But experts said some nonprofits and public assistance groups will remain blocked from receiving financial aid data from institutions, even with students' written consent.
"The fix in the omnibus bill will get us back to being able to share information for purposes of awarding financial aid from scholarship providers," said Justin Draeger, president and chief executive officer of the National Association of Student Financial Aid Administrators. "But I don't know if it necessarily gets to allowing financial aid offices to work with departments of social services for food stamps and other public benefit programs."
The snag began last year when the U.S. Department of Education changed guidance on what had been common practice -- colleges sharing Federal Application for Free Student Aid data with outside scholarship providers and other organizations (with students' permission). As a result, the inability to get FAFSA information directly from colleges became a problem for providers that tabulate last-dollar scholarship amounts for Promise or other free college programs. While the budget fixes that issue, colleges remain unable to share federal aid data with non-scholarship providers like social service programs.
For example, the budget legislation didn't clear up all of the FAFSA data problems for Degrees of Change. The nonprofit organization helps college students in the Pacific Northwest and Midwest by preparing them to become future leaders in their communities, offering scholarship programs through its Act Six initiative and evaluating the impact of financial aid on student outcomes through group's Ready to Rise program.
While the scholarship side of the organization, which currently helps about 350 students, can return to operating under FAFSA data-sharing agreements with institutions, the Ready to Rise side of the program can't.
"Trying to gather that information one by one from students just isn't practical," said Kelly Bay Meyer, director of research and evaluation at Degrees of Change, who added that some confusion remains for Degrees of Change's different college partners over whether they can share financial aid information.
The group doesn't just use FAFSA data sharing to verify scholarships for students. It also evaluates different types of loan amounts to measure the impact on students, Meyer said, while using predictive algorithms to examine when students may drop out of college.
Degrees of Change relies on that research to present to funders, who help provide the scholarships to the Act Six scholars and want to know that the organization is serving low-income, first-generation and minority students.
"We have major holes in this last year because we weren't able to get that data," Meyer said. "We've had students unable to provide us with anything and staff spending valuable time trying to help them log in to their school's portal to help them download the financial aid report and upload to a secure form."
Sara Goldrick-Rab, a professor of higher education policy and sociology at Temple University who has studied student aid, said the issue doesn't just hurt the ability of evaluators to help colleges improve their aid programs -- it also hinders agencies like the Federal Bureau of Investigation from using FAFSA information for background checks.
Officials at the National College Access Network applauded the move to partially fix the problem but said more was needed to get the data-sharing guidance back to where it was before the department's change last year.
"NCAN is thrilled about the addition of language to allow scholarship-granting college access programs to directly access financial aid information for their scholarship recipients," Carrie Warick, director of policy and advocacy for the National College Access Network, said via email. "And we plan to advocate to expand this permission to non-scholarship-granting college access programs during the Higher Education Act reauthorization so that [financial aid research] advisors … are able to talk with financial aid officers on their students' behalf."
Draeger said NASFAA will work with the department on fixing the technical guidance.
"For a student, this is already a complicated process, and this is still just one additional step," he said.