”

He said colleges likely to be doing this are private colleges that are trying to improve their “yield,” which is the percentage of the applicants they admit who decide to attend. Hawkins did not provide the names of any institutions that deny admission based on FAFSA position, but he confirmed that some are.

Hawkins said he knows college officials and some high school counselors are aware of the importance of the FAFSA position, but, “I don’t know that it is widely known, particularly among the counselors, and almost certainly not among the students. But I do understand there are a handful of people who are aware of this.”

It's unclear if the Education Department was aware of this issue until contacted by Inside Higher Ed on Friday. The department now says it will review the longstanding practice of sharing the FAFSA positions with every college.

"We will look into this matter and will consider whether a change to our policy or procedure is appropriate,” a department spokesman, Stephen Spector, said in a statement Sunday afternoon.

Among those who have been aware of this use of FAFSA is Todd Johnson, a private college consultant who advises wealthier families on admissions. He said he tells clients who use the FAFSA to list colleges in alphabetical order to avoid having the list be used against them.

“The colleges certainly aren’t going to say, ‘We’re doing evil things with it’ – but there’s a lack of transparency,” he said.

Potential Financial Aid Impact, Too

Besides turning away students who put their institution further down the list, some college officials may also be offering smaller aid packages to students who list their institution highly, according to several prominent higher education consultants who advise institutions across the country on enrollment practices.

This could be happening because students are more likely to pay whatever it takes to attend the college of their choice. So some colleges are offering the students most interested in attending less financial aid on the premise that the students will come to the campus anyway, whatever the price. Of course, colleges have other means to judge how serious an applicant is, presuming for example that those who visit the campus are more committed than those who do not. And some colleges base admissions and aid decisions in part on such criteria.

But the difference is that those criteria do not come from a federal financial aid form.

The use of the list on the FAFSA is just another example of how colleges are using increasingly sophisticated data mining techniques to recruit and shape their classes.

W. Kent Barnds is the vice president of enrollment at Augustana College, a 2,500-student liberal arts college in Illinois. In a recent essay, he compared the data that colleges use to the data used by the National Security Agency.

In an interview, Barnds said Augustana and its enrollment management consultant, Noel-Levitz, have found a strong correlation between where students list Augustana on the FAFSA and their likelihood of attending.

Of the students Augustana admits that list Augustana first on the FAFSA, 60 percent enroll. Of the students who list Augustana second on the form, 30 percent who are admitted decided to enroll. For FAFSA position No. 3, the yield is 10 percent.

Noel-Levitz finds a similar correlation between FAFSA position and yield at nearly all of its clients, said Galen Graber, an associate vice president at Noel-Levitz.

Barnds said Augustana does draw a line, though: It does not use FAFSA position to decide whether or not to admit students or to determine the size of a financial aid award. But the college does use the information to decide which applicants it will offer financial aid to first. The goal, he said, is to efficiently use the time of his staff.

“Is there potential for abuses?” Barnds said. “Yeah, there is probably potential for abuses if that is a factor that is being used in rendering an admissions decision. But that is not the case here; we’re really using it to prioritize our time, relative to the students who have already been admitted.”

Maguire Associates, another prominent enrollment consulting firm, also uses FAFSA position to advise colleges on how to build their classes. In a report last year for Indiana State University, Maguire said the university could charge more to the students most interested in attending the university, based in part on FAFSA position. Maguire and a spokeswoman for the university both said the university is not doing this.

In telephone interviews, the firm’s founder Jack Maguire, and a consultant, Linda Cox Maguire, who are married, said they provide colleges with two models: a model to predict enrollment, which does include FAFSA position as a data point, and another model to award financial aid.

They said they discourage colleges from using FAFSA position to award financial aid.

“In most of the institutions -- I can’t say all -- we work with, they know that but they don’t act on it,” Jack Maguire said in a Friday telephone interview.

Linda Cox Maguire said FAFSA position provides “important market intelligence" but should not be used by colleges to help determine aid packages.

Still, she said, that does happen.

"I guess I can't put my finger on any place, but my gut tells me it's going on,” she said in a joint telephone interview Sunday morning with her husband.

Noel-Levitz’s Graber said his firm does not recommend using FAFSA position to decide aid size but he does believe colleges do make smaller aid offers to students most interested in attending their institution.

“I think you need to be able to look families in the eye and be able to explain your awarding procedures,” he said.

Little Transparency

There is little indication to students, their parents or high school guidance counselors that any of this is happening based on the FAFSA.

There are several types of financial aid, including federal financial aid, state financial aid and institutional financial aid.

In a 2012 guidebook to the FAFSA, the federal government makes clear — on page 67 of a 71-page document — that it does not use FAFSA position to determine federal aid packages, but it suggests some states use FAFSA position to calculate aid. “For purposes of federal student aid, it does not matter in what order you list the schools,” the guidebook said. “However, to be considered for state aid, several states require you to list a state school first.”

The FAFSA form itself tells students, “For state aid, you may wish to list your preferred college first.” But it gives students little indication about what else can happen using the list.

And the government says nothing about what institutions themselves might do.

NACAC, as the college admission counseling association is known, has a set of rules designed to discourage colleges from knowing what other institutions their applicants are applying to.

According to NACAC’s statement of good practices, colleges may “not require or ask candidates or the secondary schools to indicate the order of the candidates’ college or university preferences, except under Early Decision.”

But the data turned over by the federal government basically allows colleges to ignore that rule by giving them the FAFSA position.

“If somebody knows they are first, they can play it a couple of ways; one of the ways is to short them on the financial aid package,” Johnson, who advises students, said.

Data provided to colleges by ACT, the test maker, also allows institutions to try to predict student preference based the order in which high school students list the colleges they are interested in attending. If students “opt in” to have this information shared, it is sent to colleges.

NACAC’s Hawkins said ACT's practices, as well as those of the College Board, which also sells high school student data, may need to be made clearer to high schoolers and their families.

“Most students understand that they are going to send their scores to colleges, but I don’t know that it’s clear that the demographic information they submit is used many, many different times in many, many different ways  -- sold by the testing agencies to the colleges for the purpose of recruiting,” he said.

While ACT and College Board have long earned a lot of money by selling students' names, it’s not clear why the federal government is revealing information to colleges that could be used against students. Some outsiders suggested the Department of Education’s current practice is easier on the department -- otherwise, it would have to find a way to scrub each and every one of the FAFSAs of the names of other institutions.

Still, the department’s practices are troubling to some admissions officials.

“The FAFSA is about students and families and it so clearly isn’t good for students and families that I can’t understand why it’s a practice that happens,” said Lori McGlone, the CEO of Tractus Insight, a website that helps students find colleges but promises not to sell student data, as other sites do.

Pamela Horne, the dean of admissions at Purdue University, questioned the federal government’s decision to share the FAFSA position information. She said “from a student privacy point of view, it’s really none of our business” where else students have applied. Horne said Purdue does not use FAFSA position to make decisions.

“It’s kind of surprising that the Department of Education does that, because I’m not certain that parents and students understand that information will be released to all the recipients – they may not want it to be,” she said. “It’s not a huge privacy issue, but it might be one that parents and students would be concerned about, were they aware of it.”

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