The stars seem aligned, politically and otherwise, for student aid simplification. The notion that the complexity of the process by which would-be college students apply for and receive federal financial assistance deters some young people from higher education has become firmly established and widely embraced in the last few years, most recently in a much-awaited report by a panel convened by the College Board . Politically, the Margaret Spellings-led Education Department has seized on aid simplification as the central plank of its higher education agenda in its waning days. A key figure in President-elect Barack Obama's new administration, chief of staff Rahm Emanuel, co-sponsored legislation last year  as a member of Congress to address the complexity on multiple fronts.
And perhaps most practically, the economy's downward spiral is likely to mean that a new presidential administration will be on the lookout for meaningful things it can do that wouldn't cost a lot of money -- and simplifying the student aid process, while potentially difficult and controversial, should not require a raid on the Treasury to accomplish.
Perhaps with that in mind, Sara Martinez Tucker, the U.S. under secretary of education, will formally present to Congress this week the department's plan for creating what she calls a "rational approach to federal student aid." The proposal, which both Tucker  and Spellings  have previewed in recent months, would, among other things, reduce the Free Application for Federal Student Aid to two pages and fewer than 30 questions; consolidate numerous federal grant, loan and other programs into the Pell Grant Program, subsidized and unsubsidized loan programs and one work study program; and determine the amount of aid a student would receive not based on how his or her financial situation aligns with the cost of attendance at his or her college of choice, but on the relationship between the average cost of attendance at a two-year public college and the adjusted gross income and tax exemptions of the student or his or her family.
Taken together, Tucker says, the proposals are designed to direct federal aid toward students most in need and give students and families a much clearer sense, earlier in the process, of how much federal financial help they qualify for.
"To access federal aid, the FAFSA should request information that is easily obtainable and verifiable and only ask the questions necessary to determine eligibility and award levels," Tucker says in an explanatory document she plans to submit to Congress, which is available here . "And subsidized federal aid should be targeted to the neediest students; be independent of other aid; be predictable and portable; be distributed through fewer programs, and be used by families to leverage additional state, institutional and private aid."
(Update: The Education Department announced Wednesday  afternoon that Tucker would leave her job after next week to return to California. Departures at this stage of a presidential administration are common; Tucker has been under secretary since late 2006.)
Just because there appears to be general consensus on the need to simplify and streamline the federal student aid system does not mean that the department's approach -- which obviously will fall to the next administration and Congress to consider, giving the ticking of the political clock -- will be an easy sell.
Like the proposal from the College Board, the administration's plan would eliminate grant and loan programs such as Supplemental Educational Opportunity Grants and Perkins Loans that many campus officials favor. And by calling, as Tucker's proposal does, for an end to the practice of basing the value of a student's federal aid package in part on the cost of attendance at his or her college, it is likely to face opposition from higher-tuition colleges, particularly private ones.
Several key aspects of the Education Department's proposal have been described in previous iterations of the plan. In July, at a department summit pegged to Spellings's Commission on the Future of Higher Education, Tucker had laid out in broad strokes her plan for greatly simplifying the federal aid system, though it left many details to be filled in.
In an interview with Inside Higher Ed  last month, Spellings sketched in some additional information about the department's plan to shorten the financial aid application form by about three-quarters, and to get the key information to students and families earlier in the process, with the goal of removing barriers that may prevent those low-income students who most need financial help from believing that college is within reach.
The plan that Tucker will present to Congressional leaders this week -- which was requested as part of the Higher Education Opportunity Act enacted this summer -- fleshes out a lot of the specifics left vague in her summer presentation.
Probably the most significant change is in how the government would determine how much federal aid an individual student would receive. Now, a student answers scores of questions about his or her financial situation (or his or her family's) on the federal financial aid form, and the government, using complex formulas that take into account a wide range of data about assets and other financial circumstances, determines how much the family is expected to contribute toward his or her education (the "expected family contribution").
That figure is used to determine how much the student can expect to receive in grant and subsidized loan funds (based on maximum Pell Grant and other awards that are set by Congress), and then the cost of attendance at the institution the student decides to attend influences how much "unsubsidized" federal loan money he or she qualifies for. (Unsubsidized loans have lower interest rates than private loans, but the government does not pay the interest on the loans while the student is in college, as it does on the "subsidized" loans.) Because of that setup, students at more expensive colleges qualify for more federal aid than do students at lower-cost institutions.
Under the department's proposal, the government would calculate a "federal student aid target" (which would be the maximum amount of federal grant and subsidized loan funds that the neediest student could receive), and its recommendation is that that amount be the average cost of attendance (tuition and fees, meals and housing, books and supplies) at two-year public colleges. (That target amount would increase by the rate of growth of the Consumer Price Index each year, even if actual tuitions increased more or less.)
Then, the government would calculate a "federal student aid commitment" -- the amount an individual student qualified for -- based solely on the adjusted gross income and tax exemptions of the student or his or her family. Under the proposal, the amount of need-based grant, loan and work study aid the student warranted would be based on how their adjusted gross income compared to the Department of Health and Human Services' Poverty Income Levels.
So the neediest students, Tucker said in an interview Tuesday, would quality for enough Pell Grant aid and subsidized loan funds to cover the full cost of attendance at a community college. That amount -- roughly $10,000, in current dollars -- would cover about 60 percent of the cost of attendance at a typical public four-year college and a third of the total cost of an average four-year private institution.
"The reason we picked the number we did for the student aid target is so we can say that federal aid ... will be the foundation to make community college possible for every student, and can cover the majority of expenses" at other institutions, Tucker said. For those other institutions, she said, unsubsidized loans and federal loans for parents would be available -- though capped by annual limits -- to cover much of the rest of the cost.
Other financial aid experts who favor simplification applauded Tucker and the department for their aggressive advocacy and their thoughtful approach, but had lots of questions. Sandy Baum, co-chairman of the College Board-sponsored panel on rethinking the student aid system, noted that the department's proposal shared much in common with her group's plan. "I'm happy to see that they have the goal of simplifying and targeting the aid better; those are good goals. We still need to see more of the details, though."
Michael McPherson, president of the Spencer Foundation and the panel's other co-chair, said that boiling down the FAFSA so that it provided only the information necessary to allocate federal aid could lead states and individual institutions to create their own forms to get the additional data they need to allocate their own financial support. "There's a chance they say, 'This is great for Pell and subsidized loans, but we have all this state money, and we need all the stuff that was on the original FAFSA, so we'll do our own,' " McPherson said.
Tucker said the department was sensitive to that reality, but said it would rather give students the information they need early to know how much federal aid they will receive, then let states or institutions use the information the federal government has collected as the starting point for their own calculations. "Under this system, we'd be sending schools the information about what a certain student qualifies for when the students tell us where they're applying, and then the campuses or states can say, 'Here are the questions we need you to answer to be able to award state and institutional aid,' " Tucker said.
Lauren Asher, associate director of the Institute for College Access and Success and author of a 2007 report on simplifying the FAFSA , said that the changes the department proposes in how federal aid is calculated are likely to require a "difficult and highly political process," because when such changes occur, "there are always some folks who are going to gain and some who are going to lose."
That process could take a while, Asher said, and in the meantime, her group would like to see the department make an immediate change that could "do for students and families a lot of what the intention of this proposal is": enabling students to easily authorize the Internal Revenue Service to forward the financial data families already provide directly to the Education Department. "This could lead to a good, quick estimate in much the way the department envisions," Asher said. "We see that as a process change that would make the [department's] proposal even more viable right away."
They agreed generally, though, that the department's plan would add momentum to a cause they all support. "This specific proposal matters less than that there's a strong voice coming from the Department of Education to favor simplification," said McPherson. "That's a great legacy for the next administration and the next Congress."