[Senate Hearing 116-535]
[From the U.S. Government Publishing Office]
S. Hrg. 116-535
TIME TO FINISH FIXING THE FAFSA
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING FIXING THE FREE APPLICATION FOR FEDERAL STUDENT AID
__________
SEPTEMBER 17, 2020
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Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
45-227 PDF WASHINGTON : 2022
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BERNARD SANDERS (I), Vermont
RAND Paul, Kentucky ROBERT P. CASEY, JR., Pennsylvania
SUSAN M. COLLINS, Maine TAMMY BALDWIN, Wisconsin
BILL CASSIDY, M.D., Louisiana CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas ELIZABETH WARREN, Massachusetts
LISA MURKOWSKI, Alaska TIM KAINE, Virginia
TIM SCOTT, South Carolina MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah TINA SMITH, Minnesota
MIKE BRAUN, Indiana DOUG JONES, Alabama
KELLY Loeffler, Georgia JACKY ROSEN, Nevada
David P. Cleary, Republican Staff Director
Lindsey Ward Seidman, Republican Deputy Staff Director
Evan Schatz, Minority Staff Director
John Righter, Minority Deputy Staff Director
C O N T E N T S
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STATEMENTS
THURSDAY, SEPTEMBER 17, 2020
Page
Committee Members
Alexander, Hon. Lamar, Chairman, Committee on Health, Education,
Labor, and Pensions, Opening statement......................... 1
Murray, Hon. Patty, Ranking Member, a U.S. Senator from the State
of Washington, Opening statement............................... 5
Witnesses
Cook, Kim, Executive Director, National College Attainment
Network, Washington, DC........................................ 18
Prepared statement........................................... 20
Feldman. Rachelle, Associate Provost and Director, Scholarships
and Student Aid, The University of North Carolina at Chapel
Hill, Chapel Hill, NC.......................................... 23
Prepared statement........................................... 25
Summary statement............................................ 27
Hultquist, Kristin, Founding Partner, HCM Strategists, Englewood,
CO............................................................. 37
Prepared statement........................................... 39
Long, Bridget Terry, Dean and Saris Professor of Education and
Economics, Harvard Graduate School of Education, Cambridge, MA. 8
Prepared statement........................................... 10
Scott-Clayton, Judith, Ph.d., Associate Professor of Economics
and Education, Teachers College, Columbia University, New York,
NY............................................................. 28
Prepared statement........................................... 30
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
Alexander, Hon. Lamar:
Compacts and State Higher Education Executive Officers
Association (SHEEO), Prepared Statement.................... 57
The National Association of Student Financial Aid
Administrators, Prepared Statement......................... 58
National Association of State Grant & Aid Programs, Prepared
Statement.................................................. 62
Murray, Hon. Patty:
Legal Services Center of Harvard Law School, letter submitted
for the Record............................................. 64
QUESTIONS AND ANSWERS
Response by Bridget Terry Long to questions of:
Senator Murkowski............................................ 68
Senator Scott................................................ 68
Response by Judith Scott-Clayton to questions of:
Senator Collins.............................................. 69
TIME TO FINISH FIXING THE FAFSA
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Thursday, September 17, 2020
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The Committee met, pursuant to notice, at 10:02 a.m., in
room 430, Dirksen Senate Office Building, Hon. Lamar Alexander,
Chairman of the Committee, presiding.
Present: Senators Alexander [presiding], Murray, Hassan,
Jones, Warren, Cassidy, Casey, Murphy, Collins, Braun,
Murkowski, and Rosen
OPENING STATEMENT OF SENATOR ALEXANDER
The Chairman. The Chairman. Good morning everyone. The
Committee on Health, Education, Labor, and Pensions will please
come to order. First, a few administrative matters. We have
gotten advice from the Sergeant at Arms, Health and Human
Services, Centers for Disease Control, individuals in the
hearing room will be at least six feet apart. There is no room
for the public therefore, but this is all streaming and there
will be an unedited version of it that anyone can watch later.
Our witnesses are participating by video conference today and
some Senators are as well. I would like to say something about
masks.
The Office of Attending Physician has said that since we
are six feet apart, we don't need to wear masks, although some
may. That is why my mask is off, although I have one and I wear
it outside because as Dr. Redfield reminded us yesterday, it is
extremely important tool for stopping the spread of COVID. I am
grateful to the Rules Committee, Sergeant at Arms, the press
gallery, the Architect of the Capitol, the Capitol Police and
Chung Shek and Evan Griffis, our staff, people--all their hard
work in helping to keep us safe and to helping us do these
conferences by video at which everyone seems to have become
pretty expert. Senator Murray and I will have an opening
statement. We will then turn to our witnesses who we thank for
being with us today. Each witness will have--if you would
summarize your remarks in 5 minutes, that would leave more time
for questions and answers. Each Senator will have 5 minutes and
we will try to keep the questions and answers for each Senator
at 5 minutes so everyone can have a chance to participate.
I would like to begin today by thanking Senator Murray. She
offered some kind words for me at our hearing on Tuesday. Let
me say something about her. Four years ago, she and I received
the National Education Association's Friend of Education Award.
It was the first time in 30 years the NEA had awarded that
award to a Republican but it was the second time in 4 years
that they awarded it to Senator Murray. So we would seem like
an unlikely pair. But there is a little secret to our
relationship. Senator Murray was a preschool teacher and my
mother had a kindergarten in our backyard where she had 25,
three and 4 year olds in the morning and 25, 5 year olds in the
afternoon for 30 years. And I was there for almost every year
until I was six.
Senator Murray and I have found a lot of common ground in
what you learn in preschool, which was the childhood lesson of
play well together. An indispensable part of our success has
been staff director Evan Schatz and David Cleary, my staff
director, as well as other members of the Murray staff and the
Alexander staff who have also learned to work well together and
made it easier for us to succeed. Our staff affectionately
calls them the Murrays. The laws that we have passed in this
Committee over the past 6 years when I have been Chairman and
she has been the Ranking Member wouldn't have happened without
Senator Murray, whose leadership and effectiveness helped
yield, for example, the Every Students Succeeds Act that--
President Obama called that a Christmas miracle. It affects
100,000 public schools and 50 million children, or the 21st
Century Cures Act.
Senator McConnell called that, which passed in 2016, the
most important law of the entire Congress, speeding up
lifesaving cures for diseases from Alzheimer's to cancer to
flu. It has been helpful in driving research for COVID-19. Then
there is the Opioid Response Crisis Act of 2018 and the FUTURE
Act of last year when we begin the process of simplifying the
dreaded FAFSA by law and permanently funded historically black
colleges, a goal for a long time. And there have been many
more, including the Perkins law and other important laws.
Senator Murray has been extraordinarily effective, partly
because she is a Member of the Democratic leadership and she
commands great respect on her side of the aisle. But she also
knows how to create an environment in which bills can become
law, which requires bipartisan action.
For example, when she and I first began the work on fixing
No Child Left Behind, she said that what we should do is write
the bill together. Well, that hadn't been my plan but I took
her advice. Turned out to be good advice and we got a result
that not many people thought we would get. That bill had many
complicated and contentious issues. There were crocodiles at
every part of the pond, but Senator Murray helped create--find
creative ways to conquer those challenges and proceed to the
finish. One of the most special times for me in my 18 years in
the Senate was on April 16, 2015 when we called the roll and
the Every Student Succeeds Act. In a Committee, this Committee,
of so many different points of view, every single Senator voted
yes to recommend that bill to the Senate.
That type of bipartisan support never would have happened
without Patty Murray. We have had some disappointments. We have
certainly had some differences of opinion. But Senator Murray
has always been willing to sit down and try to find a path
forward even on the most contentious issues. I often say it is
hard to get to the U.S. Senate. It is hard to stay here. And
while you are here, you might as well try to accomplish
something good for the country. Senator Murray is that kind of
Senator, the kind that is here to get something done and
Americans are fortunate that the result has been new laws to
tackle the opioid crisis, spur new cures for diseases, to make
it easier to obtain and afford college, and to help 50 million
children and 100,000 public schools. So I thank her for her
friendship, for her partnership and her leadership on some of
the most important issues of our time.
Now let's turn our attention to one of those important
issues, and it is this, 20 million students and their families
are in the middle of what has to be the strangest first
semester of college in at least a century. Almost everything
has changed for students except one thing, students still have
to answer 108 questions on the dreaded FAFSA form, the Federal
aid application for Pell Grants and student loans to help go to
college. For years now, I have carried around the FAFSA as a
prop to make the case for simplifying it, but it is no joke,
especially this year. Many students are questioning their
investment in a college education at a time when many classes
are only offering online courses.
Many of low income students who would benefit most
economically from college long term are putting it off
altogether. There was already an 8 percent drop in the number
of black undergraduate students enrolled in summer sessions
compared with last summer's enrollment according to the
National Student Clearinghouse Research Center. The president
of Southwest Tennessee Community College in Memphis, a mostly
minority community college, told me three--a few years ago that
he loses 1,500 students a semester because of the complexity of
filling out the FAFSA. Imagine how much less motivated anyone
is to fill out those 108 FAFSA questions this year. This is a
form that is especially difficult for students who are
homeless, who are in foster care, who are living with
grandparents. Hard for them to complete it. Homeless students
have to prove they are homeless.
Foster care students may not have access to all the
information required to complete the FAFSA, and students living
with their grandparents often are still dependent on their
parents, and obtaining information from their parents may be
difficult. These are the very students Federal aid is meant to
help and it is exactly the kind of economy in which a college
education proves its value. It is not that Senator Murray and I
and others haven't been trying to help fix the FAFSA. When four
of today's witnesses appeared before this Committee almost 7
years ago, they universally agreed that the FAFSA was an
obstacle to students attending college. They said we could
award Pell Grants using just two simple variables, family size
and income. Senator Bennett and I then had the same reaction.
Well, if there is that much agreement on how to make it easier
for 20 million families to apply for Federal aid, why don't we
just do it? So Senator Bennett and I set out to turn the
lengthy FAFSA into a postcard.
The result was the FAST Act. Senator Murray and I then
worked with the Obama administration to allow students to fill
out the FAFSA using their tax information from 2 years before
they enrolled in college instead of one so they could file in
the fall rather than having to wait until spring. The Trump
administration has created an app so students and families can
file the FAFSA on their cell phones or tablets. The FUTURE Act,
which Senator Murray and I sponsored, which became law last
year, reduced the FAFSA by up to 22 questions and eliminated
the bureaucratic nightmare created by requiring students to
give the Federal Government the same information twice and then
to try to catch them in making a mistake. Stopping the Federal
Government from asking for your tax information twice, once for
the IRS and then once for the Education Department, also helped
prevent most applicants from being selected by the Department
of Education for income verification caused by mistakes, which
many parents and counselors have told me is a bigger burden
than filling out the 108 questions in the first place.
Today we have got a piece of legislation that would finish
the job. It has broad bipartisan support. It is based on
recommendations that four of today's witnesses gave us nearly 7
years ago at a hearing before this Committee. Here is what I
mean when I say it is time to finish the FAFSA. The bipartisan
legislation Senator Jones and I have proposed would reduce the
total questions on the fast from 108 to no more than 33. So let
me give you an example of the difference, if I can hold it up.
This is the 108 questions. This is the 33 question form that
would make the difference if we can enact it this year. That is
the first thing it would do. Second, it would end the
Department of Education's lengthy financial data verification
process by removing unnecessary financial questions and instead
using only the financial data that will come directly from the
IRS starting in 2023, '24 school year, a change that Congress
made in the FUTURE Act which passed last year and which I just
mentioned. Three, it will continue to collect and provide
states and colleges the information they need to determine
state and institutional aid.
The first legislation that Senator Bennett and I worked on
cause some problems for states and we have worked with states
and counselors to address those problems. Four, it would create
a simple Pell Grant eligibility formula so that middle and high
school students and anyone interested in applying for aid will
know how much Pell Grant money they have to go to college.
Five, it does something else, something that Senator Murray has
been working on for 20 years that makes it easier for students
who are homeless, students in the foster system, or students
who are not in touch with their parents. Our bill allows these
students to apply for aid as independent students, making the
application process for them much simpler. As a result of these
changes, Congress would immediately enable more students to
receive Pell Grants and many more to receive the maximum Pell
Grant. An additional 420,000 students would qualify for Pell
Grants each year if this bill passed, according to the
Congressional Budget Office. An additional 1.6 million students
would qualify to receive the maximum Pell Grant Award each
year.
Students from single parent families would benefit more
from Pell Grants because the formula would account for the
greatest needs of these families. And in addition to Senator
Murray, much of this work has been done by Senator Bennett,
Senator Jones, who is a Member of this Committee, and others
who have helped with the work include Senator Booker, Senator
Burr of this Committee, Senator Collins of this Committee,
Senator King, and former Senator Isakson. During these last
several years, we have worked carefully with various
organizations to make sure our proposals don't cause any
unexpected problems. And as a result, we have the support of
the National Association for Student Aid Administrators, the
National College Attainment Network, the State Higher Education
Executive Officers Organization, Schoolhouse Connections,
National Association of State Student Grant Aid programs, each
of the regional higher education compacts. In conclusion, after
nearly 7 years of work on these issues it all boils down to
this, it makes no sense to make it this complicated to apply
for Federal aid for college. It makes no sense to discourage
the very students Congress wants to encourage to attend college
and benefit from Federal financial aid.
In Tennessee, former Governor Bill Haslam created the
Tennessee Promise and Tennessee Reconnect programs to provide 2
years of free community college to any Tennessean without a
degree. All you have to do is fill out the FAFSA. Yet the
Governor hasn't told me that the FAFSA is the single biggest
barrier to helping more Tennesseans take advantage of the
opportunity for two free years of higher education. The right
time to finish the job is now a time when college students and
their families are under so much pressure, facing so much
uncertainty, especially homeless students, students in foster
care and those living with grandparents.
I hope we can pass bipartisan legislation to do so by the
end of this year. I will now recognize Senator Murray for her
opening statement.
OPENING STATEMENT OF SENATOR MURRAY
Senator Murray. Well, Mr. Chairman, first of all, let me
just say thank you to all of our witnesses for being here
today. And Mr. Chairman, thank you for your very kind opening
remarks about me. I appreciate it so much. And if I am not
mistaken, this is your last scheduled education hearing as the
HELP Chairman. So I will say today, thank you for all your
contributions to higher education. As I said earlier this week,
as a former Governor, president of the University of Tennessee,
secretary of education, this Committee and our entire country,
everyone has really benefited from your expertise and your
experience.
I will say what I said again Tuesday, we all owe you a debt
of gratitude and really, really appreciate all your work. You
know, throughout our time together and how we have been able to
pass the FUTURE Act to permanently fund our Nation's HBCUs, we
updated our Nation's career and technical education programs,
and worked together with Senator Blunt to restore the year
round Pell Grant, just to name a few and just in higher
education. again, thank you so much for all of your
contributions. And of course, today we are discussing an issue
near and dear to your heart where you already have an
impressive legacy and that is FAFSA simplification.
I am proud of the steps that we have taken to improve the
FAFSA for students across the country. From our work in 2015
with the Obama administration to allow students to fill out the
FAFSA earlier and with more accurate financial information, to
our work last year on the FUTURE Act, which will streamline the
process to help students securely use the tax information
already on file with the Federal Government, this is an issue
where we have repeatedly been able to find common ground and
get things done. And Mr. Chairman, your leadership on this
issue has already made the FAFSA much easier to navigate. But
of course, we both agree there is more work to be done.
The ongoing pandemic is also having a profound economic
impact on families across the country and we are already seeing
students are facing unprecedented struggles when it comes to
paying for college. The FAFSA must be a tool that expands
access to higher education, not a barrier that prevents
qualified students from getting the financial aid they need to
go to college. And that means we need to build on the valuable
work that has been done to make FAFSA easier to navigate by
making sure that students experiencing homelessness, students
in foster care, and students whose families have low incomes
can successfully get access to the Pell Grants available to
them.
Because right now it is students that need our help the
most who are facing the biggest burdens in getting financial
aid. Those students don't often have the resources to navigate
the college financial aid process and they struggle without
access to college counselors or other support and many times
without dependable Internet or access to a computer. So instead
of forcing them to jump through unnecessary hoops, we need to
do everything we can to make their lives easier, like making
the verification process where students have to confirm
information on the FAFSA for their schools less of a burden,
especially for families with low incomes. Determining Pell
Grants based on the Federal poverty level so more students and
families can easily know the amount of help they will receive.
And fully implementing the FUTURE Act as soon as possible. And
we can't stop there by the way, we also need to get serious
about connecting these students to more than just Pell Grants.
We must work to ensure that students don't miss out on
state and Federal support programs they may be eligible for
that could help them afford food and housing and child care.
The FAFSA is just the beginning of the financial aid process
that we need to make easier for students and families. So I am
glad to keep working with you, Mr. Chairman, to get this right.
But while simplifying FAFSA is important, I don't have to tell
anyone here that the COVID crisis is top of mind for students
and families and educators. We just kicked off an unprecedented
school year. There have already been over 88,000 cases of
corona virus on college campuses and 60 deaths. And these
outbreaks have led many colleges to abruptly switch to remote
classes and force students to leave campus with little warning.
I am hearing truly heartbreaking stories from college
students back in my home State of Washington about the turmoil
they are experiencing. So the Senate also needs to get to work
negotiating a COVID relief package to make sure colleges can
deliver a quality education for their students and implement
public health protocols and provide emergency financial aid to
students who are struggling to afford the food and housing and
childcare and technology that they now need to have during this
crisis. I am going to keep pushing to start bipartisan
negotiations on this relief package but for now, I again want
to thank our witnesses for being here.
Thanks again to Chairman Alexander. I know we don't always
agree, but what I do know is that even when we disagree, we
have always been able to listen to each other and quite often
find things we can agree on that help the people we are here to
serve. That is what we have been able to do with the FAFSA
simplification in the past, and I hope even in the few weeks
you have remaining this year, that we can build on that work to
make much needed progress on the many critical challenges in
front of us. So thank you again, Mr. Chairman.
The Chairman. Thank you so much, Senator Murray. Senator
Baker told me one time that the key to being an effective
Senator was to become an eloquent listener.
Senator Murray. Absolutely.
The Chairman. You do pretty well at that and I try to as
well. Welcome to our witnesses today. Our first witness is Dr.
Bridget Terry Long, the Dean and Saris Professor of Education
and Economics at the Harvard Graduate School of Education. Dr.
Long is an economist who focuses on the transition from high
school to higher education and beyond. Her research examines
the impact of factors such as affordability and academic
preparation on college student outcomes. She was appointed to
the National Board for Education Sciences at the U.S.
Department of Education where she served as Vice Chair and then
Chair. She holds Ph.D. and Master's degree from the Harvard
University Department of Economics, as well as bachelor's
degree in Economics from Princeton.
Our second witness is Dr. Kim--is Ms. Kim Cook, Executive
Director of the National College Attainment Network. Ms. Cook
has worked in the higher education and college access field for
her entire professional career, including in undergraduate
admissions and financial aid and at a last dollar scholarship
program and as Executive Director of NCAN since 2008. She holds
a Master's degree in Public Administration from Pesche
University, bachelor's degree from American University.
Our third witness is Ms. Rachel Feldman, Associate Provos
and Director of Scholarships and Financial Aid at the
University of North Carolina at Chapel Hill. She served as
Director of Financial Aid at the University of California,
Berkeley. In this role, she developed and implemented a peer
led financial wellness initiative for undergraduate and
graduate students. She also co-founded and co-led the
University of California's system wide Financial Aid Leadership
Institute, developed and implemented UC Berkeley's Middle-Class
Access Plan. She currently serves in a leadership capacity on
several financial aid advocacy boards.
Our fourth witness is Dr. Judith Scott-Clayton, an
Associate Professor of Economics and Education at Teachers
College, Columbia University. She directs the economics and
education program at Columbia. Dr. Scott-Clayton is also a
faculty research associate at the National Bureau of Economic
Research and a senior research scholar at the Community College
Research Center. She holds a bachelor's degree from Wellesley
and a Ph.D. from Harvard.
Our final witness, Kristen Hultquist, a founding partner of
the consulting firm of HCM Strategies. She helps steward and
direct two recent initiatives, The American Dream 2.0 Coalition
and the Doing Better for More Students Technical Report. Ms.
Hultquist served as the U.S. Department of Education Senior
Advisor to the Undersecretary of Education and the Program
Director for Education Policy at the National Governors
Association. She also has a bachelor's degree from California
Polytechnic State University, a Master's from Georgetown.
I look forward to everyone's testimony. We thank you for
being here. Let me please remind you to summarize your
testimony in 5 minutes, if you will.
Let's begin with Dr. Long. Welcome.
STATEMENT OF BRIDGET TERRY LONG, PH.D., DEAN AND SARIS
PROFESSOR OF EDUCATION AND ECONOMICS, HARVARD GRADUATE SCHOOL
OF EDUCATION, CAMBRIDGE, MA
Ms. Long. Good morning everyone. Chairman Alexander,
Senator Murray, and Members of the Committee, thank you for the
opportunity to appear before you again today. My name is Dr.
Bridget Terry Long, and as just noted, I am the Dean and Saris
Professor of Education and Economics at the Harvard Graduate
School of Education. I have spent over the last two decades
researching issues related to postsecondary opportunity and
student success, and my testimony today aims to provide
information on the challenges students face in the financial
aid system and highlight additional steps that could be taken
to reform the FAFSA and improve the Federal financial aid
system.
To begin, I must emphasize the importance of financial aid.
There is a long, definitive research literature that proves
financial aid not only has a positive impact on college
enrollment, but also student persistence and degree completion.
It is an effective approach for supporting college access and
success. Today, the importance of financial aid is only
growing, but a major impediment for many families, especially
to many low income families, is the complexity of the college
financial aid process. There continues to be a lack of
information about the process of applying and receiving--
applying for and receiving financial aid, and the FAFSA process
is difficult to navigate.
Families are burdened with unnecessary questions that do
little to nothing to further our estimates of their financial
need. There is also confusion about how to renew financial aid.
So as a result, students miss out on the support they are
eligible to receive, which affects their enrollment decisions
and limits college access. Additionally, lost or reduced
financial aid undermines student persistence in degree
completion. Overall, having a cumbersome, overly complex
financial aid system undermines the effectiveness of our
financial aid policies, not only Federal but also state and
institutional aid programs, because the process and the FAFSA
are unnecessarily complicated gatekeepers. Importantly,
simplification is an important policy tool, a powerful policy
tool. As I have shown in my own research, interventions that
simplify the FAFSA for families have had meaningful, positive
impacts on college outcomes.
In my work with Eric Bettinger, Philip Oreopoulos, Lisa
Sanbonmatsu, we found that streamlining and providing
assistance with the FAFSA had a substantial positive impact on
the likelihood of aid application and enrolling in college. And
3 years after that intervention helping students with the
FAFSA, we found that students were still persisting in college
and they were persisting at higher levels and had higher
educational attainment than their counterparts who did not
receive help with the FAFSA. In other words, they were able to
succeed in college even though the barrier of the FAFSA process
would have kept them out of school. I want to acknowledge that
there have been improvements to the FAFSA in recent years and
those have been amazing. But while these steps have been
important, these efforts do not fully address the needs of many
students.
In a study I recently completed with Eric Bettinger and
Monica Lee, in which we conducted a randomized control trial
with 15,000 students in 2017, we found that students still
lacked access, awareness of financial aid eligibility, the
FAFSA application procedures and aid award rules. And this was
even after having prior year early FAFSA and the IRS data
retrieval tool. So our intervention, which focused on providing
support and information, had a positive impact, which
underscores the fact that without additional help and
information, the current FAFSA process is still a barrier to
getting students aid. And this point was further emphasized
with what we just witnessed this past spring, with FAFSA
submission rates during COVID.
As students lost access to their teachers, counselors and
nonprofit organizations that would normally help them, we saw
submissions for the FAFSA fall. So, yes, additional
simplification is necessary, but much more is needed beyond
just reducing the number of questions. First, I would
underscore the necessity to improve the need analysis
calculation that determines how much a families should receive.
We needed to reform it to more accurately reflect the financial
situations of most college students today who are not going
full time and are financially dependent on their parents after
immediately leaving high schools. We have working adults,
parents, veterans who are not served as well by the way that we
calculate how much aid they should receive. Second, regarding
the FAFSA, we must proactively disseminate clear information
and enable multiple pathways for families to complete the aid
application process.
Finally, perhaps most importantly, now is the time when we
need to bolster the aid that is available to students--and
numerous examples of racial injustice. While we usually see
increases in college enrollment during recessions, this moment
of time appears to be different in severity and scale.
According to a new poll, at least half of households in
large cities have been affected by depleted savings, job loss
and difficulties affording basic needs. Without Government
intervention support, we are unlikely to see investments in the
skills that will be necessary to take individuals and families
in this country to the next stage of economic growth. Thank
you.
[The prepared statement of Bridget Terry Long follows:]
prepared statement of bridget terry long
Chairman Alexander, Senator Murray, and Members of the Committee,
thank you for the opportunity to appear before you today. As we
consider ways to improve the financial aid system in the United States
and the Free Application for Federal Student Aid (FAFSA), my testimony
aims to provide information on the following topics:
Concerns about the current financial aid system and
the FAFSA
Recent data and research on how the current barriers
are impacting college access, persistence, and graduation
Highlight reforms to the FAFSA that could better
address the needs of students and families
Finally, I close with recommendations about we can improve the
Federal financial aid system
THE IMPORTANCE OF FINANCIAL AID
Financial aid increases the likelihood of college enrollment.
Research demonstrates that grants have positive effects on college
enrollment (Deming and Dynarski, 2010; Dynarski and Scott-Clayton,
2013). For example, Kane (2003; 2004) found that two state need-based
aid programs, the Cal Grant and the D.C. Tuition Assistance Grant, each
had positive effects on college access for low-income students. The
former provides grants for students to attend 4-year colleges in
California, while the latter allowed D.C. residents to pay in-State
tuition rates at public universities across the country. Dynarski
(2000; 2004) found even larger effects (4 to 6 percentage-point
increases) among a set of State financial aid programs. As shown by
these studies and others (e.g., Long, 2007), grants can be an effective
way to increase college enrollment.
Financial aid also has an important role in supporting college
persistence and degree completion.
Financial aid can also be an important policy lever for increasing
rates of college persistence and degree completion. In my study of the
Florida Student Access Grant (FSAG), a need-based grant that gave low-
income students an additional $1,300 in support, we found financial aid
to have a positive impact on a host of short-, medium-, and long-term
college outcomes. The additional $1,300 in grant aid eligibility (in
2000 dollars) increased the probability of immediate enrollment at a
public, 4-year university by 3.2 percentage points while also
increasing the probability of staying continuously enrolled through the
spring semester of students' freshman year by 4.3 percentage points for
students eligible for FSAG. Most importantly, the additional $1,300 in
aid eligibility increased the probability of earning a bachelor's
degree within 6 years by 4.6 percentage points, or 22 percent
(Castleman and Long, 2016).
It is important to note that the FSAG was awarded on top of the
Pell Grant--eligible students would have qualified for both the $1,300
FSAG and at least a $1,750 Pell Grant. As such, our results address the
question of whether increasing the size of current aid awards would
have positive effects on college outcomes (as opposed to questions
about the effects of some aid versus no aid). Overall, our results
suggest that not only does need-based aid have a positive effect on
persistence and degree completion, but also that increasing the award
amounts of current aid programs could have beneficial, cost-effective
results. Other research has also found that need-based financial aid
can improve college completion rates (Bettinger, 2015; Goldrick-Rab,
Kelchen, Harris, and Benson, 2016).
CONCERNS WITH THE FINANCIAL AID SYSTEM
It is very challenging, especially for students from low-income
families, to navigate the higher education system.
College attendance is the culmination of a series of steps and
benchmarks. First, students must aspire to attend college or derive
aspirations from their parents, teachers, and/or mentors. In addition,
they must prepare academically for college by taking the proper classes
and getting a sufficiently high grade point average, particularly if
they wish to attend a selective institution. To gain entry into a 4-
year college, students must also register for a college admissions exam
(i.e. the SAT or ACT). As they approach the college choice decision,
students and their families must contend with the difficulty of
simultaneously ranking options along multiple dimensions including
measures of quality, academic offerings, cost, and location. Then they
must put this information in perspective with their own personal
situations and preferences. Families must also discern differences in
quality, or the likelihood that the school will impart learning,
support student success, and result in future benefits. Such
differences are hard to detect as measurements of quality in higher
education tend to rely more on the characteristics of the entering
student body rather than the value added by the institution or the
benefits realized by graduates (Long, 2010a). Difficulty sorting
colleges by characteristics and quality is coupled with complicated
pricing structures, in which the net price each student pays often
differs due to government and institutional financial aid. These
choices carry on throughout the enrollment experience as students must
constantly reevaluate if their enrollment decision is likely to pay
off.
In essence, the process of preparing, choosing, and enrolling in
higher education is incredibly complex and involves many small
decisions and actions that must be taken in the right order and at the
right time. The process extremely difficult for many families to
decipher and navigate, especially for low-income families and potential
first-generation college students. Numerous studies have found that
students are often unaware of the necessary steps or even what
questions they need to ask in order to take the steps toward college
enrollment (Bettinger, Boatman, and Long, 2013; Page and Scott-Clayton,
2016).
The complexity of the financial aid system is a major barrier to
students receiving support.
The financial aid system is itself incredibly complex. To determine
eligibility, students and their families must fill out the Free
Application for Federal Student Aid (FAFSA). Not surprisingly, students
and their families are often confused and even deterred by the form
(ACSFA, 2005). In 2006, the Spellings Commission on the Future of
Higher Education acknowledged problems with the current aid process by
concluding that some students ``don't enter college because of
inadequate information and rising costs, combined with a confusing
financial aid system'' (2006, p. 7). While cost and academic
preparation are important hurdles for students, the role of information
is also substantial in determining college access and persistence.
More recently, it has been shown that the Federal aid application
barrier is especially challenging for families from low-income
backgrounds (Bettinger et al., 2012). Such evidence has led many to
conclude that the complexity of our financial aid policies results in
them not being as effective as they could be.(Dynarski & Scott-Clayton,
2013). This is underscored by the fact that financial aid programs that
are simple to access and well-known among eligible families have the
largest estimated effects on college outcomes (Long, 2010).
There is also confusion about how to renew aid and financial aid award
rules, resulting in lost or reduced support to help them persist in
college.
While completing and submitting the FAFSA is a good first step,
students need to do this each year to maintain their aid awards, and
unfortunately, college students are often unaware of this fact. Bird
and Castleman (2016) suggest that about one in five first-year Pell
Grant recipients in good academic standing do not re-file their FAFSAs
successfully, and these students tend to be concentrated at community
colleges. Furthermore, they estimate that over half of previous Pell
recipients did not reapply for aid, pointing to inaccurate beliefs
about continued aid eligibility as the impetus for this. Additional
work by Bettinger, Long, and Lee (2020) underscores the problem of
students not renewing their financial aid awards due to
misunderstandings about the FAFSA process.
Bird and Castleman further observe that students who fail to renew
their FAFSAs are less likely to persist in college over the long term.
This is not surprising given the evidence cited above about the causal
relationship between aid and educational attainment, but it is
important to separate students who do not resubmit a FAFSA due to lack
of information versus those who have decided ahead of time not to
continue in college.
Students also fail to understand how financial aid awards relate to
enrollment choices (Bettinger, Long, and Lee, 2020). For example,
students often do not realize how taking more college credits could
entitle them to additional financial aid. Based on the financial aid
calculator, a student with a zero Expected Family Contribution (i.e.,
the family's resources are so low that they are not expected to help
pay for college) would receive $1,444 for enrolling in 8 credit hours,
but receive $2,166 for enrolling in 9 credit hours, a difference of
$722. At many community colleges, this gain in financial aid would more
than cover the cost of an additional three-credit course. Attending
college part-time is considered a risk factor that is correlated with
lower rates of degree completion, and while this is not necessarily a
causal statement, encouraging a student to complete their degree in
fewer semesters (i.e., a shorter amount of time) reduces the likelihood
of progress being derailed by external circumstances.
There are many negative consequences of having a complicated financial
aid system.
There are many negative and far-reaching repercussions due to the
complexity of the college investment combined with the lack of clear
information. This translates to keeping some students out of higher
education. Among those who do decide to attend, some college students
forego aid they are eligible to receive. An American Council on
Education (ACE) study found that 850,000 students who would have been
eligible for Federal financial aid did not complete the necessary forms
to receive such aid (King, 2004). Kantrowitz (2009) estimated that
about four in ten undergraduates do not complete the FAFSA and about
one-quarter of this group would be eligible for the Pell Grant. More
recently, a 2011 study found many students fail to complete the
necessary forms, with only 43.5 percent of students at community
colleges completing the FAFSA in 2011 according to the last National
Postsecondary Student Aid Study (NPSAS), the NCES' nationally
representative survey focusing on how students pay for college. Some
students may have good information that they are ineligible for need-
based Federal grants (i.e., due to high incomes or not taking enough
credits) and choose not to apply, but these students are still eligible
for Federal loans and may qualify for State or institutional aid
programs that have much higher or no income requirements. Overall,
estimates range from about 13 to 23 percent of students who are
potentially eligible for financial aid that do not apply (King, 2004;
Kofoed, 2017).
With increasing information about high debt burdens and low
graduation rates at some college, it is clear that the college
investment can be a high-risk proposition. While the average return to
a postsecondary credential is substantial and justifies the cost in
most cases, there is wide variation in the returns to a degree based on
the specific college attended and the major completed. Moreover, nearly
half of college entrants do not graduate at all and so forfeit the
potential returns to a degree. Oppressive loan burdens and rising
student loan defaults also suggests evidence of bad college choices.
Some companies have also exploited the heightened need for information
by charging families excessive amounts for college facts that are
freely available elsewhere if one knew how to navigate through the
multiple sources that focus on higher education. This underscores the
necessity of a clear and informed college decision process.
SIMPLIFICATION IS A POWERFUL POLICY TOOL
An intervention to simplify the FAFSA had meaningful, positive results.
As noted above, lack of information and the complexity of the
financial aid application process are major barriers to college access.
However, as research has shown, simplification is an important way to
improve outcomes. In 2008 and 2009, using a random assignment research
design, my research team designed and implemented an intervention to
provide low-to moderate-income families receiving tax preparation help
free additional assistance in completing and filing the FAFSA
(Bettinger et al., 2012). The just-collected tax information was used
to pre-populate the FAFSA, and then individuals were guided through
remaining questions to complete the form in less than 10 minutes
(including completely the research consent form and background survey).
Families were also given an immediate estimate of their eligibility for
government aid as well as information about local postsecondary
options.
The results suggest that streamlining and providing assistance with
the FAFSA had a substantial positive impact on the likelihood of
submitting an aid application. The FAFSA treatment substantially
increased college financial aid applications, improved the timeliness
of aid application submission, increased the receipt of need-based
grant aid, and ultimately increased the likelihood of college
attendance and persistence.
Assistance with the FAFSA increased the likelihood of
submitting the aid application substantially.
Y FAFSA submissions increased 39 percent for seniors in high
school, from 40 percent for the control group to 56 percent for
the treatment group.
Y Aid application submissions increased 186 percent, from 14
percent to 40 percent, among independent students (those age 24
and above or who were married, a parent, or a veteran) who had
never been to college before. This translates to an almost
tripling of the number of potential students who submitted an
aid application.
Y FAFSA submissions increased 58 percent for independent
students who had previously attended college, from 35 percent
for the control group to 56 percent for the treatment group.
This suggests there are large numbers of students in college
who are foregoing financial aid they are eligible to receive
because they have not completed the FAFSA.
Y Compared to the control group, FAFSA's were filed over 1
month earlier for high school seniors and almost 3 months
earlier for independent students. This has implications for the
treatment group in terms of increased eligibility for State and
institutional financial aid programs.
Receiving assistance on the FAFSA significantly
increased college enrollment.
Y Among graduating high school seniors, there was a
substantial increase of 7 percentage points in college going
(34 percent compared to 27 percent among the group who did not
receive any FAFSA help or information).
Y Among older, independent individuals who had completed high
school or a GED but not attended college previously, the number
enrolled in college and receiving financial aid increased by
about 2 percentage points. Given that only 10 percent of the
control group did this, the program effect represents a 20
percent increase.
Y The effect seems to be concentrated among those with incomes
less than $22,000. This corresponds to the point at which
individuals are not expected to contribution anything to
college expenses (i.e., they have EFCs of zero).
Y The program also increased the percentage who received a
Federal student grant.
These results suggest that streamlining the aid application process
could be an effective and efficient way to improve college access for
low-income students. The effects of the FAFSA treatment are large,
especially relative to the intervention's low marginal cost in terms of
resources and time--providing FAFSA assistance took only 8 minutes, on
average. It is also important to emphasize that once they entered
college, the students persisted. Three years after the intervention, we
found that students who attended college after receiving assistance
with the FAFSA were persisting at higher levels and had higher
educational attainment than their counterparts who had not received the
streamlined process. In other words, they were able to succeed in
college even though the barrier of the FAFSA process would have kept
them out of school. These findings suggest other opportunities for
streamlining processes and providing quick assistance could increase
greatly participation in programs that require filling out forms to
become eligible.
While the project above emphasizes the benefits of providing
assistance and a streamlined process to complete the FAFSA, we did not
similarly find positive effects from just giving families information
about their aid eligibility. In the context of the FAFSA project, we
told a random subset of families the amount of a Pell Grant they were
eligible to receive if they completed the FAFSA by themselves.
Unfortunately, families who received aid information but no assistance
with the FAFSA did not experience improved outcomes. This suggests
information alone is not enough to help families overcome barriers in
the college enrollment process, and the complexity of the FAFSA and/or
the burden of navigating through the application process alone are
significant barriers. However, it is possible that earlier information
could generate more positive effects.
ADDITIONAL SIMPLIFICATION IS NEEDED: RESEARCH ON CONTINUING CONCERNS
There has been important progress in reforming the FAFSA in recent
years.
Given the many critiques of the FAFSA, there have been numerous
calls to simplify the financial aid process, and some progress has been
made in recent years. This includes efforts to simplify the existing
online FAFSA, including introducing skip-logic to minimize the number
of questions. Moreover, the Data Retrieval Tool (DRT) allows applicants
and parents to import IRS income tax data. Another change has been the
switch to using Prior-Prior-Year income data, which allows families to
complete their FAFSAs sooner. Most recently, the FUTURE Act will
eliminate up to 22 questions on the FAFSA and allow the Internal
Revenue Service to share applicants' tax information directly with the
U.S. Department of Education.
While there have been recent improvements to the FAFSA, these efforts
do not fully address the needs of many students, and there is still
significant room for improvement.
While recent reforms have begun to address a number of the concerns
related to the FAFSA, students and families continue to grapple with a
complex system that fails to meet many of their needs. For example, the
recent improvements to the FAFSA still require families to be aware of
the form and process. Many families still do not know that the FAFSA
exists and how to access it. No amount of simplification will help if
individuals do not actually access the form. Additionally, many
individuals, particularly low-income students, often greatly
overestimate the cost of higher education) and so do not bother
completing form because they do not think they can afford college or
will qualify for financial aid. As discussed below, it is clear the
complexity of the process still hampers many students and families.
Additionally, the improvements related to prepopulating the form
with IRS information are not helpful to non-filers. Moreover, as we saw
with the initial implementation of the DRT, the IRS pre-population was
not available to all individuals, and technical requirements also made
the process challenging. Students and parents can only access the IRS
data retrieval if they have a filed a tax return, have a valid social
security number, an unchanged marital status, no amended tax return, a
filing status that is not married filing separately, and a Federal
student aid pin.
It is also the case that to benefit from the simplified form and
process (i.e., skip logic and pre-population using data from the IRS),
student must have access to a private, online computer, preferably with
high-speed internet, a problem for many low-income families. An
additional impediment is the number of times a family must revisit the
FAFSA to complete it. As shown in our FAFSA Project, streamlining the
process by allowing participants to submit the FAFSA immediately had
large, positive effects. With each additional delay, families are less
likely to fully complete the process.
Recent research on FAFSA awareness and submissions
In recent work, we investigate experiences with the FAFSA for a
nationally representative subsample of over 15,000 college students
from the 2015-16 National Postsecondary Student Aid Study (NPSAS:16).
In a randomized controlled trial (RCT), and under a unique partnership
with the National Center for Educational Statistics, we implemented a
set of interventions designed to address students' lack of awareness
about financial aid eligibility, FAFSA application procedures, and aid
award rules related to enrollment intensity (Bettinger and Long, 2017).
During the year of our experiment, the U.S. Department of Education
implemented two nationwide changes on the FAFSA filing process. First,
the early availability of FAFSA made it so that applications were
available 3 months earlier during the year of our experiment than in
previous years. Second, the ``prior-prior year'' mandate required all
students to file the FAFSA using income tax information from 2 years
ago, rather than from the previous year. The research attempts to
better understand what format, frequency, or type of information should
be supplied, and whether other types of supports must be provided to
meaningfully influence decisionmaking processes.
The paper on the results (Bettinger, Long, and Lee, 2020),
concludes that interventions focused on support and information are
still needed to help students even after the recent improvements to the
FAFSA. Preliminary findings suggest our intervention increased FAFSA
submissions by 3.8 percentage points and persistence in postsecondary
enrollment by 2.1 percentage points. Stated another way, our
intervention still had important effects even after incorporating
recent efforts to improve the aid system--students still needed extra
supports to help them complete the FAFSA.
Lessons from Spring 2020: A FAFSA Season without Help
The most recent experience of students attempting to navigate the
higher education experience during the COVID-19 pandemic also
underscores the need for additional reform to the FAFSA and financial
aid system. During this past spring, FAFSA filings fell. According to
the National College Attainment Network, the number of high school
seniors who had completed the FAFSA through June 26 fell by 3.5 percent
in comparison to the previous year. They also found that fewer than
half of high school seniors in Florida completed the form (Field,
2020).
Students who needed to renew their FAFSA applications also
experienced a decline. The total number of completed applications by
returning students from low-income families (defined as having an
income of $25,000 or less) fell by 170,605 through June 30, the
unofficial end of the financial aid season (June, 2020).
While additional analysis is necessary to fully understand the
reason for the drop in FAFSA submissions, one leading hypothesis is
that this is an indication of how reliant students are on supports to
complete the FAFSA process. With the move to remote learning for most,
many K-12 and higher education students lost access to counselors and
teachers who could help them with this. Additionally, many of the non-
profit organizations that would ordinarily be available to provide
support reduced their services. Therefore, one conclusion from this
trend is that even with recent efforts to simplify the FAFSA, students
are struggling with the complexity of the process and form. More is
needed to support their college process.
ADDITIONAL WAYS TO IMPROVE THE FINANCIAL AID SYSTEM
While more simplification of the FAFSA would be helpful in
addressing students' needs, additional steps could be taken to improve
the entire financial aid system and process.
The current need analysis calculation does not reflect accurately the
financial situations of many college students.
While the current financial aid system was created with the idea of
determining the need of recent high school graduates who are dependent
on their parents and attend college full-time, college students are a
much more diverse group. Most would be considered ``nontraditional,''
meaning someone who fits at least one of the following criteria:
Y Delays enrollment after high school
Y Does not have a regular high school diploma (i.e., a GED or
other certificate)
Y Attends part-time
Y Works full-time while enrolled
Y Is a displaced workers or unemployed
Y Considered financially independent
Y Is a welfare recipient
Y Has dependents other than a spouse
Y Is an immigrant
Nearly three-fourths of all undergraduates are nontraditional. The
nontraditional group includes working adults, parents, welfare
recipients, immigrants, displaced workers and the unemployed, and
single, financially independent students.
Given the disconnect between how the financial aid system was
designed and the profile of many college students, many suggest that
the current financial aid system does not adequately meet the needs of
many, particularly nontraditional, students.
There are several major criticisms of the way Federal need analysis
is applied to nontraditional students. First, it is assumed that the
earnings of the potential student are relatively minor (i.e., the
result of a summer job) and should be taxed highly to cover college
expenses. Moreover, the calculation assumes that the parents' income,
the main source of support for the child, will continue even while the
student is in college and should be used to help cover expenses. In
contrast, independent students do not have other major sources of
support to rely upon. Most nontraditional students are formally engaged
in the labor market when applying for financial aid, and while the
government assumes this income level will remain the same even after
college enrollment, the nontraditional student is actually likely to
experience a reduction in earnings while pursuing a degree. Therefore,
assumptions about the amount of earnings available to them while in
school are incorrect. As an extension of this, the EFC for many
nontraditional students may be too high as they are penalized for their
earnings the year before starting school.
Proactively disseminate clear information to families early and often.
Proactively disseminating the information is my second
recommendation. Additional effort must be taken to translate and
circulate it to an audience that may understand little about higher
education offerings, pricing, financial aid, or quality. Therefore, the
Federal Government should actively reach out to potential students
where they live, study, and work rather than putting the responsibility
on the individual to seek out the information on their own. This should
be done through a series of partnerships with educational, social
services, and employment organizations along with other government
agencies. For instance, the government should work with college access
programs and youth organizations to reach students.
One specific idea would be to send students and their families
information about possible aid eligibility as early as elementary
school. Using information from tax returns, an estimate could be made,
and these reports could be similar to old Social Security projected
benefits letters that working adults received. A related idea would be
to summarize financial aid eligibility in a table with family income on
one side and family size on the other. Research suggests those two
variables give a very good estimate of aid eligibility (Dynarski and
Scott-Clayton, 2006), and such simple, early information could help
combat misperceptions about college costs and the availability of aid.
Use and enable multiple pathways for families to complete the aid
application process.
As noted above, while there have been improvements to FAFSA on the
Web, students without access to a private computer with high-speed
internet access are not able to use the tool. Moreover, awareness of
the FAFSA remains low. Therefore, I encourage maintaining the paper
FAFSA as a submission method while also enabling community-based
organizations, which help students and families complete the FAFSA
free-of-charge, to submit batches of FAFSA once receiving consent from
families. This would increase the opportunities for interacting with
the form and help the many organizations working in the field to
streamline their FAFSA assistance by interacting directly with the
Department of Education (rather than having to take each individual
family through the FAFSA on the Web or paper form). In my FAFSA
project, having electronic submission directly from the tax site to the
Department of Education reduced the amount of time and effort needed on
both the part of the family and the tax professional.
Minimize the burden on families when completing the FAFSA.
The FAFSA is a significant barrier to accessing college financial
aid, or even just determining eligibility level. The barrier is so
large that even informing families of $4,000 of grant eligibility was
not enough to have them overcome the burden of navigating through the
aid application process. Therefore, as much as possible, the process
should limit the amount of work a family needs to do to complete the
form.
Most importantly, we should eliminate steps that could be
accomplished other ways. For instance, families should not be required
to supply information available elsewhere. To some degree, this is the
purpose of having IRS data populated into the FAFSA on the Web.
However, another step forward would be to have this match happen behind
the scenes automatically. As we have demonstrated, for most families,
one could complete approximately two-thirds of the FAFSA using tax
information. As a result, it took less than 10 minutes to complete the
rest of the form (Bettinger, et al., 2012). If a family wanted to opt
out of the system or question the validity of their matched data, they
could do so, but for the vast majority of families, they would be able
to skip a burdensome step, especially for those who are not able to use
FAFSA on the Web. Information on family background and income is also
available from other sources, including the Free and Reduced-Price
Lunch system and other government programs, and these sources could
also be used to determine family aid eligibility.
Making a shorter form (simplification) would likely increase FAFSA
submissions. Moreover, such a change would make it easier to develop
programs that could help families to fill out and submit the form. By
streamlining the form and process, community-based organizations would
be able to serve students more easily as fewer pieces of information
would be required, and their outreach and assistance could be more
effective.
We should also limit the number of interactions and steps needed to
complete the FAFSA. In my research on the effects of simplifying the
FAFSA process, we found the largest effects associated with individuals
who used both simplification to complete the form and then took
advantage of automatic filing or assistance in filing. These
individuals for whom assistance and simplification were most prominent
(and the FAFSA was completed in the office) appear to be the ones most
affected by the treatment.
Bolster the aid that is available to students.
Unmet need and substantial loan burdens continue to be a problem in
the United States. With the recession and increasing financial
uncertainty prompted by the COVID-19 pandemic, the financial needs of
students are only going to increase. In fact, many institutions have
already experienced increases in requests for additional financial aid.
To help students and invest in our future, it is critical that we
increase the amount of financial aid available to low-income students.
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control of institution.'' Retrieved from http:/www.finaid.org/
educators/ 20091014fafsacompletion.pdf
King, Jacqueline E. (2004). ``Missed Opportunities: Students who do
not Apply for Financial Aid,'' American Council on Education Issue
Brief.
Kofoed, Michael S. (2017). ``To Apply or Not to Apply: FAFSA
Completion and Financial Aid Gaps.'' Research in Higher Education,
58(1), 1--39.
Long, Bridget Terry. (2010a) Grading Higher Education: Giving
Consumers the Information They Need. Washington, DC.: The Center for
American Progress and The Hamilton Project, December
Long, Bridget Terry. (2007) ``The Contributions of Economics to the
Study of College Access and Success.'' Teachers College Record, vol.
109, no. 10.
Long, Bridget Terry. (2010b) ``Making College Affordable by
Improving Aid Policy.'' Issues in Science and Technology. Washington,
DC.: National Academy of Sciences, Division of Behavioral and Social
Sciences and Education, Summer.
Page, Lindsay and Judith Scott-Clayton (2016). Improving College
Access in the United States: Barriers and Policy Responses. Economics
of Education Review, 51: 4-22.
______
The Chairman. Thank you, Dr. Long. Ms. Cook, welcome.
STATEMENT OF KIM COOK, EXECUTIVE DIRECTOR, NATIONAL COLLEGE
ATTAINMENT NETWORK, WASHINGTON, DC
Ms. Cook. Mr. Chairman, Ranking Member Murray, and Members
of the Committee, thank you for this opportunity to testify on
time to finish fixing the FAFSA. I am particularly honored to
offer this testimony as a former Pell Grant recipient myself.
The National College Attainment Network, NCAN, and its over 500
affiliates, working communities across the country to close
equity gaps in postsecondary attainment. As a Nation, we have
made progress over the past 20 years with more students
pursuing higher education. But when we scratch the surface of
the data, we find attainment gaps of over 20 percent--
percentage points persist by race and income.
Much of that gap is fueled by an affordability challenge
with NCAN's growing gap research finding that only 25 percent
of public 4 year institutions are affordable to even those
students who work hard to get it all of the Federal and state
aid for which they are eligible. FAFSA completion is the bare
minimum to afford college. This one, two punch of equity of
inequity and lack of affordability exacerbated by family income
losses due to COVID, make today's conversation about FAFSA, as
the key to access that Federal aid, critical. The high school
class of 2018 left nearly $2.6 billion on the table in
unclaimed Pell dollars by not completing the FAFSA.
Many students miss out on the Pell they deserve because the
form is unduly complicated and often requires expert assistance
to complete. Since our hearing 7 years ago, we have been
improving the FAFSA through changes such as the use of prior,
prior year income to allow students to file the application to
better align with their decisionmaking timeline and the launch
of a mobile app to reach students where they are. In the year
following news changes, we saw a 9 percent increase in FAFSA
completions for high school seniors and reversed a 4-year
decline in overall applications. Prior, prior year also
increased the percentage of FAFSA filers who are Pell eligible,
adding over 58,000 Pell eligible FAFSA filers. Clearly,
simplification matters.
The December passage of the FUTURE Act will reduce up to 22
questions on the FAFSA by allowing for data sharing between the
U.S. Department of Education and the Internal Revenue Service.
While we celebrate the passage of this legislation, it is
important to note that it faces a more complicated than
anticipated road to implementation, which is currently not
expected until the '23, '24 FAFSA. We are now at an important
inflection point to think about what is left to fix the FAFSA
and can seize three key steps remaining, remove unnecessary
questions, simplify the Pell Grant eligibility formula,
including fast tracking eligibility for students receiving
means tested benefits, and streamline verification. I expand on
these in my written testimony and would be happy to discuss
more in the question and answer period. First, NCAN has long
advocated to remove unnecessary questions. 25 percent of the
questions on today's FAFSA are answered by less than 1 percent
of applicants.
In our 2017 research, half the FAFSA, we developed and user
tested a streamline FAFSA with radical fewer questions. We
found that our simplified FAFSA improved completion time by 3
percent, and even more importantly, reduced the error rate by
56 percent. Second, we turned to the Pell Grant, the
cornerstone of Federal student aid for low income students.
NCAN Advocates for a simplified Pell eligibility formula that
ties adjusted gross income and family size to Federal poverty
levels. We also support the fast track to full Pell Grant
eligibility to those receiving means tested benefits such as
the SNAP program. While examining the Pell Grant, it is
important to address the need to restore its purchasing power
by doubling it. At its peak of '75,' 76, a maximum Pell Grant
covered more than three quarters of the average cost of
attendance for a 4-year public university.
Today, it covers less than 30 percent. NCAN's long term
investment proposal calls for a return to a Pell Grant that
covers 50 percent of the cost of attendance for public 4 year
university. Our third and final component to fix FAFSA is to
better target and significantly decrease verification selection
rates. The students' FAFSA is not complete or actionable until
this process is resolved, often causing missed deadlines and
missed opportunities or first come, first served state and
institutional aid.
Earlier this year, NCAN worked with the Office of Federal
Student Aid Data to find that slightly more than 70 percent of
students who completed verification experience no change in
their Pell Grant Award, and that 93 percent of applicants
within auto-zero EFC retained that award after verification.
These data raise questions about both the costs and benefits of
verification and how upcoming policy implementations could
knock down this barrier.
In closing, we thank you for having this important
discussion today. Mr. Chairman, as you retire from the Senate,
please let me take this opportunity to thank you for being a
tireless champion for FAFSA simplification and help all of our
students succeed. Thank you.
[The prepared statement of Kim Cook follows:]
prepared statement of kim cook
Mr. Chairman, Ranking Member Murray, and Members of the Committee,
thank you for this opportunity to testify on ``Time to Finish Fixing
the FAFSA.'' I am particularly honored to offer this testimony as a
Pell Grant recipient myself who once completed financial aid forms of
her own to change her life.
The National College Attainment Network (NCAN) and its over 500
affiliates work in communities across the country to close equity gaps
in postsecondary attainment. Committee Members may know some of our
programs such as the Tennessee College Access and Success Network and
the Ayers Foundation in Tennessee and the College Success Foundation in
Washington State.
As a Nation, we have made progress over the past 20 years with more
students pursuing higher education, but when we scratch the surface of
the data, attainment gaps of over 20 percent points persist by race and
income.
Much of that gap is fueled by an affordability challenge, with
NCAN's ``Growing Gap'' research finding that only 25 percent of public,
4-year institutions are affordable to even those students who work hard
to gather all of the Federal and state financial aid for which they are
eligible. FAFSA completion is the bare minimum required to afford
college. FAFSA simplification must not only make the process of
completing the FAFSA easier, but also take into account changes in Pell
eligibility to ensure our Nation's students who are struggling to pay
for college are left in a better position than they are today.
This one-two punch of inequity and lack of affordability,
exacerbated by family income losses due to the COVID global pandemic,
make today's conversation about Federal student aid all the more
important. And FAFSA, as the key to access that Federal student aid,
critical. When we look at FAFSA completion by school districts, the gap
between higher-and lower-income school districts is more than 7
percentage points, meaning those with the most need are less likely to
apply. The high school class of 2018 left nearly $2.6 billion on the
table in unclaimed Pell dollars by not completing the FAFSA. Many
students miss out on the Pell they deserve because the form is unduly
complicated and often requires expert assistance to complete, as we
heard from these students.
Christina from Los Angeles who matriculated at UC Berkeley said,
``There were words I didn't understand, so I had to wait until my
counselor could meet with me so I could put in the right answers.''
Daniel from Phoenix who matriculated at Bowdoin College said, ``The
people from College Depot walked around and helped. I had questions
about household size. I'm the only one that lives with my parents, but
my brother is listed on their taxes too. If they weren't there, I'm
pretty sure I would've gotten stuck.''
The Chairman's home State of Tennessee has been a leader in FAFSA
completion every year since the Tennessee Promise, with its FAFSA
completion requirement, was implemented in 2015. Louisiana shares the
top rankings the last few years as the first state to implement FAFSA
completion as a requirement for high school graduation. Louisiana has
not only increased FAFSA completion by 25 percent, but it also has
closed the FAFSA completion gap between low-income and high-income
students, successfully leveraging Federal Pell Grants on behalf of its
students. Referred to in policy circles as ``Mandatory FAFSA,'' this
policy has now been adopted by Illinois and Texas with over a dozen
states and DC considering it. Tennessee and Louisiana's success
demonstrate that states can greatly increase completion with targeted
effort and programs.
I'm also proud to report that we continue to see promising
practices out of the Evergreen State. NCAN members in Tacoma have
spearheaded a broad effort including K-12 systems, postsecondary
institutions, and community-based partners to support the class of 2020
through a difficult spring and summer and help keep them on a
postsecondary pathway (source). My colleagues at NCAN have had the
chance to work with two Educational Service Districts, ESD 121 near
Puget Sound and ESD 105 serving Yakima. The former has offered students
and families excellent college transition checklists. The latter has
focused in recent months on reducing summer melt. Both are examples of
what NCAN would like to see more of in terms of partnerships that
support students with college and career readiness.
I appreciate this opportunity to reunite with my fellow panelists
from our first hearing about the FAFSA almost 7 years ago. Since then,
we have been improving the FAFSA through changes such as use of prior-
prior year income information to allow students to file the application
earlier to better align with the decisionmaking timeline and the launch
of a mobile app and web-responsive application to reach students where
they are. In the year following those changes, we saw a 9 percent
increase in FAFSA completions for high school seniors and reversed a 4-
year decline in overall applications.
PPY not only increased applications, but it also allowed FAFSA
filers to file earlier. This increased the percent of high school
seniors applying to one more than college by five points, which is an
important improvement as admissions best practices show that students
apply to at least four schools to provide them the chance to find the
best academic fit and financial match. Finally, PPY also increased the
percentage of FAFSA filers who are Pell eligible, adding over 58,500
Pell eligible FAFSA filers.
Clearly, simplification matters.
The December passage of the FUTURE (Fostering Undergraduate Talent
by Unlocking Resources for Education) Act will reduce up to 22
questions on the FAFSA by allowing for data-sharing between the U.S.
Department of Education and the Internal Revenue Service. While we
celebrate the passage of this legislation, it's important to note that
it faces a long, and perhaps more complicated than anticipated, road to
implementation, which is currently not expected until the 2023-24
FAFSA.
We're now at an important inflection point to think about what's
left to fix the FAFSA. We see three key steps remaining: remove
unnecessary questions, simplify the Pell Grant eligibility formula,
including fast-tracking eligibility for students receiving means-tested
benefits, and streamline verification.
First, NCAN has long advocated to remove unnecessary questions on
the FAFSA. In our 2017 research ``Half the FAFSA,'' we developed and
user-tested a streamlined FAFSA with dramatically fewer questions. We
found that the simplified FAFSA improved completion time by 3 percent,
and even more importantly, reduced the error rate by 56 percent.
Twenty-five percent of the questions, totaling 30, on today's FAFSA
are answered by less than 1 percent of applicants, including payments
to tax-deferred pension and savings plans, net worth of businesses and
investment farms and other untaxed income such as workers' compensation
and disability. Of those questions 7 are transferred as part of the IRS
Data Retrieval Tool and will be automatically transferred as part of
the FUTURE Act. An additional two have been removed due to tax code
changes However, the remaining 16 questions provide little useful
information on the FAFSA form and should be removed due less than 1
percent of FAFSA filers having a non-$0 answer to those questions. NCAN
also recommends removing an additional 15 questions that are not
required for the current Federal methodology, particularly questions
related to selective service and drug convictions.
Second, we turn to the Pell Grant, the cornerstone of financial aid
for low-income students pursuing higher education since its creation in
1972. This need-based grant provides crucial support for around 7
million students each year, or about one-third of undergraduates. NCAN
advocates for a simplified Pell Grant eligibility formula that ties
Adjusted Gross Income and family size to Federal poverty levels. This
new formula should be written with the goal to ensure that our low-and
moderate-income families are able to afford college regardless of how
many children they have enrolled. This formula should err on the side
of generosity to students and not budget neutrality.
We also support a clear path to full Pell Grant eligibility for
those receiving means-tested benefits such as the SNAP program. Those
students have already proven to the Federal Government that their
family has a low-income. Students from families receiving means-tested
benefits should be placed into the auto-zero Expected Family
Contribution (EFC) category and asked no further financial questions.
Finally, this new formula would let middle school and high school
students know what Federal funds they have available to them to help
pay for the costs of their higher education.
While addressing the Pell Grant, it is also important to address
the need to restore its purchasing power by doubling it. Unfortunately,
the purchasing power of the Pell Grant has continuously declined since
the mid-1970's. At its peak in 1975-76, the maximum Pell award covered
more than three-fourths of the average cost of attendance--tuition,
fees, and living expenses--for a 4-year public university. Today, it
covers less than 30 percent. While Congress' efforts during the last
two appropriations cycles have temporarily and partially curtailed the
decreasing strength of the Pell Grant, lawmakers must make bolder
investments in this program to empower traditionally underserved
students. NCAN's long-term investment proposal calls for a return to a
Pell Grant that covers 50 percent of the cost of attendance for a
public 4-year university. Given these extraordinary times of COVID and
its resulting economic downturn, Congress should respond by immediately
doubling the maximum Pell award, allowing it to direct Federal aid to
our students with most need through an established program with clear
regulations and delivery mechanisms.
Our third and final component to fix FAFSA is to better target and
significantly decrease verification selection rates. Each year after
submitting the FAFSA, about 25 percent of all filers, and roughly half
of all low-income filers, are flagged for an audit-like process known
as verification, in which they must submit additional documents to
prove the accuracy of the information included in their financial aid
application. This process aims to reduce improper payments made by the
Federal Government. But verification unintentionally and quietly wreaks
havoc on financial aid applicants, particularly low-income students.
Some obstacles include obtaining and completing different forms if they
are applying to multiple schools, long waits for mailed IRS documents,
and painful visits to records offices for death certificates. The
student's FAFSA is not complete or actionable until this verification
process is resolved, often causing missed deadlines and missed
opportunities for first-come, first-serve state and institutional aid.
These barriers lead to ``verification melt,'' or a failure to
complete the verification process that derails a student's receipt of a
Pell Grant and other financial aid. Only 56 percent of Pell-eligible
students selected for verification actually complete this review
process and go on to receive a Pell Grant. In comparison, among Pell-
eligible students not selected for verification, 81 percent ultimately
receive a Pell Grant. This represents a 25 percentage-point melt.
FAFSA verification strikes some advocates, NCAN included, as too
aggressive compared to similar processes. For example, the Internal
Revenue Service only audits a fraction of a percent of all tax
returns--approximately 0.5 percent of all returns filed in 2017. There
is some variation in IRS audits: Taxpayers earning less than $25,000
annually have slightly higher audit rates (0.69 percent), and higher-
income taxpayers (annual income of $500,000 or more) can have an audit
rate that exceeds 6 percent. Both figures pale in comparison to the
approximately 50 percent selection rate for Pell Grant-eligible FAFSA
filers.
Earlier this year, NCAN worked with the Office of Federal Student
Aid (FSA) of the U.S. Department of Education (ED) to obtain a data
extract on changes to the Federal Pell Grant amounts received by
students selected for FAFSA verification. NCAN's examination of
verification and the Pell Grant program found the following:
In the two most recent award years, slightly more than 70
percent of students who completed verification prior to November 1st
experienced no change in their Pell Grant award.
Among students whose Pell Grant award did change, Pell
Grants were twice as likely to decrease rather than increase after
verification.
Ninety-three percent of applicants with an auto-zero EFC,
i.e., applicants from low-income households who met the tax filing and
income requirements to complete a shorter FAFSA and receive a maximum
Pell Grant Award, retained that award after verification.
These data not only shed light on an area in which policymakers and
researchers had been generally in the dark, but also raise questions
about both the costs and benefits of verification and how upcoming
policy implementations (specifically of the FUTURE Act [PL 116-91]) can
affect FAFSA applicants and the verification process. In addition to
the 22 questions the FUTURE Act will remove from the FAFSA using direct
data sharing between IRS and FSA, it will also improve the FAFSA
verification process by confirming which individuals are not required
to file taxes. This will help NCAN students such as Alex and Dorothy,
both of whom needed support from NCAN members to navigate the process
of the verification of non-filer tax form during verification. Alex had
to obtain documents about his mother's earnings in Mexico and Dorothy
needed to confirm that her mother was on disability and SNAP, both
programs already administered by the government.
In closing, we appreciate the major improvements made to the FAFSA
since our 2013 hearing on this topic. As we look to what could be final
steps to fix FAFSA, we support removing unnecessary questions,
simplifying the Pell Grant eligibility formula, including fast-tracking
eligibility for students receiving means-tested benefits, and
streamlining verification. These ideas are further explained in my
written testimony. NCAN and its member programs offer our assistance
and best practices to inform your considerations of these next steps.
We thank you for having this important discussion today and for your
ongoing commitment to closing the equity and affordability gaps in
college attainment. Mr. Chairman, as you retire from the Senate, please
let me close by taking this opportunity to thank you for being a
tireless champion for FAFSA simplification to help all of our students
succeed. Thank you.
______
The Chairman. Thank you very much, Ms. Cook, for your
testimony and your nice comments. Ms. Feldman, welcome.
STATEMENT OF RACHELLE FELDMAN, ASSOCIATE PROVOST AND DIRECTOR,
SCHOLARSHIPS AND STUDENT AID, THE UNIVERSITY OF NORTH CAROLINA
CHAPEL HILL, CHAPEL HILL, NC
Ms. Feldman. Thank you. Thank you, Chairman Alexander,
Ranking Member Murray, and Members of the Committee for this
opportunity to speak about simplifying the aid application
process. As a person on a campus, I see every day how important
this is. At Carolina, we are a public flagship university that
prides itself on being truly public, and that includes making
it affordable for anyone who earns their admission through
their scholarship and hard work. More than 10 percent of our
undergraduates participate in our Carolina Covenant program,
which is a no loans promise for low income students.
A quarter of our undergraduates receive Pell Grants and
nearly half receive some sort of need based aid. This means
Carolina provides significant funding to make college
affordable to every student across the income spectrum.
Therefore, we much stretch our precious taxpayer and donor
dollars and direct funds where they are needed most. This means
we need a FAFSA that works for our lowest income students, but
also for middle income families that still need help to afford
college and also for those seeking Federal loans to finance
their education.
On the campus, I see firsthand how students and families
get discouraged by the complexity of the process. In difficult
times like this pandemic, I really see the worry and
frustration families have as they try to make it through all
their paperwork. As you can imagine, our neediest students were
among the hardest hit as they and their family members lost
jobs, had to close small businesses, and students were
uncertain of where to live and how to take their courses
remotely. We want to be there to answer their questions and to
provide them help and support, something we would have more
time to do if we didn't have to explain a complicated
application or follow-up on missing tax transcripts. I applaud
the Senate's efforts to make sure students can more easily make
it through the process and concentrate on their education. As
an aid office we really want three things, an aid application
that is easy for students to complete, a precise and meaningful
measure of financial need, and to be empowered to serve
individual students in unique situations.
With the FUTURE Act and further reform we can get there.
The director of IRS--information is key. It means the FAFSA
won't need to ask questions about things we already know. That
will make more students likely to complete the process and
attend college. And we can be assured of the quality and
accuracy of the data we are receiving. So we should not need to
subject so many families to verification, a roadblock for needy
students, and frankly, a burden for schools as well. I hope you
will enact, in fact, additional legislation that will leverage
the expanded IRS data in the FUTURE Act to further streamline
the process. While schools like mine could use that expanded
tax information right now for rewarding our own funds, its
value could be multiplied exponentially by using Federal needs
analysis. I have several specific thoughts on how this could
make things easier and more equitable, which I outlined in my
written testimony and I would be happy to comment on in
question and answer.
Also in my written testimonials, I applaud many of the
ideas in the FAFSA Simplification Act, particularly removing
questions that are not related to finances and making the FAFSA
easier for those in simple situations without sacrificing
information for people with complex situations. I would love to
see a FAFSA that not only simply and equitably helps us
distribute Pell, but also contains enough information to
eliminate any need for supplemental forms from states or from
schools. As simple as we make the FAFSA, so we also need to
make sure it makes sense for all families, including those in
the nontraditional situations many of my colleagues have
mentioned.
Aid can be confusing even beyond the FAFSA. We need time to
dig into each student situation and to use professional
judgment to address unique challenges. Otherwise, the
simplified formulas that work for the many may harm the few.
The pandemic has proven this point, without the flexibility to
adjust aid for job losses and extra expenses, many students
would have dropped out. But families face hardships all the
time, not just during pandemics. And we want to help them all
and use their true ability to pay to guide that help. I hope
that once the FUTURE Act and further legislation helps us
simplify the FAFSA, students, parents and aid officers can all
spend less time navigating forms, fixing errors and submitting
and reviewing tax forms for verification.
Instead, I hope students and families have more time for
learning and living, and I hope aid officers have more time to
counsel families, encourage financial literacy, help students
facing emergency, and address special circumstances. Our goal
should be to help students not only with access but to
successful graduation. Once again, let me thank you for the
steps we have already taken in the FUTURE Act and the excellent
proposals to make things easier and simpler for all families.
As an aid officer, I hope you will create a simple but
meaningful process that allows professionals like me to
concentrate on helping students and making their dream of
obtaining a college degree come true. Thank you very much.
[The prepared statement of Rachelle Feldman follows:]
prepared statement of rachelle feldman
Chairman Alexander, Ranking Member Murray and Members of the
Committee:
My name is Rachelle Feldman; I am the associate provost and
director of scholarships and student aid at the University of North
Carolina at Chapel Hill. Carolina is a public flagship that prides
itself on being truly public, including making it affordable for anyone
who earns their admission through their scholarship and hard work. More
than 10 percent of our undergraduates participate in Carolina
Covenant--our no loans program for low-income students. Nearly 25
percent of our undergraduates receive Pell grants and nearly half
receive some kind of need-based aid. I see firsthand how students and
families--particularly those new to the process--can get discouraged by
complexity and can struggle to make it through the application process.
In difficult times like the COVID-19 pandemic, I really see the worry
and frustration of low-income families as they try to make it through
all the paperwork. As aid officers navigating this pandemic, we want to
help students not just pay for and succeed in college, but counsel
students on all their options, help them with emergency aid, and
support them with the full range of resources available. I applaud the
Senate's efforts to make sure that students can more easily make it
through the process and concentrate on their education.
At the same time, we need to ensure we balance the integrity of the
Federal aid programs with this simplicity. We must continue to do our
best to direct these precious taxpayer funds where they are most
needed. This is very important for key Federal programs like the Pell
grant. It is also key for states and institutions that are important
partners to Federal student aid in providing a complete package of
support to students. Carolina provides significant institutional
funding and strives to make college affordable to every student across
the income spectrum. This means we need a FAFSA that works for our
lowest income students, but also for middle income families that still
need help to afford college and for those seeking Federal loans to
finance their education.
Those of us on the ground at colleges and universities are very
excited about the passage of the FUTURE Act. Simply said, we think it
can be a game changer. While the IRS Data Retrieval Tool (DRT) has
already been very helpful, too many applicants cannot use it. Once the
direct share of IRS information allowed by FUTURE is implemented, this
will be a huge step forward--simpler and more efficient for the whole
process. Using what we already know about a student's finances without
having to ask will not only make students more likely to complete the
application process and attend college, but we can be assured of
quality and accuracy. This means not subjecting as many families to
verification--a process many of the neediest students struggle to
complete.
I am especially excited to know that more IRS data will be shared,
including information about which tax schedules are filed and key line
items from those schedules. I hope that we will see additional
legislation that will leverage this data to further streamline the
process where appropriate. While this expanded information is
immediately helpful for awarding institutional aid, its value could be
multiplied by using it in Federal needs analysis. For example:
Automatic verification on non-filing could mean no
more information is needed for a zero Expected Family
Contribution (EFC) or equivalent.
The presence of no schedules (or only Schedule 1)
paired with an income cap could also be used to eliminate
further questions. This could be expanded further if the family
or student indicates receipt of certain means-tested benefits,
which should qualify them for the maximum Pell Grant.
The presence of other schedules and fields showing
significant investments, business assets, and real estate
holding could indicate that more information is needed,
including information on assets. Assets can reflect
generational wealth and resources, which are not available to
other students, even when incomes are similar.
The presence of negative figures on Schedule 1 which
lead to negative adjusted gross income (AGI) often indicates
that the current formula significantly understates a family's
ability to pay for college. I suggest including these figures
and adding them back to AGI in the analysis of EFC.
Foreign income is currently excluded from
consideration, but in today's global economy, where foreign
income is present it is often significant and should be
included to be fair and equitable.
I also applaud many of the ideas in the FAFSA Simplification Act,
particularly:
Fewer questions for those with means-tested benefits
and simple income situations, and more questions for those with
more complex tax situations, including questions about their
assets.
the removal of questions that do not have any impact
on the formula to determine need, such as those about drug
conviction and selective service registration.
renaming the EFC to a need index. With a real
reconsideration of form and process, this makes a lot of sense
and will give families more clarity.
the predictability of a simple lookup chart for Pell
eligibility, decoupled from the more complex information needed
to package other aid. This makes good sense and can help
encourage college going behaviors. This eligibility method
should effectively reverse the 2011 cuts to ``auto-zero'' for
all families, particularly single independent students who
don't have a system of family support.
I hope though that aid administrators will be given
some guardrails to help ensure program integrity, such as the
ability to use Professional Judgement to reduce a Pell grant if
the AGI does not appear to reflect a true ability to pay.
In order to stretch our precious taxpayer dollars, it is so
important that we target the funds where they are needed most. Our
program for our lowest income students, the Carolina Covenant, promises
the opportunity for debt-free graduation and includes co-curricular and
academic supports. At Carolina we have 4,200 students eligible for Pell
grant but when we look at them with more scrutiny, 200 aren't eligible
for our grants because of other assets or other untaxed income. While
this seems a small percent, the funds saved for state taxpayers are
significant and the program is better targeted to those who need it. We
also have programs for middle income students and need to be able to
distinguish students above the Pell grant limit from one another to
make sure every student can afford and graduate from Carolina.
I would love to see a FAFSA that not only simply and equitably
helps us distribute Pell, but also contains enough information to
eliminate any need for supplemental forms. As simple as we make the
FAFSA, we also need to ensure it makes sense for all families,
including those in non-traditional situations (e.g., students supported
by grandparents or other guardians, those with non-custodial parents
providing support, those self-employed parents or students, those with
small businesses and those with traditional employment).
I'd like to offer a couple of other considerations from ``on the
ground.'' The aid process can be confusing for students even after they
successfully apply, and an aid administrator has taken the time to
truly dig into and understand each student's situation. Simply stated,
we know our students best.
Even if it is very well designed and appropriate,
changing the measure of a student's need to a new index partway
through their school career may be confusing. I hope that if
you pass legislation changing the Federal formula, include a
transition period and allow aid administrators to hold students
who have been receiving aid under the old rules harmless as
they finish their degree.
In addition, aid administrators need the reassurance
of the 2009 Dear Colleague Letter (GEN 09-05) on unemployment
clarifying the use of Professional Judgement for unemployed
students and families. This ability to locally update and
evaluate a student's true and current situation based on
reasonable documentation and assumptions is essential for
applying whatever measures are in place fairly and moving
students toward graduation whose circumstances have changed.
Recent guidance from this Administration was too vague and
missed some key parts. Unemployment benefits should be counted
as zero, since they are only a temporary benefit, and the
Departments of Education and Labor should inform students of
their aid eligibility. I hope you will consider codifying this
in law, including the ability to assume zero income for
unemployed independent students
Again, in times like this pandemic with the loss of
income and resources we already see our students facing, we
need more resources to help them. We also need the flexibility
to evaluate their current situation.
I hope, once we truly implement the FUTURE Act and simplify the
process of applying for aid, we in the aid offices can spend less time
on helping families with the forms, following up on errors and
verifying information using IRS tax forms. Instead, I hope we can have
more time to counsel families on the types of supports available, help
students facing emergencies, address special circumstance and financial
literacy, and support students not only with access--but to
completion--success!
Once again, let me thank you for the steps we have taken with the
FUTURE Act and the excellent proposals to make things easier and
simpler for all families--but particularly those most vulnerable to
getting discouraged. I hope you will support steps to integrate even
more information from the IRS with ED to eliminate more questions, but
equally importantly to improve the quality of the index information the
Federal Government, states, and colleges use to award financial aid.
______
[Summary Statement of Rachelle Feldman]
Why Simplification is Important:
On our campus, we see firsthand how families and
students, particularly those who are first generation and low-
income, struggle with the complexity of the application.
We are a public flagship that prides itself on being
truly public--including making it affordable for anyone who
earns their admission. More than 10 percent of our
undergraduates are in Carolina Covenant--a no loans program for
low-income students. Nearly 25 percent receive Pell grants and
nearly half receive need-based financial aid.
FAFSA simplification will enable aid offices like
ours to spend more time counseling families and students and
less time on helping families with the forms, following up on
errors and verifying information using IRS tax forms.
In a time like now with the COVID pandemic, it's more
important than ever to be able to spend time reassuring
students and dealing with their changing circumstances instead
of walking them through forms.
Striking the Right Balance:
We need to balance the integrity of the Federal aid
programs with this simplicity, ensuring we direct precious
taxpayer dollars where they are most needed.
This is really important for key Federal programs
like the Pell grant.
It is also vital for states and institutions that are
important partners in providing a complete student aid package
to students. This is especially true for institutions like
Carolina where we provide significant institutional funding to
make college affordable across the income spectrum.
We need a FAFSA that works for all--our lowest income
students, middle income families that still need help to afford
college, those seeking Federal loans to finance their
education, and those in non-traditional situations.
We don't want to oversimplify and drive states and
institutions to use supplemental forms or move the questions to
the burdensome verification process.
Forward Motion and Progress:
The FUTURE Act is great start. The implementation of
data sharing through this Act will be an enormous step toward
making things not only simpler, but more efficient. Eliminates
issues with Data Retrieval Tool
The quality and accuracy of information shared
directly from the IRS should reduce verification burden.
The FAFSA Simplification Act contains more progress--
by ensuring those with means-tested benefits and simple income
situations would answer fewer questions, and those with more
complex tax situations would answer more questions (including
questions about assets); by removing questions unrelated to
financial strength. The proposal to separate Pell into a
predictable formula can encourage college going behaviors but
needs guardrails.
What is Needed: Expand Use of IRS Data in Federal Needs Analysis
The value of IRS data could be multiplied by using it in Federal
needs analysis. For example:
Automatic verification on non-filing could mean no
more information is needed for a zero Expected Family
Contribution (EFC) or equivalent.
The presence of no schedules (or only Schedule 1)
paired with an income cap and means-tested benefits could also
be used to eliminate further questions and automatically
qualify students for Pell Grants.
Other schedules and fields showing significant
investments, business assets, and real estate holding could
indicate that more information is needed, including assets
which reflect generational wealth and resources, which are not
available to other students, even when incomes are similar.
Figures on Schedule 1 which lead to negative adjusted
gross income (AGI) often significantly understate a family's
ability to pay and should be added back to AGI in analysis of
need including Pell eligibility.
Foreign income is currently excluded from
consideration, but in today's global economy, where foreign
income is present it is often significant and should be
included to be fair and equitable.
Campus Expertise and Application
Schools know students best and it is important to
pair any measure of need with Professional Judgement, codifying
the use of Professional Judgement into law important for
schools and students.
With a simpler, but effective FAFSA and need
analysis, schools can spend more time counseling students,
helping in emergencies, improving financial literacy, and
supporting students to completion.
______
The Chairman. Thank you, Ms. Feldman. Dr. Scott-Clayton,
welcome.
STATEMENT OF JUDITH SCOTT-CLAYTON, PH.D., ASSOCIATE PROFESSOR
OF ECONOMICS AND EDUCATION, TEACHERS COLLEGE, COLUMBIA
UNIVERSITY, NEW YORK, NY
Ms. Scott-Clayton. Thank you, Chairman Alexander, Ranking
Member Murray and Members of the Committee. It is a true honor
to be here in front of you again, this time virtually.
Obviously, a lot has changed since we first testified in 2013
and especially during these past 6 months. So the first thing I
would like to address is why FAFSA simplification still matters
in the context of everything else that is going on right now.
To put it simply, FAFSA simplification still matters because
college access still matters, and perhaps now more so than
ever. We know that the burdens of this pandemic, from
unemployment to food and housing insecurity, to increased
exposure to illness and death are falling hardest on low income
families and communities of color.
In addition, low income college students may lack adequate
computer technology and Wi-Fi to support online classes, and
the public institutions that they are most likely to attend are
facing drastic cuts in state and local funding. With a full
recovery not expected for perhaps a decade, much is uncertain
about the future, but the one thing that we can count on is
that without large and sustained Federal efforts to support low
income students at all levels of education, educational
inequality is likely to explode in the coming years. And if we
don't take every step that we can to address this now, we will
be addressing the fallout for generations. When it comes to
inequality and college access, fixing the FAFSA can be a
meaningful part of the solution.
We know from decades of rigorous research that when
students get financial aid, it increases enrollment, helps
students graduate and can lead to higher earnings and higher
rates of home ownership after college. Unfortunately, as my
collaborator, Dr. Susan Dynarski and I wrote when we first
began studying this issue, the Federal student aid programs
hide their substantial benefits behind a tangled thicket of
bureaucracy embodied in the FAFSA application process.
For many families, throwing out a FAFSA is more complicated
than an income tax form and it is something that they have less
experience with. Too many eligible students or prospective
students have simply never heard of it and have no idea it
could provide them with up to a year $38,000 in Pell Grants
support over the course of their degree. Others try to file but
get stuck along the way, including in the cumbersome
verification process, some don't realize that they have to
reapply every year, and still others are shut out due to the
process' unnecessary and counterproductive question 23 about
prior drug convictions, like a woman I met just this month when
we were on a panel together speaking about college access to
members of the Oklahoma House of Representatives.
This complexity undermines our investment in student aid by
making it harder to reach the very students that need it most.
And this is not just speculation as Dr. Long just talked about.
One of the studies that she mentioned that she was a co-author
on showed that just helping families fill out and submit the
FAFSA increased college enrollment by 8 percentage points. That
is huge. Yet millions of students fail to file each year,
losing out on an estimated 24 billion in aid annually. And
right now, during the pandemic, the FAFSA is just one more
baffling frustration for students and families to navigate when
so much of their energy is consumed just trying to survive. And
most frustrating of all is that it does not have to be this
way. Most of the questions on the FAFSA are not even necessary
to accurately target Federal student aid.
Simulations show that college eligibility could be
accurately predicted using only a few key items like income and
family size. We could get rid of what we think of as the FAFSA
completely and here is what that could look like. First, base
Pell Grants on a limited number of elements that are already
available from the IRS so that no separate financial
application would even be needed. Second, we could continue to
provide an index of eligibility that states and institutions
can use for their own purposes. Third, fix eligibility for
several years so that students can plan a multiyear course of
study without needing to reapply. Four, summarize Pell
eligibility by income and a simple lookup table.
Finally, use IRS information to proactively communicate to
prospective students and their families about likely Pell
eligibility. Since 2013, substantial progress has been made for
simplification thanks to the hard work of Members of this
Committee. The FUTURE Act will reduce the hassle even further
and minimize the need for verification. But concerningly, FAFSA
applications are actually down since the Committee took up this
issue in 2013, and they are down the most among low income
students and independent students.
Without further action, the FAFSA will still be the FAFSA
and will still be a barrier for low income students. Of course,
this isn't the only action that we need to address persistent
and growing inequality in education. But right now, we can't
afford not to take every opportunity that we have to help low
income students who need our support now more than ever. Thank
you and I look forward to your questions.
[The prepared statement of Judith Scott-Clayton follows:]
prepared statement of judith scott-clayton
Chairman Alexander, Ranking Member Murray, and Members of the
Committee:
My name is Judith Scott-Clayton. I am an Associate Professor of
Economics and Education at Teachers College, Columbia University, as
well as a Research Associate of the National Bureau of Economic
Research and a Senior Scholar at the Community College Research Center.
For more than a decade, I have conducted my own research on the impacts
of financial aid policy, reviewed the evidence from others doing work
in the field, and participated in policy working groups examining
financial aid and other college access interventions at both the State
and Federal level.
In the following testimony, I draw upon a longstanding body of
research. While I have made similar points in prior testimony to the
Committee, I place this body of knowledge in context of the current
policy landscape, and I also incorporate new, recent findings from the
literature. I first discuss the critical importance of Federal student
aid in the context of the ongoing COVID-19 crisis. I then focus on
three questions: What does the latest evidence tell us regarding the
likely benefits of financial aid simplification? Which aspects of
simplification are the most important? And how can we address the
remaining barriers to simplification?
Thank you for your Committee's continuing bipartisan interest in
this important topic, and for the opportunity to testify. I look
forward to your questions.
I. The COVID-19 crisis heightens the critical role of Federal student
aid, as well as the urgent need to finish fixing the FAFSA.
Well before the onset of the COVID-19 pandemic, troubling trends
had emerged in higher education: while college enrollment has increased
substantially since the passage of the Higher Education Act of 1965,
gaps in enrollment between high and low income families are actually
greater for recent cohorts than for those born in the early 1960's
(Bailey & Dynarski, 2011). Racial disparities in college attainment
have grown as well (Emmons & Ricketts, 2017).
These persistent college attainment gaps are troubling because the
benefits of postsecondary education remain near historically high
levels. Prior to the pandemic, full-time workers with a bachelor's
degree were earning $24,900 more annually than workers with only a high
school diploma (Ma, Pender, & Welch, 2019). Those with a college
education also have substantially higher employment rates, receive
better employment benefits, are less likely to smoke, more likely to
vote, and pay more in taxes (Ma, Pender, & Welch, 2019).
The COVID-19 pandemic has fallen especially hard on those without a
college degree, and unfortunately is likely to exacerbate college
attainment gaps even further. Unemployment among those with only a high
school diploma is typically around twice as high as for those with a
bachelor's degree, but the gap gets even bigger during recessions. In
August 2020, for example, unemployment for those with only a high
school degree was 9.8 percent compared to 5.6 percent for 4-year
graduates (versus 3.6 and 2.4 percent, respectively, in August 2019).
The situation for Black, Hispanic, and low-income families is
particularly dire as these groups not only experience higher rates of
job loss, but also higher rates of COVID-related illness and mortality
than White, Asian, and higher-income families (Hardy & Logan, 2020;
Gould & Wilson, 2020; Kinder & Ross, 2020). \1\
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\1\ Statistics retrieved from https://fred.stlouisfed.org/release/
tables--eid=48713&rid=50.
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College enrollments typically rise when the labor market is weak,
but this is no typical recession: colleges and students currently face
the same or even greater barriers to normal operations as do employers
and workers. As a result, enrollments for the current academic year are
expected to fall by around 15 percent (American Council on Education,
2020). Even after the public health crisis abates, however, the
economic damage is likely to linger for years. The Congressional Budget
Office (2020) estimates that unemployment will be twice as high as
before the pandemic through the end of 2022, and will remain above its
pre-pandemic level for the next decade. The National Council of State
Legislators (2020), citing survey data, predicts that COVID-related
financial uncertainty--for both students and colleges--will be a long-
term concern that could undermine enrollment and retention.
Without significant additional Federal investments in education, at
all levels of schooling, the consequences of the COVID-19 pandemic may
last for far more than a decade; the inequalities we see exacerbated
today will be passed on to the next generation.
When it comes to postsecondary education, the Federal Pell Grant--
the Nation's single largest grant program, used at over 6,300 eligible
institutions nationwide, and providing up to $6,345 per student per
year for up to 6 years of undergraduate study--has never been more
essential. Unfortunately, for too many prospective low-income students
the Pell Grant--remains unknown and unclaimed, due to its opaque design
and the unnecessarily burdensome Free Application for Federal Student
Aid (FAFSA). One study estimated that students lose out on $24 billion
in financial aid annually due to failure to file the FAFSA (Kofoed,
2017). \2\ The application may be especially challenging during the
pandemic, as families juggle other urgent concerns.
---------------------------------------------------------------------------
\2\ Estimated amount includes foregone Pell Grants as well as
other aid dependent upon FAFSA application
---------------------------------------------------------------------------
Fixing the FAFSA--so that Pell eligibility could be determined
automatically, without a separate application, and awards could be
fixed for several years without the need to reapply--will enhance the
impact of Federal student aid, and thus will provide a meaningful
improvement in educational opportunity for low-income students. Now
more than ever, we must ensure that Federal student aid lives up to its
promise of ensuring that ``the path of knowledge is open to all that
have the determination to walk it.'' \3\
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\3\ Lyndon Baines Johnson, ``Remarks at Southwest Texas State
College Upon Signing the Higher Education Act of 1965,'' November 8,
1965. Archived online by Gerhard Peters and John T. Woolley, The
American Presidency Project (www.presidency.ucsb.edu/ws/--pid=27356).
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II. A longstanding body of research suggests substantial benefits to
simplifying the financial aid application process, and substantial
costs to the status quo.
Nearly forty years of research convincingly demonstrates that
financial aid can influence college enrollment, persistence, and
completion (see Page & Scott-Clayton, 2016, for a recent review). The
latest research indicates that financial aid influences not just
college enrollment and completion, but also important post-college
outcomes like earnings and homeownership (Bettinger, Gurantz, Kawano, &
Sacerdote, 2019; Scott-Clayton & Zafar, 2019; Denning, Marx, & Turner,
2019). The benefits of financial aid are shared by taxpayers as well:
Denning, Marx, & Turner (2019) estimate that the costs of grant aid are
fully recovered in the form of higher Federal tax payments within 10
years of college entry.
While financial aid clearly can influence college enrollment, this
does not imply that every aid program is equally effective. Many of the
studies that have found positive impacts of financial aid examined
programs with simple, easy-to-understand eligibility rules and
application procedures. In contrast, accessing Federal financial aid
requires students to submit a Free Application for Federal Student Aid
(FAFSA), the complexity of which has been well-documented (Dynarski &
Scott-Clayton 2006; Dynarski, Scott-Clayton & Wiederspan, 2013; Bill &
Melinda Gates Foundation, 2015). With over 100 questions, the FAFSA is
longer and more complicated than the 1040A and 1040EZ, the tax forms
filed by a majority of taxpayers.
The original intent of all these questions is to more accurately
target aid to those that need it most, but ironically the effect is the
opposite. Most of the financial information collected on the FAFSA
contributes very little to aid eligibility determination. Pell
eligibility and even the Expected Family Contribution (EFC) itself can
be approximated with a high level of precision using just a handful of
elements from the form, primarily relying upon adjusted gross income
and family size (Dynarski & Scott-Clayton, 2006, 2007; Dynarski, Scott-
Clayton, & Wiederspan, 2013; Reuben, Gault, & Baum, 2015). \4\
---------------------------------------------------------------------------
\4\ For example, when Dynarski and Scott-Clayton (2006) estimated
Pell awards and EFCs for dependent students using only parental
adjusted gross income, marital status, family size, and number in
college, the correlation between estimated and actual Pell awards was
0.88 and the correlation between estimated and actual EFC was even
higher at 0.91.
---------------------------------------------------------------------------
The FAFSA isn't just an annoyance. Its complexity and lack of
transparency make it harder to reach students who need aid most,
undermining the effectiveness of aid. Many students never receive the
Federal aid for which they would qualify: of the 30 percent of
undergraduates who fail to file a FAFSA, one-third would have qualified
for a Pell Grant. \5\ Some of those who do successfully file may submit
the form too late to qualify for State and institutional aid they
otherwise could have received (King, 2004). And even those who submit
in 1 year may fail to reapply the next year, increasing the risk of
dropout (Bird & Castleman, 2014).
---------------------------------------------------------------------------
\5\ Author's calculations based on data from the 2011--2012
National Postsecondary Student Aid Study (NPSAS).
---------------------------------------------------------------------------
Of even greater concern are those who never show up in college
because they never knew they would qualify for aid, or weren't sure
they could really count on it. Misperceptions about college costs and
financial aid are widespread and are most prevalent among students from
the lowest-income backgrounds (ACSFA, 2005; Grodsky & Jones, 2007;
Horn, Chen, & Chapman 2003; Hoxby & Avery, 2013; Hoxby & Turner, 2013;
Radford, 2013). For lower-income and first-generation students who are
particularly uncertain about their ability to afford college, when the
time comes to file a FAFSA it may already be too late. College
preparation needs to start well before the end of high school. But if
students assume college is out of reach, they may never seek out the
information that would challenge that assumption, and may not take the
steps they need to take academically to be prepared. Similarly, workers
who have lost their jobs need to know that Pell Grants are available
for them, otherwise they might not even consider the option of
returning to school to retrain or upskill (Barr & Turner, 2015).
We don't have to speculate about the potential impact of
simplification: rigorous research shows that reducing application
hurdles can be a highly cost-effective strategy for reducing inequality
in college access. In one study, researchers randomly selected a subset
of low-income families who visited tax-preparation centers and were
offered personal assistance with completing and submitting the FAFSA.
The intervention increased immediate college entry rates by 8
percentage points (24 percent) for high school seniors and 1.5
percentage points (16 percent) for older participants with no prior
college experience (Bettinger, Long, Oreopoulos, & Sanbonmatsu, 2012).
After 3 years, participants in the full treatment group had accumulated
significantly more time in college than the control group. Other
studies document similar or even larger positive effects (up to 8-14
percentage point increases in enrollment or persistence) of providing
students support to navigate paperwork, and reminding them about
deadlines for financial aid application or renewal (Castleman, Page, &
Schooley, 2014; Castleman & Page, 2016).
Question 23 on the FAFSA, which asks about prior drug convictions
and renders some applicants ineligible for Federal student aid as a
result, is yet another unnecessary barrier that keeps Federal aid from
reaching those who could benefit most. Research indicates that this
question does not do anything to deter drug use (Lovenheim & Owens,
2014), nor does it make campuses safer (Custer, 2016). Determining how
to answer the question correctly may require filling out an additional,
highly complicated worksheet. Out of the 18 million students facing
this question annually, about 1,000 students are denied aid as a result
(Kreighbaum, 2018). Thousands more may simply abandon the application
altogether out of confusion and stress. \6\ The question is
particularly problematic given troubling racial disparities in drug
arrests and convictions (Schanzenbach et al., 2016). It is also
particularly counterproductive given that further education may be one
of the best ways to promote successful re-entry, and reduce relapse and
recidivism (see research review by Alliance for Excellent Education,
2013).
---------------------------------------------------------------------------
\6\ A study of college application attrition at the State
University of New York found that for every one student who was denied
admission as the result of prior criminal history, 15 abandoned the
application entirely (Rosenthal et al., 2015).
---------------------------------------------------------------------------
III. Progress in recent years to improve the FAFSA has laid essential
groundwork for transformative change--but urgency is needed to fully
implement and build further upon these reforms.
To be effective, a simplification strategy needs to address at
least two related but distinct problems. First is the burden of
completing the application itself, which imposes compliance costs,
stress, and may deter even some applicants who intend to apply. Second
is the overall lack of transparency which makes aid eligibility
difficult to predict, communicate, and rely upon (ACSFA, 2005; Dynarski
& Scott-Clayton, 2007). Thus, in evaluating ``how much simplification
is enough,'' the critical criteria should be: does the reform both
substantially reduce application hassle and substantially improve
transparency and predictability?
Efforts to simplify the FAFSA have a long history. In 1986,
Congress introduced a ``simplified needs test'' so that some families
could omit asset information from the form, and in 1992 Congress
introduced the ``automatic-zero EFC'' for families with incomes below a
cutoff amount. More recently, a mobile-friendly form was introduced,
some questions have been eliminated, and the ``skip-logic'' has been
improved in the online application so that students don't have to
answer questions that aren't relevant to their circumstance. Two
particularly helpful changes are that students can now automatically
import tax information from the IRS via the IRS Data Retrieval Tool
(DRT), and because the formula now uses prior-prior year tax
information, students can apply several months earlier than they could
before. The FUTURE Act, passed in 2019, makes additional important
strides by authorizing the Internal Revenue Service to directly share
taxpayer information with the Department of Education.
These changes are important, and help reduce the application
burden. They will also help reduce the need for costly FAFSA
verifications, which costs institutions an estimated $500 million per
year, representing 15-22 percent of typical financial aid office
operating budgets (Guzman-Alvarez & Page, 2020). Research indicates
that the verification process on its own may reduce enrollment of Pell-
eligible students by 2 to 3 percentage points (Wiederspan, 2019).
Still, many of the most complicated questions remain, such as
questions about untaxed income, the value of investments, and drug
convictions. And because students are advised to assemble their
documents and even to fill out a paper ``worksheet'' prior to beginning
the online form, it is not clear that these reforms necessarily
eliminate all the time and hassle required. \7\ One recent study of the
auto-zero EFC concludes that this ``behind the scenes'' simplification
on its own likely has little or no effect on college enrollments
(Matsudaira, 2018). Other studies have found that information on aid
eligibility alone is not enough to generate meaningful changes in
enrollment (Bettinger et al., 2012; Bergman, Denning, & Manoli, 2019).
---------------------------------------------------------------------------
\7\ See, for example, this blog post from the U.S. Department of
Education, ``7 Things You Need Before You Fill Out the 2018--19 FAFSA
Form,'' which doesn't mention the auto-zero or simplified needs test.
It does mention the IRS-DRT, but notes that since not everyone will be
able to use it, applicants should still have their tax forms available
for reference (https://blog.ed.gov/2017/09/7-things-need-fill-2018-19-
fafsa-form/
---------------------------------------------------------------------------
While the form is getting easier and moving earlier, the
eligibility formula remains opaque and unpredictable, so it remains
difficult for students and families to discern their likely eligibility
well in advance of application, or to have much confidence they can
count on the award over time. This uncertainty and lack of transparency
matters: one recent randomized study found that providing early
outreach, clear communication, and a multi-year aid guarantee
dramatically increased matriculation rates even though the program
simply re-packaged aid for which students would have qualified anyway
(Dynarski et al., 2018).
Concerningly, FAFSA submissions have actually declined noticeably
since 2013, both overall and as a percentage of college enrollees. \8\
The reasons for this decline are not entirely clear, but the trend
suggests that reforms are still needed. To finish fixing the FAFSA, we
need to not only dramatically reduce application hassle, but also to
dramatically increase transparency and certainty around financial aid.
Under the current system, describing how the EFC is calculated, and how
Pell Grant awards are calculated from that, is very difficult to
explain in simple terms, and students have to reapply every year. \9\
While many calculators and estimators are available online, the
students most in need of assistance may not even know these exist, let
alone go looking for them in the 9th grade. The opacity of Pell
eligibility may be one reason why the program lacks the name
recognition of the simpler, highly advertised aid programs now in place
in many states, like the Tennessee Promise.
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\8\ In 2013-14, 21.2 million FAFSAs were submitted (equivalent to
79 percent of 12-month headcounts), compared to 18.1 million for the
2019-20 school year (70 percent of 12-month headcounts).
\9\ The document that outlines the 2020-21 EFC formula is 36 pages
long, and the Federal Student Aid Application and Verification Guide
that explains the FAFSA process for financial aid professionals is
currently 140 pages long.
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To promote early awareness of Pell eligibility will require clear
communication tools and proactive outreach, both of which would be much
easier with a more transparent formula. How could this be done? Since
the main determinants of Title IV aid eligibility are already collected
via the IRS Form 1040, some (including myself) have proposed
simplifying the Pell formula, eliminating the FAFSA completely and
instead determining eligibility automatically, using income and other
data from tax forms. Various teams have articulated how a simplified
formula could work (including the bipartisan Financial Aid Simplicity
and Transparency [FAST] Act introduced by Senators Alexander and Bennet
in 2014; as well as proposals by The Institute for College Access and
Success, 2007; Dynarski & Scott-Clayton, 2007; Baum & Scott-Clayton,
2013; Bill & Melinda Gates Foundation, 2015; Rueben, Gault, & Baum,
2015). Beyond reducing application hassle, simplifying the Pell
eligibility formula to the point it could be expressed in a simple
lookup table would substantially improve transparency.
In the debate around various simplification proposals, two concerns
are commonly raised. One is that if the formula doesn't include asset
information, then wealthy families with low incomes will claim aid that
they don't really need. But surprisingly, although the FAFSA questions
about net worth are arguably among the most challenging to answer, the
answer is basically ignored for the vast majority of applicants. Why?
Retirement accounts and home equity are excluded, and this is where
most families hold their assets. Other assets are considered only if
they fall above a threshold that rises with the age of the oldest
parent. \10\ Dynarski and Scott-Clayton (2006) found that assets had no
effect on Pell eligibility for 99 percent of dependent applicants and
no effect on EFC for 85 percent of dependent applicants. Asset
information likely matters even less for independent students.
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\10\ This threshold was reduced in recent years, e.g. from $25,400
in 2018 to $7,100 in 2020 for a two-parent dependent student in which
the elder parent was age 55. The median net worth of households with
children age 18 or younger, excluding home equity but including
retirement accounts, is $14,993 (U.S. Census Bureau, Survey of Income
and Program Participation, 2014 Panel, Wave 1). On average, retirement
savings represent about 40 percent of remaining assets, suggesting the
median net worth excluding both home equity and retirement savings
could be well under $10,000.
---------------------------------------------------------------------------
A second common concern is that while simplified formula might work
fine for Federal aid, states and institutions may need more detailed
information for their own programs. By far the most common financial
element used for State aid eligibility is the EFC--which is explicitly
preserved under some simplification proposals, and could be easily
estimated under others. As discussed above, EFCs can be closely
approximated using only a fraction of the information currently
collected on the FAFSA. Baum, Little, Ma, and Sturtevant (2012) show
that these minor changes in EFC have only small effects on the
distribution of State aid. While the specific effects may vary from
State to State, data on current applicants could be used to predict
state-specific effects so that states have time to make any necessary
adjustments.
Adjusted gross income is another element that could easily be
preserved and passed to states under even the most radical proposals
for simplification. Finally, if aid eligibility were determined
automatically via the tax system, information on demographics,
institutions, and application date could easily be collected via a
supplementary non-financial form. Once students know what they qualify
for, they may be much more likely to fill out a simple form that
doesn't require complex information on income and assets.
Institutional aid presents a somewhat different challenge. Changes
in EFC that have little implication for Federal or State need-based aid
may matter more for institutional aid that often extends to much
higher-income households. However, schools with substantial
institutional aid typically already use an additional financial aid
form, the CSS Profile, and would continue to do so even if the FAFSA
were dramatically simplified. The Federal aid process need not burden
all applicants with questions required for only a fraction of
institutions.
IV. Summary of key recommendations
A low-income student today can qualify for up to $38,070 in
lifetime Pell Grant aid, over the course of their studies. But too many
give up on college before they start, or drop out before they finish,
because of complexity and a lack of transparency in the aid application
process.
In recent years, important reforms have been made that lay the
foundation for further simplification. My key recommendations to finish
fixing the FAFSA are to:
Base Pell awards on a limited number of data elements
that are available from the IRS so that eligibility is
transparent and no separate financial application is needed.
Continue to provide states and institutions with an
index of eligibility, as well as basic demographic and
institutional information, to use in distributing other
financial aid.
Fix eligibility for several years, allowing students
to securely plan for a multi-year course of study without the
need to reapply.
Summarize Pell eligibility by family income in a
lookup table--even if some fine print is required--that
schools, counselors, and community organizations can post and
distribute.
Use IRS information to proactively communicate to
prospective students and their families about their Pell
eligibility.
Figuring out the FAFSA is a major hurdle in the process of applying
for college, but it is hardly the only one. If Federal policymakers can
simplify the cost calculus for students and their families, it could
free up the time and effort of thousands of counselors, aid
administrators, college advisors, and volunteers nationwide that are
currently devoted to helping students fill out FAFSAs. Instead, these
critical human resources could be redirected to helping students
identify a high-quality college option that not only fits their budget,
but furthers their educational aspirations. And students themselves
could worry a little less about this form, and a little more about
everything else they need to do to prepare for, persist, and succeed in
college.
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______
The Chairman. Thank you, Dr. Scott-Clayton. Now our final
witness is Ms. Hultquist. Welcome.
STATEMENT OF KRISTIN HULTQUIST, FOUNDING PARTNER, HCM
STRATEGISTS, ENGLEWOOD, CO
Ms. Hultquist. Thank you. Good morning, Senator Alexander,
Senator Murray, and Members of the Committee. Thank you for the
opportunity to appear today. I am Kristin Hultquist and I come
before you as a lifelong higher education analyst, a former
senior adviser in the U.S. Department of Education, and a last
witness to the coalesce interest and support of the FAFSA
Simplification Act. 525,600 minutes sing artists performing
Seasons of Love in the Tony Award winning play Rent. They ask,
how do you measure a year? I ask, how do you measure the time
it takes to coalesce the voices for the FAFSA Simplification
Act?
It is been 24 years since President Clinton introduced with
his budget the concept of using prior year income provided
through tax returns, 4,362 days since Secretary Margaret
Spellings first waived the 10 page FAFSA when rolling out the
Bush administration's call for FAFSA simplification, 68,102
hours since The New York Times covered HCM Strategists' release
of our American Dream 2.0 report on simplifying student aid.
This is a bipartisan report signed by civil rights leaders, a
sitting Governor, the president of the Nation's largest
historically black college university system, the former head
of the Congressional Budget Office, employers, and Ms. Cook.
3.6 million minutes since we four sat before you to
demonstrate our shared conviction that fewer questions asked of
students could yield approximately the same determination of
need. States agree, we must finish fixing the FAFSA now. SHEEO,
MHEC, WICHE, and NEBHE, SREB, an alphabet soup for sure of
state based educational leadership organizations, unite on
this. Tennessee's experience shows us why they do. Tennessee
has implemented multiple layers of staffing and infrastructure
to achieve its best in the Nation FAFSA completion status.
Every school counselor gets a FAFSA kit. This leads to a FAFSA
frenzy day across the state. No joke, that is a real thing.
Finally, students receive individual reminders throughout the
application period, urging them to complete their form and
connecting them to call centers for support.
Institutions agree, we must fix the FAFSA now. NASA
supports this bill. I see the consequences of not having a
simplified needs analysis for Pell. In my role as a trustee of
one of our Nation's Hispanic serving institutions, Metro State
University, Denver, we are the opportunity generator in
Colorado. Blacks and Latinos comprise half of our student body.
One third of our full time students qualify for the maximum
Pell Grant. The hard work of racial justice on our campus needs
a simplified Pell formula. And for Denver's 130,000 unemployed,
with a Pell look up table, MSU, Denver can partner with our
state's unemployment insurance program to reach these adults
that need rescaling and upskilling.
Advocates for students coalesce around other changes in the
FAFSA Simplification Act. As vice chair of the Institute for
Higher Education Policy, I joined the voices of nearly 40
national faith, justice reform, business corrections and higher
education organizations calling for removal of question 23,
prohibiting students from prior drug related offenses from
getting aid. I sit before you not just as one to remind you of
the consensus achieved, but as a former Department of Education
adviser, one who knows that delaying now to adopt the FAFSA
Simplification Act is wasteful and inefficient. Federal student
aid today is incorporating necessary upgrades to the future.
Changes in the FAFSA do not happen quickly because a backend
systems, but we have the opportunity to do the full renovation
once. Future FAFSA filers will authorize the IRS to share data
and then no additional financial information will be needed. My
mom raised me to never quit a race nine tenths from time
machine.
As a former 400 meter hurdler, I know that is one hurdle
from the tape. As a first generation Pell graduate, as a mother
of a daughter just started college this fall, as the financial
supporter of Cornerstone Christian School, where every one of
our students will be first gen and needs us to finish the job
we started 24 years ago, I implore you, don't quit now. We have
53 questions, one hurdle to go to finish this race. We can and
must measure the impact of consensus achieved in more than time
elapsed. Millions more Americans will access financially they
need to improve their lives if you pass now the FAFSA
Simplification Act. Thank you. I welcome your questions.
[The prepared statement of Kristin Hultquist follows:]
prepared statement of kristin hultquist
Chairman Alexander, Senator Murray and Members of the Committee,
thank you for the opportunity to appear today. I am Kristin Hultquist,
and I come before you as a lifelong higher education analyst, a former
senior advisor in the US Department of Education and a last witness to
coalesced student, parent, institutional, and state interests.
525,600 minutes sing artists performing Seasons of Love in the
Tony-winning play
Rent. They ask, how do you measure a year. I ask, how do measure
the time it takes to coalesce the voices for the FAFSA Simplification
Act?
24 years since President Clinton introduced with his
budget the concept of using prior year income provided in tax
returns as a means of simplifying the application process.
4,362 days since Secretary Spellings first waved the
10-page FAFSA when rolling out the Bush administration's
response to the Spellings Commission's report, which called for
FAFSA simplification.
68,102 hours since the New York times covered HCM
Strategists' release of our American Dream 2.0 report on
simplifying student aid, a report signed by civil rights
leaders, a sitting Governor, the head of the nation's largest
HBCU system, a foundation president, employers and Ms. Cook.
3.6 million minutes since we sat before you to
demonstrate our shared conviction that fewer questions asked of
students could yield approximately the same determination of
need.
Congress, with this Administration and the last one, have done much
to simplify FAFSA. But the work is far from finished. It is work that
requires Congress to simplify the Pell formula and split it from the
Expected Family contribution. Then, and only then, will it be as simple
as a look up table. A simple table for the recently unemployed, the
first-generation middle school students in rural communities and cities
across the country to know that they are eligible for a Pell Grant is
available to support their educational and training needs and improve
their futures. Adopting the FAFSA Simplification Act of 2019 will
result in the largest expansion of the Pell program in over a decade.
Isn't that the type of consensus-supported change we should adopt to
close out this very, very difficult 2020?
States agree we must finish fixing the FAFSA now. SHEEO, MHEC,
NEBHE, SREB, WICHE--an alphabet soup of the top state organizations
supporting states' educational systems--unite on this. One of the
states that has led the country consistently in FAFSA completion is
Tennessee. To achieve this type of success, Tennessee has implemented
multiple layers of staffing and infrastructure. First, every school
counselor in Tennessee gets a FAFSA kit from the State higher education
commission. This leads to a ``FAFSA frenzy'' day across the state,
where in Tennessee both state and local officials work to build a sense
of excitement among the state to complete their FAFSA. Finally,
students receive individual reminders fromthe State throughout
application period, urging them to complete their form and providing
support through a call center support.
Put simply, it should not be so hard that students and their
families need such extensive help to apply for Federal aid to go to
school so they can pursue lives with more prosperity that they have
known. States should not have to establish staff infrastructure and
communications campaigns for low income students to receive financial
help to attend college. And even with all of these efforts, Tennessee
has thousands of high school seniors each year that don't complete the
FAFSA. This was true before COVID-19; it is even more urgent today.
Institutions agree we must finish fixing the FAFSA now. The
National Association of Student Financial Aid Administrators supports
the FAFSA Simplification Act. I see the consequences of not having the
simplified Pell determination in my role as a trustee of one of our
nation's Hispanic-Serving Institutions, Metro State University Denver.
One-third of our full-time students qualify for the maximum Pell grant.
Our college serves more Blacks and Latinos than any other university in
Colorado; students of color comprise half of our student body. This
fall, first-time FAFSA rates are down 13.5 percent and our fall
enrollment is down 6 percent. The hard work of racial justice on our
campus needs a simplified Pell formula. And for Denver's 130,000
recently unemployed? MSU Denver could reach these adults that need
reskilling and upskilling and partner with the state's unemployment
insurance program if we had a Pell grant look-up table like this bill
will create.
Advocates for students coalesce around other changes in the FAFSA
Simplification Act we need now. As vice-chair of the Institute for
Higher Education Policy's board, and a believer in second chances, I
join the voices of nearly forty national faith, justice reform,
business, corrections and higher education organizations that support
expanding affordable postsecondary pathways to thousands more students
by ensuring that individuals who were convicted of drug-related
offenses are not discouraged from applying for Federal financial aid. A
2015 study by the Center for Community Alternatives focused on the
State University of New York found that nearly two out of every three
undergraduate applicants who disclosed a felony conviction never
completed their FAFSA applications. This chilling effect may be felt by
Federal student aid applicants as well. Acting on the FAFSA
Simplification Act now will remove Question 23 and allow Federal aid to
be awarded to students seeking to reach their full potential by
pursuing a postsecondary education.
Last, I sit before you not just as one to remind you of the
consensus we have achieved and the need for Congress to act on it. I
sit as a former Department of Education adviser, one who knows that
delaying now to adopt the FAFSA Simplification is inefficient and
wasteful--senseless when every person applying for financial aid stands
to benefit if we finish the job.
Federal Student Aid today is incorporating necessary upgrades to
the system required by the Future Act. Changes in the FAFSA do not
happen quickly due to the backend systems, but we have the opportunity
to do the full renovation once. For example, the current law uses
elements of tax forms that no longer exist under the Tax Cuts and Jobs
Act, namely the 1040 A and EZ. Currently, the Department has had to
``make do'' and substitute Schedule 1 as a proxy for the A or EZ. The
Future Act does not use the Schedule 1. The FAFSA Simplification Act
provides new data points in the letter schedules that are better
understood to delineate complex filers from simple ones. If we don't
align what we will be getting from Federal tax records with what FSA
collects through the legislatively mandated need analysis, we continue
to have the problem where individuals do not know if they filed a
Schedule 1, just like they didn't know if they were eligible for a 1040
A or EZ. And we will still ask more financial questions than are
needed.
My mom, the daughter of an immigrant and World War II vet, raised
me never to quit a race when you are 9/10 from finishing. As a former
400 meter hurdler, that is one hurdle from the tape. I implore you,
don't quit now. These times are full of overwhelming problems. With the
measures in the FAFSA Simplification Act, we can bring hope to the
millions of Americans who seek to improve their lives and their
families' lives with increased education and training. We owe it to
them to act on our consensus.
Every year you delay, it takes two more years to get a simple Pell
grant look up table, to get applicants minimally comparable consumer
information and potential eligibility for other means-tested aid.
Wanting or waiting for comprehensive reauthorization of the Higher
Education Act is not a reason to waste more time. We need your
leadership now more than ever during these times.
We can and must measure the impact of the consensus we have
achieved in more than time elapsed but rather by the millions more
Americans receiving the financial aid they need to improve their lives.
Again, passing the bipartisan FAFSA Simplification Act is the type of
legislation we should adopt to close out this very, very difficult
2020.
______
The Chairman. Well, thank you very much to our witnesses. A
compelling testimony and I have--will now begin a series of
questions from Senators limited to 5 minutes each. Listening to
all of you, especially the numbers that Ms. Hultquist just
mentioned, takes me back 7 years to the testimony when four of
the witnesses who are here today, when I asked them, I said,
well, could you each write as a letter about what we need to do
to simplify the FAFSA? And they turned around, looked at each
other and said, we don't need to each write you a letter. We
all agree on what needs to be done. And so they wrote us one
letter. And that was 7 years ago. And it sounds like today it
seems even more urgent to do it now. Sometimes in the Senate,
we get in a position of saying, well, let's wait till we agree
on everything to do anything. This is a very significant thing
that we are talking about.
I mean, just to go back to where I started, this is the
FAFSA. This is 108 questions that in the middle of a pandemic
20 million families are expected to fill out in order to get
their free education in Tennessee for 2 years or any Pell Grant
or any student loan. 20 million families filling it out every
year. And what our witnesses have told us is that there are 53
questions on that list that we don't need. And there is really
not any disagreement about that. I guess there is someone
somewhere who disagrees about that but I haven't met them. I
rarely have met any issue about which there is much more
compelling agreement than this. So this would be the new FAFSA,
minus 53 questions, that our witnesses say is unnecessary. Now,
let me talk about a technical matter. The law that Senator
Murray and I introduced last year that took the 22 questions
and said--that were on the FAFSA--that are on the FAFSA, and
with one click, a student applicant and family can ask the IRS
to answer that question for them.
That is a big step forward. And the 53 we are talking about
are in addition to that. But it will take a while to implement
the law we passed last year and we are told that may be the
year '23, '24. Well, my question, and let me ask Ms. Hultquist
and Ms. Cook to start with this question, wouldn't it make
sense to go ahead and pass this legislation, removing the 53
questions so that it can be implemented at the same time, the
law we passed last year is, so that the new simplified FAFSA
can be introduced all at once to 20 million families in the
same year, '24? How much difference would that make, Ms.
Hultquist?
Ms. Hultquist. Well, thank you, Mr. Chairman. I wanted to
start by echoing Senator Murray's commendation of you. And on
behalf of all first generation students, we owe you a debt of
gratitude. From a student perspective, no doubt, the FAFSA
Simplification Act finishes the job to only ask the questions
we need and no more for states and for institutions. From a
taxpayer and U.S. Department of Education perspective, I
believe you measure twice and cut once. We are going to have
one back office system upgrade. It is going to be more secure
because we are transferring data from the IRS and the
Department of Education. But we are not linking up our data
elements. So the current law uses data elements from tax forms
that no longer exist.
The Tax Cuts and Jobs Act got rid of the 1040a and 1040ez.
So currently the Department of Education is using schedule one
as a proxy for these. But the FUTURE Act doesn't recognize
schedule one. So what you have is one model not talking to the
old model. Let's cleanup the legislation so that our statutory
formula for student affordability index, bye, bye EFC, would
actually be able to be sufficient and so individuals don't have
to wonder, do I fill out a schedule one? Just like right now
they don't know what is a 1040a, what is an ez----
The Chairman. I am going to run out of time here--I am
going to run out of time. Let me, if I may, move on to Ms. Cook
and ask her the same question. Wouldn't it make sense to go
ahead and pass this law this year, getting rid of the 53
questions so that it could be implemented at the same time of
the FUTURE Act that Senator Murray and I sponsored?
Ms. Cook. Mr. Chairman, NCAN is fortunate to help serve and
advise on the implementation of the FUTURE Act. And we have
seen, as you understand well, from your time at the sausage
making process is difficult. I would say to the extent that we
can make these sweeping changes once, I am sure that would be
helpful and I would be hopeful that we would be able to
integrate them all into a '23, '24 FAFSA.
The Chairman. Dr. Scott-Clayton, do you have anything to
add?
Ms. Scott-Clayton. I simply agree with the prior
statements. I absolutely think, get it done once to make it
efficient.
The Chairman. My time is up. Senator Murray.
Senator Murray. Well, thank you, Mr. Chairman. Ms. Feldman,
let me ask you, in overseeing Federal financial aid at USC
Chapel Hill, you see firsthand how FAFSA is just one part of a
complicated financial aid and enrollment process.
Unfortunately, families face a lot of barriers in getting
access to the support they need to afford higher education. And
you are on campuses seeing the tumultuous impact of trying to
make this process work during a pandemic.
As a former Pell Grant recipient myself, I know how forms
and eligibility rules create hurdles and headaches for
families. And unfortunately, these barriers have only gotten
worse, with students and families now facing more rules and
more forms to get into college, get financial aid, and maintain
that support. So I want to ask you, besides completing the
FAFSA, what are the biggest hurdles students and families face
in getting access to the financial aid that they need?
Ms. Feldman. Thank you, Senator Murray. That is a fabulous
question. And there certainly are more hurdles than simply the
FAFSA alone. I think we have mentioned several of them. In
particular, the verification process, which is like an audit of
what they have already filled out on the form. But in fact,
students are verified on their financial aid application at
much higher rates than we audit people on their tax returns,
which is a little confusing. In addition, if I can be naive and
frank, students just need more money.
Students need higher Pell Grants and students need higher
thresholds for that Pell Grant and maybe this decoupling of the
Pell Grant eligibility from our complicated EFC formula gives
us a chance to address that issue. And finally, we need to make
sure, as I said earlier, that whatever we do to simplify those
formulas for the index isn't so simple that schools like ours
decide that students need to fill out the CSS profile or other
supplemental forms, which are even more complicated than the
FAFSA today.
Senator Murray. Okay. Thank you. You know, while it is
critical, we know that FAFSA is just the front end of the
process that students go through to get the help they need to
afford college. There is a lot more we can do or should be
doing to make sure our students have the support they need to
afford food and housing and child care. And as the economic
devastation of this pandemic is continuing, many students and
families, particularly students and families of color, are now
experiencing unemployment and are really struggling to make
ends meet.
Those financial pressures threaten to exacerbate existing
racial disparities regarding access to higher education. So to
any of our witnesses who would like to answer, let me just
start with Ms. Cook and then Ms. Feldman, how can the
Department of Education, states and colleges use the FAFSA and
financial aid process to connect students to other Federal
programs like SNAP or TANF or Medicaid and help make sure they
can meet their basic needs while going to school?
Ms. Cook. Senator, our experience is that many, many of our
students have overlapping eligibility for Pell Grant or SNAP,
for TANF, for example. We see some opportunities perhaps on
loan counseling to flag those students and share those
eligibility that they may not be aware of. I also think we have
some promise in the proposed simplified Pell Grant eligibility
index since that is tied to Federal poverty level. It could
give us a chance to crosswalk other means tested benefits
programs that are also tied to Federal poverty level.
Senator Murray. Okay, good.
Ms. Feldman.
Ms. Feldman. Thank you. I agree with the statements of Ms.
Cook, especially about the Federal poverty level. I also
believe that we need to make sure that whatever measures we are
using to accommodate nontraditional situations such as students
who live with their grandparents, the students aren't even sure
which are the parents they should be putting on the form, and
our independent students returning to school, which make up
more and more of our populations.
Senator Murray. Okay. I just have a minute left, but I
wanted to ask Dr. Long and Dr. Scott-Clayton, you have both
written about the benefits of predictability for financial aid.
What should we, as policymakers, do to make sure students know
their options, including those offered by their college
financial aid administrators should they need their aid
adjusted because of financial hardship that we are seeing now
because of the pandemic and other conditions?
Ms. Long. Thank you, Senator Murray. Just to say we need to
move out of these acronyms that we use like EFC. We have seen
lots of research, other colleges and universities have moved
just to income thresholds that families understand or parents
understand much better. I think this also builds on your
previous question where we know about other aid programs and
using crosswalks between them. If you are already qualifying
for food stamps or other kinds of assistance, communicating
that to students, same as if you were qualifying for financial
aid, having to go back and notifying students, we have seen
this work in the past very effectively and increasing access to
support.
Senator Murray. Good. Thank you. I know I am out of time,
so maybe if some of the others can give me a written response,
that would be great. Thank you.
The Chairman. Thank you, Senator Murray.
Senator Cassidy.
Senator Cassidy. Thank you, Mr. Chairman. Mr. Chairman. I
mean, it is like such a no brainer. You have convinced me over
the last four or 5 years we have worked together as to the
wisdom of this and some of these witnesses whom we have heard
before. Similarly, by the way, my wife is a general surgeon.
She was filling out FAFSA and she threw up her hands in the
air. She was like, I can't do this.
I think if your first language is not English, how would
you accomplish it? And so it really gives me sympathy. With
that said, I am going to actually open up speaking about
something which is not directly on point, but at least would
like to make the point. Ms. Hultquist, it is not only important
that somebody be able to access the financial means to go, but
I personally think that it is important that they have the
student level data. As I tell folks, if you look in the mirror,
what does someone who looks like you going to do in this
curriculum at this university?
Senator Warren and I have a bill, College Transparency Act,
that would request this to be published so that someone can
say, I look like this, what am I going to do in this curriculum
at this school. Do you have any comments on that? You are on
mute. You are on mute again--there you go.
Ms. Hultquist. Thank you, Senator, for the tip and also for
your question and for your leadership in sponsoring with
Senator Warren the College Transparency Act. Currently,
students must make choices about whether where to attend
college or to study or how to pay for it based on woefully
inadequate information. This is because our national data
systems are incomplete. They are inconsistent. They are
duplicative and they are burdensome. So a student level data
network like the one you have proposed would fix this.
It would provide students with quality information on
institution and programable outcomes to inform their choices,
but also give policymakers better information to drive evidence
based decisions, which is very critical in a time like this
when resources are scarce.
Senator Cassidy. Thank you very much. Thanks for--and
frankly, I am going to ask you be called as a witness if we
ever have a hearing on it, we thank you. Ms. Feldman, your
testimony stated that you hope that the aid administrators--
that aid administrators will be giving guardrails to ensure
program integrity, such as the ability to use professional
judgment to reduce a Pell Grant if the AGI does not appear to
reflect the student's true ability to pay. Can you elaborate on
that? Because I think that--we are trying to get help to
people. And sometimes it gets just kind of tied in a knot. And
I think you want to untie it. Can you elaborate on that,
please?
Ms. Feldman. Absolutely. Certainly our overall goal is to
make things as simple and straightforward as possible for the
majority of families. But I can tell you a story about a family
that I had a few years ago. The student apply for aid. They
were selected for verification. The mother's AGI was $20,000,
$4,000 from earned work and $16,000 from interest income. As we
dug in, that woman was a lawyer who owned her own firm and
worked out of her home, and her income was actually much closer
to $300,000 but she had a lot of paper write offs as she
depreciated her home, her car, and wrote off a lot of other
things as her personal expenses.
It feels like it is not a good use of taxpayer money to
give the student a full Pell Grant when there are so many true
need rather than those who are able to quite legally use the
tax system to write down their income with these non-financial
paper expenses that don't really affect their true ability to
pay. I think using that would be rare, but in some cases,
particularly for institutional and state aid, it can be very
important.
Senator Cassidy. Well, I will tell you, Ms. Feldman, one of
the things we always have to push back on is a lack of
accountability. And I think you are asking for administrator
level accountability. So thank you for treating the taxpayers
money like it is your own money. But let me ask you one more
question. Tell me, UNC, how has the pandemic affected students'
ability to pay, those who may have lost jobs, etc. Can you just
comment on that?
Ms. Feldman. Yes. The pandemic has really been devastating,
particularly for our lowest income students. And with our
switch to remote learning, many of them needed help just
getting hooked up to broadband Internet so that they were able
to study. Students needed a desk to study and maybe they shared
a room at home with three of their siblings. It--thank goodness
we had the Cares Act to help us with emergency aid but our
resources are dwindling and I worry about what we will do next
year when we are facing a huge increase in students who are
coming to us for reconsideration because they--their parents
have lost jobs, they can't find part time work and they are so
uncertain about the future. We would really appreciate some
support.
Senator Cassidy. Okay, thank you. Mr. Chairman, I yield the
floor.
The Chairman. Thank you, Senator Cassidy.
Senator Casey.
Senator Casey. Mr. Chairman, thanks very much. I wanted to
start by saying that I think I speak for a lot of Members of
the Committee when I say that most of us would incorporate by
reference what both you and Senator Murray said about each
other. So we wanted that on the record. But let me start with
the circumstance we face with the worst public health crisis in
a century, the COVID-19 pandemic. That pandemic, we know, has
created all kinds of disruptions. And in the education system,
those disruptions range from child care through post-secondary
education and so many other disruptions in between.
At the same time, there has been a jobs crisis that has
flowed in the wake of the pandemic. We know that post-secondary
education will be a critical component to any economic
recovery. And unfortunately for many students, the pandemic has
not only created financial strain, but it has exacerbated other
barriers to post-secondary education, such as access to
technology, access to transportation, and even access to
affordable, high quality child care. We have heard testimony
this past March, as well as today, that only 45 percent of low
income students complete the FAFSA and missing out on some $24
billion in grants and loans in institutional aid each year. So
to ensure that any student with financial need is able to
obtain assistance, it is clear that we must make the form and
verification process simpler.
I think we all agree on that. But I have to say, without
any--without further reforms to the Higher Education Act and
significant investments in child care, elementary and secondary
education, higher education, state and local funding and so
many other investments we should be making, post-secondary
access and success will unfortunately remain out of reach for
many Americans. I will start with Associate Provost Feldman for
this question.
Many college financial aid offices because of the pandemic
had to cancel in-person counseling and training events and many
college access organizations transitioned to virtual
operations. Supporting students solely online or by phone as
they navigate these complex forms is indeed challenging. And
for many low income and rural students, a lack of access to
technology or reliable high speed Internet can make it nearly
impossible.
According to the Pew Research Center, 30 percent of low
income households with school age children lack reliable
Internet at home. My fundamental question is this, what can the
Department of Education and institutions of higher education do
to better support these students in applying for financial aid
without the in-person assistance?
Ms. Feldman. Thank you, Senator Casey. That is indeed a
challenging question. In here in North Carolina we are
certainly a state that has broadband deserts in our rural
counties and places. We in fact, as we move to remote
instruction, gave students supplements, very particularly to
try to purchase broadband access. But in some cases, students
chose to stay and live in an apartment in Chapel Hill rather
than go home, because no matter how much money we throw at
them, there simply wasn't that access available and they
couldn't be successful.
On the other hand, students have been very resilient at
using things like Zoom or this WebEx product we are using now
or their phone to apply for aid and ask for help. And we have
been able to help them much more carefully and strongly than we
thought. I think if there is anything the Department can do
again to provide funding for students who need it to help
enhance their access to technology in their schools or in their
homes or both, it would be key to them successfully
transitioning to college this coming year.
Senator Casey. Before I close just want to ask any other
member of the panel if they wanted to comment on this question
about what the Department can do.
Ms. Long. Thank you, Senator, for the question. I would
just briefly say, we want students and families to be focusing
their time on their academic preparation, and we know they have
to focus now on many other needs. The more that we can do in
proactively be pushing out information--so for families, we
have already established that they are struggling and that they
are poor, why make them go through the form? Why are we not
doing outreach? And so these recommendations to based things
off of poverty levels and qualification for other programs, we
can be much more proactive in meeting families where they are
in their needs.
Senator Casey. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Casey.
Senator Murkowski.
Senator Murkowski. Okay. You can hear me. You can see me
now, right?
The Chairman. I can hear you. I can't see you. Now I can
see you. Senator Murkowski, we can see you.
Senator Murkowski. Alright. Thank you, Chairman Alexander,
and thank you to those who have gathered to talk about these
important issues for our students and what we can do to ease
the process for them. Several of you have noted the importance
of decoupling the Pell Grant need analysis from Federal student
loan to ensure that our middle schoolers, our high school
students will know that they have got the money then to go into
college. We recognize, though, that the FAFSA Simplification
Act does not provide a promise that students will be eligible
for a Pell Grant because we know that circumstances can change,
families' incomes may change, and there has been that
discussion this morning.
The early awareness chart idea, I assume, is intended to
let the students know that college may be an option if the
income levels stay the same. But I am afraid that message may
get lost there. I am concerned that families may believe that a
chart showing a certain family income and family size equals a
certain Pell Grant amount and that is--that is a promise. That
is a guarantee. So how can the FAFSA Simplification Act avoid
that misunderstanding? Have we thought through how we ensure in
a clear way that this is conditioned on circumstances remaining
the same? Is this a fear or concern that you have? And I throw
that to any member of the panel who may wish to speak to it.
Ms. Scott-Clayton. I will speak to that. Thank you,
Senator. I do think that is a little bit of a concern, but you
sort of have to weigh the relative concerns here. Right now, I
think that the far larger concern is that students don't know
or aren't preparing for college because they think they won't
qualify. If we do have some students who are preparing and
doing everything they can to get ready for college, then at the
end they get a surprise in the other direction, that is a
concern.
But I think there are so many other ways to help those
students. For the long term, I think the ideal solution there
is to think about taking that eligibility and basing it on a
family's income as they are going along and preparing for
college so that it can really be a promise when we get to that
point--they know. It is almost more like a savings account for
a baby bond sort of idea where by the time you get there, they
know exactly what they have in the bank. And I think that FAFSA
simplification is a step that will move us in that direction.
Senator Murkowski. We are not quite there yet, but we are
laying the groundwork for what you have, perhaps----
Ms. Scott-Clayton. I think this is a huge step. I think
this would be a huge step, the legislation that is on the
agenda today, I think will be a major step. And like I said, I
am way more worried about students not preparing for college
because they think they won't qualify. And we know that there
is a lot of persistence to family income over time. We saw that
in the conversation about the prior, prior year switch. There
is a lot of persistence in eligibility over time. So that is
not the biggest of my concerns right now. I think it will open
the door to even greater reforms in the future.
Senator Murkowski. Anybody else want to speak to that
quickly? I have got one more question I would like to ask.
Ms. Long. Sure. If I could just interject about just
briefly, I do have some research in this area. When we were
focusing on 20,000 students in Ohio, North Carolina, we also
ended up having a small experiment where we shared with their
younger siblings and with the sophomores and freshmen in their
schools the kind of postcard that we are talking about right
now with a pre-estimate of financial aid.
What we actually found is that families all became
interested in all of a sudden meeting with their guidance
counselors, meeting with the nonprofits that were available to
start a conversation. It grabbed their attention so that they
were coming in to get the advising not just about financially,
but also about college choice and program of study, which is
also a very important part of the process. So we really
interpreted as starting the conversation, which is absolutely
critical, given all the misinformation that is out there, that
there is no aid.
Senator Murkowski. I appreciate that. Let me ask, switch to
a question that came from the University of Alaska and this
relates to the need for changes in the income verification
process. From their perspective, this verification process has
been--they have described it almost as a pyrrhic victory. It
has captured a minimum amount of fraud and abuse. She likened
it to getting audited by the IRS every year and finding nothing
every time. It is good that you find nothing, but it puts
applicants through quite a process for what they feel is very
small benefit to the Department's Federal student aid office.
The FSA provided guidance that allowed for applicants to
submit a signed copy of their 1040 for the academic year 2021.
This is very, very helpful from previous guidance that had
required an IRS return transcript that was very burdensome for
many of my constituents, particularly those that come from low
income households. So we saw previously that these applicants
were more likely to be selected for verification, which
ultimately led to less completed FAFSA applications. The
guidance hasn't been extended yet for academic year 2021-2022.
I guess the quick question and hopefully quick answer is
whether or not a permanent change in required documentation is
necessary in your view?
Ms. Cook. Senator, I will take that, yes. So quick answer,
yes. A permanent change to allow flexibility in the ways that
students meet verification is a temporary fix. A longer term
fix is to use the data that we have learned about this many
times audited, few times changed to really better target and
lessen and perhaps get to the point where we can eliminate this
backed process.
The Chairman. Thank you----
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murkowski. Senator Warren.
Senator Warren. Thank you, Mr. Chairman. This is our fourth
annual hearing simplifying student aid applications. And by
now, I think all of us agree that this is a good idea. But four
hearings? Since the Republicans took control of the Senate
nearly 6 years ago, we have not had one single hearing in this
Committee on the student debt crisis. Instead of spending more
time on how to make it easier for students to borrow more
money, I think we ought to focus on how to deal with the $1.6
trillion in debt that is crushing millions of people. And I
think that is particularly urgent because student loan debt is
disproportionately a serious problem for black and brown
communities, especially as the COVID-19 pandemic and economic
crisis also disproportionately hits the same communities.
I believe it is time to explore bold solutions like broad
student debt cancellation. Congress should do that, but even if
Congress doesn't cancel student loan debt, the President and
Secretary of Education could do that right now. So, Dr. Scott-
Clayton, just how bad is the student debt crisis for black and
brown families?
Ms. Scott-Clayton. It is really shockingly bad. Even prior
to the pandemic, nearly half of black student loan borrowers
will experience a student loan default within 12 years of
college entry. That is compared to about a third of Hispanic
borrowers and one in five white student borrowers. It is so bad
that a black college graduate with a bachelor's degree is more
likely to experience a default than a white college dropout.
And unfortunately, these stats might get worse due to the
pandemic.
Senator Warren. Right. And Dr. Long, what are the
consequences of the student debt crisis for students who are
still in school? Does debt have an impact on their completion?
Ms. Long. Thank you, Senator Warren, for highlighting this
issue. Yes, it is affecting not only attainment, but the
quality of the experiences. The research shows lower GPAs,
lower academic engagement, taking advantage of resources,
reduction in course loads so attainment has been affected. And
then these students that affect their ability to save and to
participate in asset building. So it has many negative
consequences.
Senator Warren. Thank you. Just quickly, Dr. Scott-Clayton,
I know you agree with me that simplifying the FAFSA form is a
good idea. But do you also agree that student debt cancellation
is the most efficient and effective solution to the crisis
facing borrowers right now?
Ms. Scott-Clayton. I do agree, given the urgency right now,
we absolutely need to talk about some debt cancelation to
address the crisis in student loans.
Senator Warren. Thank you. I appreciate that. I request
unanimous consent to submit into the hearing record a letter
from the Harvard Law School project on predatory student
lending that details the legal authority of the Secretary of
Education to cancel student loans without congressional action.
Millions of people are getting crushed by student loan debt and
that is why I have a bill to broadly cancel student loan debt
as well. Mr. Chairman, do I have permission to enter this into
the record?
The Chairman. So ordered, Senator Warren.
[The following information can be found on page 64 in
Additional Material:]
Senator Warren. Thank you. You know, but even if Congress
doesn't act later, Leader Schumer and I introduced a resolution
this morning calling on President Trump and Secretary DeVos to
use the authority Congress has already given them to broadly
cancel student loan debt now. It is time to get this done.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Warren. Senator Scott. We
will go to Senator Jones.
Senator Jones. Thank you, Mr. Chairman. And let me also
echo what Senator Casey said, I so very much appreciate the
comments that you have made about Senator Murray and Senator
Murray's comments about you. And for those that may think that
we have a cynical Washington, DC, I can assure folks that heard
those comments that they are heartfelt. And as someone who has
worked with both of you in a really close way, particularly on
this issue with you, Senator Alexander, are being a heartfelt
and appreciated. And that is why it has been such a joy for me
to work on this Committee over the last two and a half years.
So I really appreciate everything that has been commented on
today and your work together. I would have to say, Senator
Alexander, I appreciate especially the work that we have been
doing together on this really important issue. In Alabama,
there are so many kids that just walk away from the FAFSA. I
think in 2018 I saw statistics that close to 50 percent of our
high school seniors just walk away from FAFSA leaving a lot of
grant money on the table, not just scholarship money for loans,
but grant money and scholarships on the table.
One of the issues that we have seen with the implementation
of the bill that we passed for the FUTURE Act, it seems to be
that the Department of Education is going to be pretty slow to
implement this. And I am not sure who is best to answer this,
but I am trying to figure out what you are hearing about why it
is going to take so long. And let me say, I completely agree
with Senator Alexander that if we could get our bill passed to
do a complete overhaul and get them implemented at the same
time, that is the ideal solution.
Given this pandemic, given the end of this Congress it is
going to be tough to get that done. So I am assuming that we
may end this Congress simply with what we have got, which is
the FUTURE Act. Why is it taking so long and what can we do,
especially in Congress, to speed that up so it could be ready
earlier? Anybody. I will open up to anybody that might want to
answer that.
Ms. Cook. Senator, I will kick off here. What we are
hearing is that there are complications in data security and in
use of Federal tax information. So concerns about how that
information is and can be shared between the departments and
then with filers and even with family members who are part of
an application. What Congress can do is clarify its intentions
of how that information can and should be used and help us
certainly respect and care for data that we understand is
sensitive, but to use it wisely.
Senator Jones. Would anybody else want to share anything
that they have heard or just simply ask, how is it--how
important would it be for Congress to do whatever is necessary
to get that implemented earlier, if at all possible?
Ms. Feldman. Senator, thank you. This was Rachelle. As a
person at a school, we would certainly love to see the FUTURE
Act and any further simplification implemented as soon as
possible. The longer it takes, the longer we have to help
people through difficult forms and the more risk we have that
students don't complete the process, especially during this
time of pandemic and extra needs. So we appreciate that
support. It is hard to understand how all the sausage making at
a very complex organization like Federal Student Aid works, but
certainly, the sooner the better.
Ms. Scott-Clayton. I would just add to emphasize a sense of
confusion about why it does need to take so long, and that some
pressure may be necessary to see that along, because I think it
is a huge frustration to go through all the work of getting
that legislation and then not have the urgency to get it
implemented as soon as possible.
Senator Jones. Well, thank you all. A lot of my questions
have been answered. Let me just say again, we are going to
continue to work on this. It is something that is really
important to all these states. I may, following this hearing,
get with Senator Murray and Senator Alexander to see what we
could do to try to push that date up somehow some way. You
know, Senator Collins, who is also on this Committee, and I got
a bill passed recently that would provide some extra security
for the IRS by creating a voluntary program for your PIN number
for the IRS. That would create an extra level of security.
Maybe we could work to try to help implement that through
some of this somehow, some way so we can give all our parents
and all those affected with this the level of comfort that they
need for the security. So in this day and age, the U.S.
Government of all people ought to be able to keep that
information secure. So, again, thank you, Mr. Chairman, for
this work on this issue. Thank you for including me on this
work on this issue. I really very much appreciate that. I have
enjoyed it very much. And thanks to all our witnesses for being
here today.
The Chairman. Thank you, Senator Jones. And thanks for your
leadership and sponsorship both on the FUTURE Act and on this
legislation, reducing 53 questions from the FAFSA. Senator
Rosen.
Senator Rosen. Thank you, Mr. Chairman, Ranking Member.
Thank you to all the witnesses for being there for our
students, educating them and caring about them. And Mr.
Chairman, I just want to thank you for your leadership on this
Committee in the U.S. Senate and for welcoming me here to both
of them. And I really appreciate that and we are going to miss
your guidance.
But moving on, I just want to talk a little bit about what
is going on in Nevada. And so with so many students in Nevada,
across our country, of course, are facing financial pressures
due to the pandemic of COVID-19. So removing barriers,
increasing access to meet programs is just radical.
Unfortunately, low income students, those in rural areas, first
generation students have long faced obstacles when applying
student aid. Since the start of the pandemic, the number of
students completing FAFSA has decreased for Pell eligible
students with the greatest decreases coming from families with
incomes of $25,000 or less.
Additionally, students with the greatest barriers are also
with students most likely to be required to complete a
burdensome secondary income verification, which results in many
eligible students missing out on that very important financial
aid they need to reach their goals. And so Ms. Feldman, excuse
me, what modifications to the family income verification
process can be made, particularly to address the low income
students facing a changing education and financial landscape?
Ms. Feldman. Thank you very much, Senator Rosen. I think
the first thing to ask is why we verify so many families in the
first place. The rate of verification has hovered around 30
percent. The Department has talked about lowering it to 22
percent. These are much higher rates than we see on income tax
verification, which are in the single digits. And we have not
shown that is necessary or effective, as most of the families
we verify show little to no change in their ultimate
eligibility, although many fail to complete it because it is
difficult to obtain the forms they need.
In addition, I think that research, as my colleagues have
mentioned, has shown that verifying the lowest income families,
those with means tested benefits or who qualify for auto-zero
EFC or expected family contribution is particularly
ineffective. And yet at schools, we continue to see those
students selected over and over again. And those are the
students who often have the most difficulty getting the forms
they need to complete the process. So if I could make two
recommendations, they would be very simple. Well, three.
One, let's implement the FUTURE Act so we don't have to ask
them questions because we know already from their tax forms
what their income is. Two, let's really look at both formula
and select fewer people. And three, let's not concentrate on
the lowest income families, but more on the business owners or
middle income families where we see actual change when we do
verification.
Senator Rosen. Thank you, I want to just really quickly ask
a question about our student vets and our dreamers. And, of
course, like you said, a lot of reasons people don't fill out
FAFSA, a lot of barriers, a lot of confusion, a lot of our
veterans don't realize they might be able to get FAFSA or get
other student aid in addition to their G.I. benefits. We have
got a lot of DACA recipients out there. And so we intentionally
provided flexibility to determine how to distribute the
funding. And so we have to be sure that we get it out there.
Again, Ms. Feldman, I am going to ask you, as Director of
Scholarships and Student Aid, how do you think we should be
sure that our student vets, our DACA recipients, how can we be
sure that they understand their eligibility, particularly those
student vets, that they have more in addition to our G.I.--
actually or all of them. So what recommendations do you have
there for dreamers and student veterans?
Ms. Feldman. Thank you. It is a little bit of a complicated
question since particularly dreamers have different eligibility
depending what state they live in. I think it would be easier
for everyone if we had some consistent eligibility for students
who have been in the country since they were very small.
For veterans, I would really like to see more outreach and
more understanding for them that their veterans benefits often
do not offset the other aid they are eligible for, or that they
could save those benefits for graduate schools if they used
other aid to further their undergraduate career. And I should
hope we could enlist the Department of Defense and the other
veterans support services in helping us craft a message
together with the Department of Education in schools that would
let them know that it is worth their time to apply for aid.
Senator Rosen. I thank you and I look forward to working
with you in the future on doing all of those things. Thank you.
The Chairman. Thank you, Senator Rosen.
Senator Hassan.
Senator Hassan. Well, thank you, Mr. Chair and Ranking
Member, for having this hearing. And Mr. Chair, I just want to
echo what you have heard from the witnesses and from our
Ranking Member today. I want to thank you for your leadership
and thank you for your outreach to me as a new Senator when I
started in particular. And we have had some candid exchanges,
but we have always had productive ones and that really speaks
to your leadership.
Thank you so much for everything you have done for so many.
And I want to thank the witnesses for being here today as well.
And I am going to start with a question to Ms. Cook. And Ms.
Feldman. In May, I sent a letter to Secretary DeVos with
Senators Tim Scott, Loeffler and Booker urging the Department
of Education to ensure that students who had been financially
impacted by COVID-19 received the financial aid that they are
now eligible for.
Well, the Administration has since clarified that financial
aid administrators may use what is known as professional
judgment to adjust students financial aid eligibility if their
financial situation or employment status has changed. The
Department has continued to count unemployment benefits toward
a students earned income calculation, something that simply
doesn't make sense given the uncertain duration of the benefits
and the economic disruption that the need for the benefits
represent. The Department of Education has also failed to
conduct any outreach to recently unemployed individuals about
their higher education options, which the Obama administration
did during the last economic recession, or committed to
changing the online FAFSA form to capture students with recent
financial changes.
We need to do more for our current and future students. So
Ms. Cook and Ms. Feldman, what are your recommendations for how
Congress and the Department of Education can address the
challenges that students are facing while navigating their
changing financial circumstances? And we will start with you,
Ms. Cook.
Ms. Cook. Thank you for this question and for your
attention to a rapidly changing situation. Many of our
students, unfortunately, do find themselves or family members
with changes in employment, catastrophic health care bills, and
unfortunately, in some situations, the death of a parent. This
is a lot to manage and certainly triggers for professional
judgment. We appreciate the flexibility that has been put in
place so far but I agree with you that more can be done to
better support our students, particularly those with
unemployment. I will yield some time to Mr. Feldman too.
Senator Hassan. Thank you.
Ms. Feldman.
Ms. Feldman. Thank you. I think you have made some
excellent points, and it would certainly help students and aid
administrators to have a lot of clarity about the flexibility
were allowed in professional judgment, including not counting
temporary means of support such as unemployment benefits.
I think you will see in my written testimony that I call on
you as Members of Congress to codify into law the provisions
that were made in the 2009 Dear Colleague letter, which allowed
for both of those provisions and protected schools from getting
professional program reviews from the Department of Education
based on the number of professional judgments done during a
pandemic or other crisis such as this one.
Senator Hassan. Thank you very much for those responses.
Ms. Hultquist, I have a question for you as well. The COVID-19
pandemic has devastated businesses across New Hampshire and
across the country and put a record number of people out of
work. I have heard from many constituents who are struggling to
find work in their chosen field and who need access to
upskilling and retraining programs. In August, Senator Young
and I introduced the bipartisan Upskilling and Retraining
Assistance Act, which would help expand educational assistance
programs for employers who hire and retrain workers.
We need to provide robust support to workers and businesses
who are adapting during and after this pandemic and
institutions of higher education play a significant role in
this effort. Ms. Hultquist, with this shift in workforce and
business needs, can you speak to the role of higher education
in economic recovery and to how employers and industry leaders
may partner with higher education on some of these initiatives?
Ms. Hultquist. Absolutely. Thank you, Senator, for your
question. I will say that higher education is absolute critical
to economic recovery. It is, in fact, one of the benefits of
the FAFSA Simplification Act. We will be able to directly go to
the actual job fairs over time, of course, with the Pell lookup
table. When you look at certain communities around the country,
let's take in San Diego, impressive partnerships between higher
education, the Workforce Development Council, and employers to
create real clear pathways to the adults. They reach them when
they are unemployed. They let them know. They actually combine
with an income shared agreement that says if you finish this
program, it is in high need in our San Diego County, you won't
have to pay for your education. And so if you have an income
below a certain level.
Senator Hassan. Thank you very much. And thank you, Mr.
Chair.
The Chairman. Thank you, Senator Hassan. That will complete
our questions from Senators but let me go to Senator Murray and
see if she has any closing remarks or additional questions.
Senator Murray. I don't have any additional questions, but
let me just thank the witnesses for joining us today. And Mr.
Chairman, thank you again for all the work you have done to
simplify the FAFSA. As I said earlier, it is really largely
thanks to your leadership that we have taken great strides in
making FAFSA easier to navigate for many students across the
country. But it is still clear we have a lot more to do,
especially to make sure that our most at risk students can
easily access the Pell Grants that are available to them.
We have got to make sure the financial aid process is
easier for these students by making the verification process
less of a burden, determining Pell grants based on the Federal
poverty level so more students and families can easily know the
amount of help they are going to receive, and fully
implementing the FUTURE Act. And we absolutely have to address
what is top of mind for so many higher education students and
their families, and that, of course, is the COVID crisis.
Mr. Chairman, I am very proud of the successful bipartisan
work that we have done on FAFSA simplification in the past. I
hope in the coming weeks we can continue in that vein to
address the critical challenges in front of us. Thank you.
The Chairman. Thank you, Senator Murray. And once again,
thanks to you and your staff for making this hearing possible
and making it easy. And I agree that--I look forward to
continuing to work over the next few weeks to see if we can
finish the job. I have two comments to make and then I will
conclude the hearing. One is Senator Warren mentioned that we
hadn't had any hearings on student debt. Well, that is wrong.
We have had five on student college costs, student loans,
student debt, student loan repayment options. On March 27,
2014, May 28, 2015, June 2015, January 2018, February 2018.
Those were all bipartisan hearings. We had good, robust
discussion. Obviously, there is lots of discussion that we can
have among ourselves on access to college and student debt, the
cost of college, student loan repayment. Those are all very
important issues and I am sure that the Congress will continue
to deal with them. Now, we have not agreed on exactly how to
deal with all those issues, as well as some other ones, such as
accountability in higher education. We have substantial
agreement, but it looks like we are not going to have a bill, a
broad bill reauthorizing higher education this year.
But it seems to me that is not a good reason not to finish
the job on FAFSA simplification. In the first place, we are
talking about a lot of Americans when we talk about FAFSA. We
are talking about 20 million families, a disproportionate
number of them, low income families, minority families, for
whom Federal aid is designed to help them have a ticket to a
better life and a higher income to higher education. And any
time we can do something that important that helps 20 million
of the most deserving families in the country, and we have
substantial agreement on it, we should do it.
Second, we do have substantial agreement on it. As I
pointed out, Senator Murray and I have worked with the Obama
administration and the Trump administration and we have passed
a law last year that would take significant steps to simplify
the FAFSA. But for the last 7 years, most of the witnesses who
are here today have told us what else we need to do and that is
to take the 108 questions and get rid of 53 questions and come
up with something about this size. So why would we deliberately
require 20 million lower income families in America to continue
to fill out 53 questions they don't need to fill out, according
to all the witness testimony that we have had at all or
hearings? Why would we insist that they continue to do that
when we could finish the job and pass the bill that we have
before us? That is one. Second, we have the pandemic.
For the people who have, who the witnesses, Senator Murray
and others have mentioned are especially in need of help, who
may live with their grandparents, not be able to identify their
parents, homeless people, foster children, we through this
legislation can allow them to apply as independent students and
make it much easier for them to access the FAFSA. The
Congressional Budget Office says if we act, 420,000 more
students will apply for Pell Grants. I know that in our State
of Tennessee, which fills out the FAFSA some more than any
other state, lots of students will be able to have 2 years of
free college education.
Then we have got the practical consideration that the
FUTURE Act that Senator Murray and I sponsored is now law. And
the Treasury Department and the Department of Education are
finding ways to implement it, and it would make much more sense
and be much easier if we could pass this bill, removing the 53
additional questions, and let both the FUTURE Act and this
legislation be implemented at the same time. So at some point
in the Senate, what we usually do is say, okay, we have talked
about something enough, we have got as much advice as we need.
There is really nothing much more we need to do to finish this
job. It is an important job for the country.
There is bipartisan support, no real opposition to it. So
let's do it. So it is my great hope that Senator Murray, I, and
this Committee can work together in the next few weeks to do as
we have often done, and that is to finish the job, simplify the
FAFSA and make it easier for 20 million families to have,
especially low income families, especially during this
pandemic, to have access to higher education. The hearing
record will remain open for 10 days. Members may submit
additional information for the record within that time if they
would like.
The Chairman. I want to thank our witnesses today. You are
real experts on this subject. You spend your life in dealing
with students and their families and helping them have access
to college. And as you have for the last 7 years, you have near
unanimous agreement on what we need to do so I hope we will be
wise enough to take your advice and do it.
Thank you for being a part of our hearing today. Our
Committee will meet again on Wednesday, September 23 at 10 a.m.
for a hearing entitled COVID-19, An Update On the Federal
Response. We will hear from Dr. Anthony Fauci, Dr. Robert
Redfield, Admiral Bret Giroir, and Dr. Steven Hahn. Thank you
for being here today. The Committee will stand adjourned.
ADDITIONAL MATERIAL
Chairman Alexander, Ranking Member Murray, and Senator Jones,
U.S. Senate Committee on Health, Education, Labor, and Pensions,
455 Dirksen Senate Office Building,
Washington, DC.
Dear Chairman Alexander, Ranking Member Murray and Senator Jones:
We write to thank each of you for your leadership to advance the
simplification of the Free Application for Federal Student Aid (FAFSA)
and to encourage passage of the FAFSA Simplification Act of 2019 this
year. We fully agree that it is time to finish fixing the FAFSA.
We represent state and regional higher education leaders,
government officials, and agencies in all fifty states. Our members
know that filing the FAFSA is the first, but overly complicated step,
for students to enroll in colleges and universities. Too many
prospective students never make it past this first step.
During the unprecedented COVID-19 emergency students and families
are reevaluating their plans to attend college and some are less likely
to consider attending. We have already seen dramatic reductions in
enrollment and concerning declines in FAFSA completion rates,
particularly among students who are underrepresented in higher
education. This will exacerbate existing inequalities.
It is urgent to finish fixing the FAFSA through passage of the
FAFSA Simplification Act due to four timely issues:
1. The new simple Pell Grant formula will allow for clear
communication with students and families about the money
available for them to earn a postsecondary credential. In
uncertain economic times, people need more certainty when
considering college opportunities.
2. States and public institutions will continue to have the
information they need to award $8.2 billion dollars in state-
appropriated financial aid and will receive more nuanced
information regarding needy students by allowing the formula to
show shades of gray with a negative student aid index.
3. Putting off reforms to the FAFSA means that when FUTURE
Act implementation occurs the data coming in will not align to
the current law's formula, adding new and unnecessary
complexity. Students and families will still have to answer
financial questions and try to understand their tax filing
situation.
4. The flexibility provided to financial aid administrators
regarding professional judgment, as well as the new opportunity
for students to file for provisional independence, will assist
many of the students who struggle the most.
Thank you each for your strong commitment to this issue. It is
important to enact this reform this year so our states and regions will
be able to set up students and families for success.
Respectfully,
Robert E. Anderson
President, State Higher Education Executive Officers Association
(SHEEO)
Susan G. Heegaard
President,
Midwestern Higher Education Commission (MHEC)
Michael K. Thomas
President,
New England Board of Higher Education (NEBHE)
Stephen L. Pruitt
President,
Southern Regional Education Board (SREB)
Demaree K. Michelau
President,
Western Interstate Commission for Higher Education (WICHE)
______
The National Association of Student Financial Aid
Administrators
September 17, 2020
Senator Lamar Alexander, Chairman
U.S. Senate Committee on Health, Education, Labor, and Pensions,
455 Dirksen Senate Office Building,
Washington, DC.
Chairman Alexander, Ranking Member Murray, and Members of the
Committee:
The National Association of Student Financial Aid Administrators
(NASFAA) respectfully submits the following written testimony for
inclusion in the ``Time to Finish Fixing the FAFSA'' hearing, to be
held on Sept. 17, 2020. NASFAA represents financial aid administrators
at 3,000 colleges across the country. Collectively, our schools serve
nine out of every 10 undergraduate students.
Background
The Free Application for Federal Student Aid (FAFSA) has come a
long way over the past decade, from the initial implementation of the
Internal Revenue Service (IRS) Data Retrieval Tool in 2009-10, \1\ to
refined skip logic to minimize the number of questions presented to an
applicant, to the launch of the mobile FAFSA in October 2018. \2\ There
are many examples of small adjustments throughout the years that, taken
together with the shift in 2017-18 \3\ to using prior-prior year income
data, have reduced the time it takes for a student to fill out the
FAFSA. Today, the average completion time is approximately 31 minutes,
\4\ a vast improvement from the time it took to fill out the form when
it was first developed.
---------------------------------------------------------------------------
\1\ ``Overview of IRS Data Retrieval process for 2009-10 FAFSA on
the Web'', Electronic Announcement, November 5, 2009: https://
ifap.ed.gov/electronic-announcements/11-05-2009-application-
processing--subject-overview-irs-data-retrieval
\2\ ``Next GEN FSA Update,'' Presentation from ED, 2018 FSA
Training Conference for Financial Aid Professionals, December 2018:
https://fsaconferences.ed.gov/2018sessionlist.html
\3\ ``The President's Plan for Early Financial Aid: Improving
College Choice and Helping More Americans Pay for College'' The White
House, September 13, 2015: https://obamawhitehouse.archives.gov/the--
press-office/2015/09/14/fact-sheet-president's-plan-early financial-
aid-improving-college-choice
\4\ Federal Student Aid, Federal Student Aid FAFSA Volume Reports:
FAFSA Data by Demographic Characteristics, 2010-11 and 2017-18
Application Cycles
---------------------------------------------------------------------------
However, even with these successes, the average FAFSA completion
time has only dropped 34 seconds from the 2010-11 application cycle,
when completion times were first made publicly available on the U.S.
Department of Education's (ED) office of Federal Student Aid (FSA) Data
Center, to the 2017-18 application cycle, the most recent available
year. This small, incremental progress suggests that the significant
streamlining of the FAFSA--which is very much needed--must be achieved
through legislative change. Complexity of the FAFSA is often cited as a
barrier to FAFSA completion, especially for our neediest students. \5\
As a result, significant numbers of needy students do not receive
Federal aid for which they would be eligible, making a postsecondary
education financially impossible, if they attend at all. Based on data
from the 2011-12 National Postsecondary Student Aid Study (NPSAS),
about one-third of students who did not file a FAFSA would have been
eligible for a Federal Pell Grant. \6\
---------------------------------------------------------------------------
\5\ Davidson, J. C. (2013). Increasing FAFSA completion rates:
Research, policies and practices. Journal of Student Financial Aid,
43(1), Article 4. http://eric.ed.gov/'id=EJ1018058
\6\ Page, L. C., & Scott-Clayton, J. (2016). Improving college
access in the United States: Barriers and policy responses. Economics
of Education Review, 51, 4--22.
---------------------------------------------------------------------------
Fortunately, there is bipartisan and bicameral interest in tackling
the challenges of FAFSA simplification. In this Congress, there have
been 11 bills introduced related to FAFSA simplification, including the
Simple FAFSA Act of 2019, the HOPE (Heightening Opportunities for
Pathways to Education) for FAFSA Act, the Student Aid Improvement Act
of 2019, the FAFSA Simplification Act of 2019, and the Fostering
Undergraduate Talent by Unlocking Resources for Education Act (FUTURE)
Act of 2019.
In particular, the FAFSA Simplification Act, which NASFAA supports,
would significantly reduce the number of questions on the FAFSA--
including irrelevant and unnecessary questions, such as the Selective
Service and drug offense-related questions--and present only the
applicable questions as predetermined based on an applicant's reported
family income. Taking into account feedback from financial aid
professionals nationwide, the bill takes a commonsense approach to
shorten the FAFSA application to an extent that would not deprive
institutions of crucial information needed to appropriately disburse
billions of dollars of financial aid to eligible students.
The FUTURE Act, passed in December 2019, amends both the Internal
Revenue Code and the Higher Education Act to allow for the automatic
transfer of IRS tax data to the FAFSA, which will simplify the
financial aid application process for millions of students and
families. In addition to providing a more streamlined, less burdensome
process for students and families, the law, when fully implemented,
will create a more secure data-sharing experience, limit applicant
errors in reported income, and reduce improper payments.
While the FUTURE Act focuses on much-needed enhancements to the
application process, it does not address the Federal Methodology (FM)
need analysis formula which dictates the questions that are asked of
applicants as they complete their FAFSA. While we work to implement the
FUTURE Act, we should also be considering potential statutory
modifications to FM to further our FAFSA simplification goals.
Striking the Balance
To address the complexity of the FAFSA, we must first underscore
the basic tenets that underpin the philosophy behind the Federal
student financial aid programs:
1. Federal student financial aid is predicated on the idea
that the primary responsibility to pay for college is that of
the student and their family.
2. In instances where students and families do not have the
means or ability to pay for college, the Federal Government
will provide need-based financial aid.
3. Because need-based financial aid dollars are limited, the
Federal Government asks students to complete an application
that helps to determine the financial strength of each family,
and then aid is awarded accordingly. Students and families of
strong financial means receive little to no need-based aid, and
those with more limited means receive more need-based aid.
As Congress explores ways to simplify the FAFSA, it is important to
remember these three tenets, because, taken together, the formula and
form implement these philosophical underpinnings. Inherent in this
implementation is a tension between two key goals: (1) The desire to
make the form as easy as possible to complete, and; (2) creating a form
that allows the Federal and State governments, and schools, to
accurately measure the financial strength of applicants to ensure need-
based grants are well targeted.
Put more simply, the real challenge is to put together an
application that is as simple as possible but allows us to accurately
distinguish the truly needy from those who are not.
Ultimately, it is this tension that causes most debates within the
application simplification discussion. Historically, trying to balance
these two objectives has meant tradeoffs between simplification and
accuracy. For example, the most accurate measure of the financial
strength of an applicant would be assessed by asking detailed questions
about income amounts, sources of income, assets, savings, tax brackets,
annual expenditures, and more. However, such a structure would make the
form complex, tedious, difficult to verify, and--most importantly--
extremely daunting for low-income students. First-generation students,
whose families have no prior experience with the college application
process, are at risk of being deterred by such a complex FAFSA and
potentially losing the opportunity to attend college simply due to the
form.
On the other hand, simplifying the form too much would not give aid
administrators the information we need to differentiate between
students who appear poor based on their Adjusted Gross Income (AGI)
alone but actually come from financially strong families who have
resources elsewhere, from students who are truly low income.
Even if we found a very simple, generally strong proxy like AGI as
a determinant for Federal student aid programs, that same proxy would
not necessarily work for all other forms of non-Federal need-based
grants. Schools, states, and private scholarship providers all provide
need-based aid and want to make sure their funds are going to truly
needy students. If we go too far in simplifying the Federal
application, we could inadvertently complicate this process even
further by driving states, institutions and private scholarship
providers to return to requiring their own separate applications, as
they did prior to the creation of the FAFSA in 1992. \7\
---------------------------------------------------------------------------
\7\ Public Law 102-630
---------------------------------------------------------------------------
To that end, we offer what we believe should be the two core tenets
of any FAFSA simplification effort: 1) While any change in public
policy creates winners and losers, Congress must ensure that any
changes in the name of simplification do not do more harm than good to
students; and 2) Congress should work to ensure that efforts to
simplify the FAFSA will not result in states or institutions having to
create supplemental financial aid applications to collect necessary
information.
Recommendations for Improvement
With today's technology the tradeoff between simplification and
accuracy is not as daunting as it has been in the past. By relying on
timing and technology, NASFAA believes Congress can dramatically reduce
the number of questions for all applicants, but most of all for low-
income students.
The direct data sharing between the IRS and ED authorized by the
FUTURE Act is the linchpin to any future simplification effort. After
collecting consent and minimal information upfront, the data sharing
can function as a tool to sort applicants quickly and accurately.
As an example of the impact of the direct data sharing in a FAFSA
simplification model, NASFAA's 2015 FAFSA Simplification Proposal \8\
was recently updated \9\ to incorporate the potential inherent in the
FUTURE Act, as well as new Federal tax forms. Broadly, our approach
sorts students and families up-front to direct them down one of three
potential application pathways based on their predicted financial
strength. We highlight the updated proposal and pathways below as a
well-developed concept for FAFSA simplification, building on the data-
sharing authority in the FUTURE Act.
---------------------------------------------------------------------------
\8\ ``FAFSA Simplification,'' NASFAA FAFSA Working Group Report,
July 2015:https://www.nasfaa.org/fafsa-report
\9\ ``Exploring Ways to Enhance FAFSA Efficiency: 2020 NASFAA
FAFSA Simplification Proposal Update,'' August 2020:https://
www.nasfaa.org/uploads/documents/FAFSA--Series--Pt7--Simplification--
Proposal--Update.pdf
---------------------------------------------------------------------------
Path 1: Automatic-Zero Expected Family Contribution (EFC) Group
After the applicant answers the initial questions on identifiers,
demographics, and dependency status, IRS/ED data sharing would be
conducted.
Applicants whose data sharing results indicate a non-filing tax
status would need only to list the school codes where they would like
their application sent, sign and date the FAFSA, and submit it. The
FAFSA would gather no further financial information and the applicant
would automatically be eligible for the maximum Federal Pell Grant.
Applicants whose data sharing results indicate an income tax return
with an AGI of $50,000 or above would proceed to Path 2 or Path 3.
Applicants whose data sharing results indicate a tax return with an
AGI of less than $50,000 would be asked if a parent (for dependent
students) or anyone in their household (for independent students) was a
recipient of any of the following means-tested benefits:
Supplemental Nutrition Assistance Program (SNAP)
Medicaid
Supplemental Security Income (SSI)
Temporary Assistance for Needy Families (TANF)
Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC)
Applicants answering ``yes'' to the means-tested benefit question
would list the school codes where they would like their application
sent, sign and date the FAFSA, and submit it. The FAFSA would gather no
further financial information, and the applicant would automatically be
eligible for the maximum Pell Grant.
Applicants answering ``no'' to the means-tested benefit question
would proceed to Path 2 or Path 3.
The goal of Path 1 is to ensure that our country's neediest
students, especially those whose income is below the tax filing
threshold or who have already proven themselves poor through their
eligibility for means-tested benefits, do not have to yet again fill
out a cumbersome form that yields the same results. Since the non-
filing status and AGI has been verified directly by the IRS, there is
both a higher degree of data integrity and less burden for the
applicant.
Path 2
Applicants who do not meet the conditions for Path 1 (the
automatic-zero EFC group) and who filed no tax schedules or only filed
Schedule 1 would be directed to Path 2. The filing of tax schedules
would have already been confirmed earlier in the process by IRS/ED data
sharing, so the funneling of applicants would be seamless from their
perspective.
The EFC formula would be functionally the same as it is currently,
except with the elimination of some fields related to untaxed income,
excludable income, and assets.
Untaxed income fields would include:
Individual Retirement Arrangement (IRA) deductions
Tax-exempt interest income
Untaxed IRA distributions
Untaxed pensions
Child support received
Excludable income would include only education tax credits
(American Opportunity Tax Credit and Lifetime Learning Tax Credit).
Related to assets, by definition, applicants who don't file IRS
forms and/or schedules other than Schedule 1 do not have significant
assets. Therefore, under Path 2, the FAFSA would ask only about cash,
savings, and checking accounts. This question would apply only to
dependent students (not parents of dependent students), and independent
students without dependents.
Path 3
Having not qualified for Path 1 or Path 2, applicants who filed a
1040 with forms and/or schedules other than Schedule 1 would be steered
to Path 3.
All of the taxable and untaxed income questions would be the same
for Path 3 as for Path 2. However, under Path 3 any dollar amount
listed in line 45 of IRS Form 2555, Foreign Earned Income, would be
counted as untaxed income.
For assets, the FAFSA would ask all applicants the cash, savings,
and checking accounts question. It would present the other existing
asset questions on investments and business/farms if IRS/ED data
sharing indicated that a specific line item on the 1040 or Schedule 1
was populated, which suggests the existence of those assets. For
example, if line 3 on Schedule 1 is populated, that may indicate a
business whose net worth should be reported on the FAFSA, and the
corresponding FAFSA question would then be presented to that applicant.
This would require expanding data sharing to include information about
the filing of specific IRS forms and schedules as well as specific line
items.
When negative income is reported on Schedule 1, we recommend that
ED automatically adjust the AGI reported through IRS/ED data sharing to
add back negative income items and use that adjusted AGI in need
analysis. As Federal budgets have tightened and Congress has instituted
eligibility changes solely to save money, aid administrators have
become increasingly concerned about FAFSA applicants who can claim a
loss for tax purposes even though that loss does not indicate a
reduction in the family's actual financial strength. Under the current
formula, many of these applicants appear to be much needier than they
actually are. Prohibiting negative figures from Schedule 1--
specifically lines 3-6 and line 8--levels the playing field somewhat
while still allowing financial aid administrators to retain their
ability to consider a family's special circumstances under their
professional judgment authority in situations where a family's losses
on the tax return do reflect an actual loss in financial strength.
Finally, the result from these changes would be to produce an index
that ranks applicants according to their financial strength, instead of
creating the current ``Expected Family Contribution,'' a misnomer and
major point of confusion for students and families. This three-pathway
approach, along with the indexed ranking, is a simple, streamlined,
fair, and accurate way to reform the FAFSA.
The bipartisan FAFSA Simplification Act of 2019 also proposes
ridding the FAFSA of many questions, using tiered pathways for non-Pell
Grant need-based aid, and relying on direct data sharing authorized by
the FUTURE Act. Applicants who identify as nonfilers for tax purposes
or recipients of certain means-tested benefits would only be asked to
complete basic demographic and benefit-related questions to complete
their FAFSA. All other applicants would be required to answer the same
introductory questions, and would then go on to have the income
information needed to calculate their eligibility for need-based aid
transferred directly from the IRS to ED.
Both NASFAA's proposal and the FAFSA Simplification Act strive to
strike a balance between a simple application that is easy to complete,
but that simultaneously allows the Federal and State governments, and
schools, to accurately measure the financial strength of applicants and
ensure need-based grants are well targeted.
Impact on Verification
Unfortunately, the application process does not end after a student
submits a FAFSA. Many applicants are then required to verify the
information they have just submitted. Verification of FAFSA information
can be confusing and tedious for students, particularly for
disadvantaged students who are unfamiliar with the process. In some
cases, the verification requirements can be cumbersome enough to deter
students from completing the process. Only 56 percent of Pell-eligible
students selected for verification go on to receive a Pell Grant, in
comparison to 81 percent of Pell-eligible students not selected for
verification. This represents a 25 percentage-point ``verification
melt'' (i.e., students who likely were Pell-eligible but were unable to
access Federal Pell Grant dollars). \10\
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\10\ Warick, C. and Lowry, D. (2018) ``FAFSA Verification: Good
Government or Red Tape?'' National College Attainment Network.https://
cdn.ymaws.com/www.ncan.org/resource/resmgr/publications/
verificationwp2018.pdf.
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One of the major benefits of the NASFAA proposal, taken together
with the FUTURE Act, is the positive impact this approach would have on
reducing verification burden for both students and schools. The current
IRS Data Retrieval Tool is clunky and not all applicants are eligible
to use it. With direct data sharing, information for many more
applicants will be coming directly from the IRS, greatly reducing the
need for verification. This eliminates hurdles for low-income students
and frees up more time for financial aid administrators to counsel
students, rather than push paperwork.
Conclusion
In order to strengthen the FAFSA for those who need it the most, we
will need to work to balance the tension between simplification and
accuracy and be willing to accept that there might be some imperfection
in pursuit of balancing these goals.
Simplifying the FAFSA is not a panacea for the larger issues of
college access and affordability but creating an application form and
process that are succinct, easy, and predictable is a crucial piece of
the overall puzzle. We look forward to working with you to continue to
ensure higher education access and promote college success.
______
National Association of State Student Grant and Aid
Programs
September 16, 2020
Senator Lamar Alexander, Chairman
U.S. Senate Committee on Health, Education, Labor, and Pensions,
455 Dirksen Senate Office Building,
Washington, DC.
The National Association of State Student Grant and Aid Programs
(NASSGAP) thanks you for considering an urgent update to the Higher
Education Act that could include key provisions of the FAFSA
Simplification Act of 2019 (``the Act''). We write today in support of
critical and time-sensitive improvements contained in the Act. We are
hopeful that you will be able to engage in mark-up with the full
Committee to incorporate these key simplification initiatives into
legislation that can pass both chambers of Congress or to enact the
simplification features most important to students and their families
in time to incorporate this needed simplification with the FUTURE Act
implementation.
NASSGAP strongly supports several key proposals in the Act:
Establishing the Pell tables will greatly simplify
the process both for students and parents looking to estimate
their potential aid awards and for the high school counselors
and college access professionals, including our many members,
who assist students in college access and outreach initiatives
and FAFSA completion events.
Reducing the number of FAFSA questions by up to two-
thirds will greatly enhance the perceived ease of FAFSA
completion. NASSGAP's members greatly appreciate your retaining
the four questions that most states need to establish
eligibility for our $12 billion in State grant and scholarship
aid.
Providing `auto-zero' status to students in families
already receiving means-tested benefits
Transitioning to the ``Student Aid Index'' (SAI) better describes
the existing ``Expected Family Contribution'' (EFC) term and will allow
for better differentiation among high need students. We support this
transition and are working closely with our members to explore how this
transition will work. We are pleased to see the need for State guidance
reflected in the Act to expedite the transition in states where EFC is
the term defined in the State statute or regulations for awarding State
need-based aid.
While significant improvements were made to the financial aid
process with the inclusion of key provisions of the Faster Access to
Federal Student Aid Act in the FUTURE Act, we think the current COVID-
19 crisis calls for further steps to simplify the FAFSA at a time when
it is difficult, if not impossible, for counselors and college access
professionals to meet with first-generation and other low-income
students and their parents to help them complete the FAFSA. If these
students do not complete the FAFSA, they are far less likely to enroll
in postsecondary education and acquire the skills needed to power
America's 21st century economy.
NASSGAP's members are on the front lines of working with high
school counselors and college access professionals to help students and
parents complete the FAFSA. With the COVID-19 crisis, it is no longer
possible to hold in-person FAFSA completion events; and FAFSA
completion rates, especially for low-income and first-generation
students dropped markedly once schools began transitioning to remote
learning in March. Every question that can be removed from the FAFSA
expedites the application process, enabling us to assist more students
and parents in completing the FAFSA.
We are hopeful that the provisions of the FAFSA Simplification Act
can be enacted in the current session of the 116th Congress. Declines
in FAFSA completion and enrollment because of the COVID-19 crisis make
passage of this legislation urgent.
NASSGAP greatly appreciates your consideration of the provisions of
the FAFSA Simplification Act. We continue to be very interested in
working with you and the Department of Education on further FAFSA
simplification initiatives. Because each State is different and the
financial aid programs we manage are often subject to State statute, we
work carefully with our members to ensure that simplification
initiatives do not create additional application steps for students and
parents in the State financial aid process.
In the most recent academic year, NASSGAP's members provided about
$12 billion in grant aid to over four million students pursuing their
higher education goals. We would be happy to meet with you to discuss
any further financial aid proposals so that we can expedite evaluation
of the impact on the application process for students and parents in
our respective states.
Respectfully,
Jennifer Rogers,
President
Frank Ballmann,
Director, Washington Office
______
Legal Services Center of Harvard Law School
Centro De Servicios Legales
Project on Predatory Student Lending
Jamaica Plain, MA 02130
Hon. Elizabeth Warren
317 Hart Senate Office Building
Washington, DC 20510
Dear Senator Warren:
You have previously proposed that the President of the United
States could direct the Secretary of the United States Department of
Education (Secretary) to exercise his or her existing authority to
cancel Federal student loan debt on a broad or categorical basis.
We have consulted the statutory and regulatory framework governing
Federal student loan programs administered by the Department of
Education, as well as the framework and controlling interpretations of
the budgetary structure of these programs. We conclude that such broad
or categorical debt cancellation would be a lawful and permissible
exercise of the Secretary's authority under existing law.
By way of background, the power to create debt is generally
understood to include the power to cancel it. This power rests in the
first instance with Congress. The Constitution gives to Congress the
power to ``dispose of'' the property of the United States. U.S. Const.
Art. IV, sec. 3, Cl. 2. This means that Congress alone is able to
``release or otherwise dispose of the rights and property'' of the
Federal Government, and thus ``[s]ubordinate officers of the United
States are without that power, save only as it has been conferred upon
them by an Act of Congress or is to be implied from other powers.''
Royal Indemnity Co. v. United States, 313 U.S. 289, 294 (1941)
(emphasis added).
Congress gave a general but restricted authority to administrative
agencies of the executive branch to cancel debt owed to the Federal
Government in the Federal Claims Collection Act of 1966 (FCCA), as
amended by the Debt Collection Improvement Act (DCIA), 31 U.S.C. Sec.
3701 et seq. \1\ The Departments of Justice and the Treasury have
promulgated standards by which this authority is to be exercised by
agencies, known as the Federal Claims Collection Standards (FCCS), 31
C.F.R. Subt. B, Ch. IX.
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\1\ In general, the FCCA gives heads of agencies the power, in
certain circumstances, to compromise (or, cancel) debts owed to the
Government of up to $100,000 (exclusive of interest) without the
involvement of the Attorney General. 31 U.S.C. Sec. 3711(a)(2).
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However, as relevant to your proposal, Congress has granted the
Secretary a more specific and unrestricted authority to create and to
cancel or modify debt owed under Federal student loan programs in the
Higher Education Act (HEA) itself. That provision empowers the
Secretary to execute the broad debt cancellation plan you have
proposed.
A. Statutory Authorization to Create Student Loan Debts and Guarantees
Under the Federal Family Education Loan Program (FFELP), Congress
authorized the Department of Education to guarantee (and pay a portion
of interest on) loans issued to students in eligible institutions as
defined by the program. See generally 20 U.S.C. Sec. 1071(a)(1); HEA,
Title IV, Part B. Congress authorized appropriations for ``such sums as
may be necessary'' under the program, which ``shall remain available
until expended,'' 20 U.S.C. Sec. 1071(b). \2\ Generally, funds are
expended under FFELP when a guarantee agency makes a demand for payment
following borrower default, at which point the loan may be assigned to
the Department. \3\ Congress has authorized the Secretary in certain
circumstances to require a guaranty agency to assign to the Secretary
any FFELP loan on which the Secretary has made a payment to the
guaranty agency. 20 U.S.C. Sec. 1078(c)(8).
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\2\ congressional authorization for the Department to make or
insure new loans under FFELP terminated as of June 30, 2010. 20 U.S.C.
Sec. 1071(d).
\3\ 20 U.S.C. Sec. 1080.
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Under the Direct Loan Program (DLP), HEA, Title IV, Part D,
Congress made available to the Department of Education ``such sums as
may be necessary'' to lend to ``all eligible students (and the eligible
parents of such students)'' who are eligible under the program. 20
U.S.C. Sec. 1087a(a); see also 20 U.S.C. Sec. 1087b(a) (``The
Secretary shall provide, on the basis of the need and the eligibility
of students...funds for student and parent loans under this part...'').
Both FFELP and DLP are mandatory programs that Congress has
exempted from annual appropriations requirements, \4\ the relevance of
which to your proposal is discussed below.
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\4\ See OMB Circular No. A-11 (2016), Section 20, p. 6
(``Entitlement refers to a program in which the Federal Government is
legally obligated to make payments or provide aid to any person
who...meets the legal criteria for eligibility. Entitlements are
generally provided by an authorizing statute, and can include loan and
grant programs.''). Congress separately provided for an appropriation
of ``such sums as may be necessary'' for ``administrative expenses
necessary for carrying out [Title IV], including expenses for staff
personnel, program reviews, and compliance activities.'' 20 U.S.C.
Sec. 1098b.
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Through the Federal Perkins Loan Program (FPLP), HEA, Title IV,
Part E, Congress authorized the Secretary to ``carry out a program
assisting in the maintenance of funds at institutions of higher
education'' for making loans to undergraduate students. 20 U.S.C. Sec.
1087aa(a). For each fiscal year, Congress appropriates funds for the
FPLP, 20 U.S.C. Sec. 1087aa(b), and directs the Secretary in how to
allocate such funds to eligible institutions. 20 U.S.C. Sec. 1087bb.
B. Statutory Authorization to Compromise and Modify Student Loan Debts
and Guarantees
Congress enumerated general powers of the Secretary under Title IV,
including the power to prescribe such regulations as are necessary to
carry out the programs; to sue and be sued in Federal court; and to
include terms, conditions, and covenants relating to repayment, and to
modify such terms. 20 U.S.C. Sec. 1082(a). Although located in the
portion of the HEA specific to FFELP, the Secretary openly relies on
these authorities in carrying out activities under other Title IV
programs, \5\ and Congress has acquiesced in this interpretation.
Direct Loans are understood to have the same terms and conditions as
FFELP loans, 20 U.S.C. Sec. 1087a(b)(2).
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\5\ For example, there is no other congressional authorization for
the Secretary to sue and be sued in the Higher Education Act, and the
Secretary regularly initiates and defends lawsuits related to DLP
activities. Likewise, the Secretary promulgates regulations under the
DLP. Insofar as the general power conferred in Sec. 1082 relates to the
ability to set terms and conditions of Federal student loans, and to
cancel or compromise those loans, congressional intent to apply such
powers to DLP loans is evident in the DLP ``parity provision,'' 20
U.S.C. Sec. 1087e(a)(1): ``Unless otherwise specified in this part,
loans made to borrowers under this part shall have the same terms,
conditions, and benefits, and be available in the same amounts, as
loans made to borrowers [of FFELP loans].'' Statutory discharges
exemplify the functioning of the parity provision. Congress has
authorized the Secretary to discharge (or, cancel) student loans under
the FFELP in circumstances of death, disability, or false certification
by an institution of the student's eligibility for the loan. 20 U.S.C.
Sec. 1087. The Secretary has promulgated regulations making these
discharges available to borrowers under the DLP. See 34 C.F.R.
Sec. Sec. 685.212 (discharge of a DLP loan obligation when borrower
dies); 685.213 (discharge of a DLP loan obligation when a borrower is
disabled); 685.214 (discharge of a DLP loan obligation when a
borrower's school closes); 685.215 (discharge of a DLP loan obligation
when a borrower's eligibility is falsely certified by an institution).
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i. Secretary's Compromise Authority under the HEA
Amongst the general powers conferred by Congress to the Secretary
in the HEA is the power to ``enforce, pay, compromise, waive, or
release any right, title, claim, lien, or demand, however acquired,
including any equity or any right of redemption.'' 20 U.S.C. Sec.
1082(a)(6) (emphasis added). \6\ This compromise authority was
contained in the HEA from its initial enactment. \7\ Any exercise of
this compromise authority ``shall be final and conclusive upon all
accounting and other officers of the Government.'' 20 U.S.C. Sec.
1082(b). The only statutory limitation on this authority is the
requirement that the Secretary ``may not enter into any settlement of
any claim under [Title IV] that exceeds $1,000,000'' without requesting
``a review of the proposed settlement of such claim by the Attorney
General,'' 20 U.S.C. Sec. 1082(b). \8\
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\6\ Subsection (a)(5) authorizes the Secretary to compromise ``any
claim on, or arising because of, any such insurance or any guaranty
agreement'' under FFELP.
\7\ Pub. Law 89-329, Section 432(a)(6) (Nov. 8, 1965).
\8\ Congress similarly granted authority to the Secretary under
the FPLP ``to enforce, pay, compromise, waive, or release any right,
title, claim, lien, or demand, however acquired, including any equity
or any right of redemption,'' 20 U.S.C. Sec. 1087hh(2).
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In 1988, the Secretary finalized a regulation, 34 C.F.R. Sec.
30.70, which explains how the Secretary exercises discretion to
compromise a debt. \9\ This regulation was enacted as part of a package
of regulations addressed to the Secretary's general authority to
collect debt. As explained, those regulations ``supplement the FCCS in
those instances where the FCCS requires agency-specific rules or the
nature of a particular debt collection activity administered by the
Department calls for further clarification of the FCCS. In some cases,
these regulations clarify the relationship between the laws
administered by the Secretary and the requirements of the FCCS.'' \10\
The compromise-specific regulation at Sec. 0.70 clearly preserves the
Secretary's authority "to compromise a debt, or suspend or terminate
collection of a debt, in any amount," without reference to FCCS or
referral to DOJ, "if the debt arises under the Guaranteed Student Loan
Program" under Title IV, Part B (FFELP), or Title IV, Part E (PLP). 34
C.F.R. 30.70(h) (eff. until June 30, 2017). \11\ With respect to non-
Title IV debt, the Secretary would apply the FCCA and FCCS standards
only where the Secretary's regulations require that a debt be referred
to DOJ for resolution. \12\ This requirement is found only in relation
to funds misspent by institutional recipients under specific grant
programs or cooperative agreements. \13\
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\9\ 53 Fed. Reg. 33424-01 (Aug. 30, 1998).
\10\ 53 Fed. Reg. at 33424. Other Department regulations clarify
that the Secretary may take ``any action authorized by law''--not just
the FCCA or FCCS--to collect (or compromise) a debt, 30 C.F.R. Sec.
30.1(a), and that the Secretary ``complies with the requirements of the
FCCS...that are not inconsistent'' with the Secretary's own
regulations, 30 C.F.R. Sec. 30.1(b).
\11\ The pilot version of the DLP was signed into law in the 1992
Reauthorization of the HEA, after the promulgation of this regulation.
\12\ 34 C.F.R. Sec. 30.70(a)(1) (eff. until June 30, 2017).
\13\ 34 C.F.R. Sec. 30.70(b) (referring to section 452(f) of the
General Education Provisions Act (20 U.S.C. Sec. 1234a), which only
applies to ``recipients'' of a ``grant or cooperative agreement under
an applicable program.'' With respect to Title IV programs, the
Secretary is required to consult with--but not refer to--a proposed
compromise of any single Title IV debt that is greater than $1 million,
20 U.S.C. Sec. 1082(b).
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As part of the 2016 borrower defense regulations, the Secretary
amended Sec. 30.70. \14\ The stated intent of the regulatory change
was to ``reflect a series of statutory changes that have expanded the
Secretary's authority to compromise...debts,'' \15\ and to
``[c]larify'' that certain limits do ``not apply to resolution of
claims arising under the FFEL Program, or under the Direct Loan Program
or Perkins Loan Program...'' \16\ The only statutory change to the
Title IV compromise authority was the 2008 amendment to section 432 of
the HEA to require the Department to provide DOJ an opportunity to
review and comment on any proposed resolution of a claim arising under
any Title IV program that exceeds $1 million. \17\
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\14\ 81 Fed. Reg. 75926 (Nov. 1, 2016).
\15\ Generally speaking, the FCCS were amended to allow for
agencies to compromise debts at a higher dollar level--$100,000 rather
than $20,000--without referring them to DOJ.
\16\ 81 Fed. Reg. 39330, 39369 (June 16, 2016) (NPRM); accord
Issue Paper 11, Negotiated Rulemaking Committee,https://www..ed.gov/
policy/highered/reg/hearulemaking/2016/bd3-i11-collection.pdf
(proposing to amend Sec. 30.70 to ``[c]larify that the generally
applicable $100,000 limit does not apply to resolution of claims
arising under'' FFELP, DLP, or PLP; ``and include the requirement that
the Department seek DOJ review of any proposed resolution of a claim
exceeding $1,000,000 under any of those loan programs'').
\17\ See Pub. L. 110-315.
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The amended Sec. 30.70 continues to differentiate the treatment of
Title IV debts, addressing them in a new subsection (e). However, this
new subsection includes a cross reference to the FCCS--``Subject to
[the requirement to consult with DOJ on compromise of a claim over $1
million], under the provisions of 31 CFR part 902 or 903, the Secretary
may compromise a debt in any amount, or suspend or terminate collection
of a debt in any amount, if the debt arises under'' FFELP, DLP, or PLP.
\18\
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\18\ 34 C.F.R. 30.70 (e)(1) (eff. July 1, 2017) (emphasis added).
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The best reading of the amended regulation is that the Secretary
may compromise debts under Title IV programs without following the
procedures outlined in the FCCS. First, cabining the Secretary's broad
authority to compromise Title IV debts under the HEA to the
considerations and procedures outlined in the FCCS would constitute a
significant limiting of that authority. There is nothing in the
regulatory history to suggest this was the intent of the Department. To
the contrary, the regulation was revised so as to reflect expansions in
the Secretary's authority. Second, the language of subsection (e) is
not reconcilable with the FCCS. Subsection (e) states that the
Secretary may compromise a debt in any amount, without prescribing any
procedures or considerations for the exercise of that discretion,
whereas the FCCS (found in 31 CFR part 902 or 903) apply restrictions
on the dollar amounts and prescribe considerations and procedures that
an agency must follow before compromising a debt. \19\ Moreover, the
FCCS, on their own terms, apply only when an agency is relying on the
congressional delegation of authority under the FCCA to compromise a
debt. \20\
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\19\ For the same reason, subsection (e) is incongruous with
subsection (a)'s language that ``the Secretary uses the standards in
the FCCS, 31 CFR part 902, to determine whether compromise of a debt is
appropriate if the debt arises under a program administered by the
Department...''
\20\ See 31 C.F.R. Sec. 902.1(a) (``The standards set forth in
this part apply to the compromise of debts pursuant to 31 U.S.C. Sec.
3711); 31 C.F.R. Sec. 903.1(a) (``The standards set forth in this part
apply to the suspension or termination of collection activity pursuant
to 31 U.S.C. Sec. 3711); see also 31 C.F.R. Sec. 900.1(a) (``The
regulations in this chapter prescribe standards for Federal agency use
in the administrative collection, offset, compromise, and the
suspension or termination of collection activity..., unless specific
Federal agency statutes or regulations apply to such activities....'');
Sec. 900.4 (``the laws and regulations that are specifically applicable
to claims collection activities of a particular agency generally take
precedence over [the FCCS]'').
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Alternately, it is not inconsistent with the amended regulation for
the Secretary to compromise a Title IV debt outside of, rather than
``under'' the provisions of the FCCS. The regulation's language is
precatory rather than mandatory, and the statutory authority of Sec.
1082 is broad. The Secretary need not rely on a regulation in order to
implement it. Prior to 1988, there was no regulation even addressing
the compromise authority, and other powers granted by Congress in Sec.
1082 do not have any implementing regulations, yet are regularly used.
\21\
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\21\ For example, section 1082(a)(4) authorizes the Secretary to
consent to modification of ``any note or other instrument evidencing a
loan'' under Title IV. The Secretary does modify loans even in the
absence of any implementing regulations--and the FCCS do not address
modification at all. In fact, the Secretary has used the modification
power to cancel out, or modify to zero, loan obligations under FFELP
and DLP in certain circumstances. See Carr et al. v. DeVos, Case No.
19-cv-6597 (S.D.N.Y.), Dkt. No. 15-1 (Decl. of Cristin Bulman), 16
(Stipulation of Dismissal) (Secretary modified DLP and FFELP loans of
Plaintiffs pursuant to 20 U.S.C. Sec. 1082(a)(4) resulting in balances
of $0.00).
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It is also possible that the Secretary could compromise a
significant number of outstanding loans in conformity with the FCCS.
Specifically, under those standards, agencies may compromise a debt
when its collection is in doubt because the debtor is unable to pay the
full amount in a ``reasonable time,'' \22\ or if the cost of collecting
a debt is greater than the amount likely recoverable in a single
installment. 1A\23\
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\22\ 31 C.F.R. Sec. 902.2(a)(1).
\23\ 31 C.F.R. Sec. 902.2(e),(f).
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ii. Secretary's Authority to Modify Loans under the HEA
The Secretary may carry out your plan to cancel existing student
loan debt under a distinct statutory authority--the authority to modify
existing loans found in 20 U.S.C. Sec. 1082(a)(4). Like the compromise
authority, the modification power is included in the FFELP section of
the HEA, but is read to apply to the DLP, and has a corollary in the
FPLP, see 20 U.S.C. Sec. 1087hh(1).
Modification of existing loans under Title IV programs is outside
of the FCCA and FCCS, which address compromise and settlement, but not
modification. The Secretary has the authority to modify a loan to zero,
\24\ and exercises this authority even in the absence of any
implementing regulations.
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\24\ See fn 21, supra.
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Such modification (and, likewise, any act to compromise existing
student loans), is permissible under the budgetary standards that
govern Title IV programs.
Under the Federal Credit Reform Act of 1990 (FCRA), direct loan
obligations and guarantee commitments may only be incurred or made to
the extent that their ``costs'' are annually appropriated by Congress.
See 2 U.S.C. Sec. 661c(b). However, the FCRA specifically exempts any
``direct loan or loan guarantee program'' that ``constitutes an
entitlement (such as the guaranteed student loan program...)'' from
this appropriations requirement. 2 U.S.C. Sec. 661c(c) (exemption for
mandatory programs). Likewise, subsection (c) exempts mandatory
programs such as FFELP and DLP from the requirement that any
outstanding direct loan or loan guarantee ``shall not be modified in a
manner that increases its cost'' unless the cost increase is provided
for in an appropriations Act, 2 U.S.C. Sec. 661c(e). Congress also
anticipated and provided ``permanent indefinite authority'' for
agencies' ``reestimate'' of the cost for a group of direct loans or
loan guarantees made in a single fiscal year. 2 U.S.C. Sec. 661c(f).
For the foregoing reasons, we conclude that your proposal calls for
a lawful and permissible use of the authority Congress has conferred on
the Secretary of Education, which is anticipated and allowed for in the
budgetary and accounting treatment of Federal student loan programs.
Sincerely,
Eileen Connor,
Legal Director
Deanne Loonin,
Attorney
Toby Merrill,
Director
______
QUESTIONS AND ANSWERS
response by bridget terry long to questions of senator murkowski, and
senator scott
Senator Murkowski
Question 1. Dr. Long, your written testimony included information
that an estimated 40 percent of undergraduates do not complete the
FAFSA and that one-quarter of these would be eligible for a Pell Grant.
Further, that a 2011 study of students at community colleges found that
only 43.5 percent completed a FAFSA. Do this research indicate what
variety of reasons there are for this low FAFSA completion rate?
Answer. Based on surveys and interviews, students do not complete
the FAFSA for a myriad of reasons. First, awareness about the form and
its purpose has been low historically. In my work helping families
complete the FAFSA in H&R Block offices, we learned that parents were
unaware that the FAFSA is an information-gathering tool. In other
words, completing the form is the process by which families find out
about their financial aid eligibility. Students and their families also
have a number of misperceptions about who is eligible to receive aid,
and so they did not apply because they assumed their income was too
high or they were too old.
A second reason students do not complete the FAFSA is that they and
their families report difficulty completing the form. This can be due
to uncertainty regarding the questions and/or the length of the form.
As discussed at the hearing, and previous hearings, the FAFSA contains
numerous (and unnecessary) questions. Additionally, language
threatening Federal prosecution for incorrect information is a
deterrent for some families--they fear an honest mistake might result
in a serious penalty.
FAFSA submission rates may be especially low at community colleges
due to the population these institutions tend to serve. Students at
community colleges tend to be from lower-income backgrounds, are older,
and often are balancing other commitments, such as employment and
caring for dependents. Based on this profile, we know these students
are more likely to come from high school that have very high student-
to-school counselor ratios, meaning that they have fewer supports to
help them navigate the FAFSA. It is also more likely that they will be
first-generation college students, so their parents may be less able to
help them with the form. As older students, they may not have access to
any high school-based supports, and therefore, may not receive
information or assistance with the form. Finally, as students balancing
other commitments, the complexity and length of the FAFSA may make the
process more difficult to handle.
Senator Scott
Question 1. As the co-chair of the Financial Literacy Caucus, I
believe financial literacy skills are integral to attaining a high-
quality education and achieving economic mobility. Families and
students should have a clear financial picture when choosing where to
invest in education. Senator Manchin and I introduced the Student Loan
Modernization Act, which aims to help students and families make
informed and responsible decisions by providing prospective borrowers
with clear and accessible disclosures about Federal student loan
obligations.
a. Dr. Long, private lenders are required to issue plain-
language disclosures of this type, but the Federal system has
not been aligned. The Federal Government disbursed over $87
Billion dollars in Federal student loans in 2018-19 school year
and holds 92 percent of all student loans. Considering this,
what recommendations do you have to help student aid
administrators and students make informed financial decisions
when they're presented with their student aid award?
b. A 2019 survey found that 90 percent of Americans believe
that borrowers should receive disclosures detailing costs and
terms before taking out an education loan, and more than 90
percent believe that such disclosures should always provide
specific monthly payment amounts. During your tenure, have you
come across any data available that correlates explicit
financial disclosures with repayment, default, or college
completion rates?
Answer. I commend your efforts to increase the clarity and
transparency of the Federal student loan program. Similar to private
loans, government loans should also be required to provide disclosures
in plain language. In discussions with other scholars, the comparison
is often made to home mortgages, in which the payments and impact of
interest is made clear at the time of taking out the loan.
Similar to the survey data you describe, I endorse the idea of
highlighting monthly payment information. Other research makes clear
that the average person has difficulty doing even simple calculations
in their head, so quoting total or annual amounts will not have the
same effect as monthly payments. Moreover, so much of personal finance
is defined in terms of monthly units that the loan system should
follow. Several years ago, I came across a non-profit organization that
went a step further to help college students understand how the size of
a monthly payment translated into what other things the student might
be able to afford. For example, a high monthly payment combined with a
low salary meant the student would not be able to afford a car and
would need to live with multiple roommates. Alternatively, a low
monthly payment and moderate salary suggested the student would be able
to live alone and perhaps afford a small car. In other words, the
organization was attempting to translate debt burden into units
familiar to the student with the hope of informing their choices about
debt and major choice. While this example may be extreme, the principle
is relevant: we must make highly consequential decisions like the
option to take out student loans, completely clear and transparent so
that we can help individuals to make informed choices and to begin to
plan accordingly for the longer-term responsibility of debt repayment.
Several years ago, I believe the Department of Education did pilot
a small study to examine the impact of financial disclosures on student
loan choices. However, I do not know if that project continued to track
longer-term outcomes such as repayment. In other work, we have seen
that providing clear information regarding college finances (in this
case, financial aid) has had a positive effect on persistence and
college completion.
______
response by judith scott-clayton to questions of senator collins
Senator Collins
Question 1. Maine is leading in the effort to create 529 savings
accounts to help families save for college. The Alfond Foundation in
Maine, for example, provides $500 to every child born in Maine, which
can be used to open a 529 account, and the finance authority of Maine
provides matching grants to Mainers to open up 529s. Because the FAFSA
takes 529 savings into account when calculating the Expected Family
Contribution, some families worry that contributing to a 529 will
decrease their child's grant aid. Yet saving in advance can make a big
difference in the ability to finance an education. The more that is
saved, the less a family may need to borrow.
a. As we work to simplify the FAFSA, should we consider ways to
encourage more college saving strategies?
Answer. Thank you for this question, which incorporates two
important issues: first, whether the considerations of assets in the
FAFSA process may serve as a disincentive to save for college, and
second, whether college savings incentive programs are worthy of
expansion separate from FAFSA reforms.
On the first question, I am concerned that asking about 529s--and
assets in general--on the FAFSA serves as a disincentive to college
saving, in addition to adding significantly to the complexity of the
form. This is particularly frustrating because assets are basically
ignored for the vast majority of applicants in the EFC calculation.
Retirement accounts and home equity are excluded, and this is where
most families hold their assets. Other assets are considered only if
they fall above a threshold that rises with the age of the oldest
parent. \1\ Dynarski and Scott-Clayton (2006) found that assets had no
effect on Pell eligibility for 99 percent of dependent applicants and
no effect on EFC for 85 percent of dependent applicants. Asset
information likely matters even less for independent students. The
savings disincentive embedded in the current FAFSA--whether real or
only perceived--provides yet another justification for simplifying the
formula to include only those elements available from IRS income tax
data.
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\1\ This threshold was reduced in recent years, e.g. from $25,400
in 2018 to $7,100 in 2020 for a two-parent dependent student in which
the elder parent was age 55. The median net worth of households with
children age 18 or younger, excluding home equity but including
retirement accounts, is $14,993 (U.S. Census Bureau, Survey of Income
and Program Participation, 2014 Panel, Wave 1). On average, retirement
savings represent about 40 percent of remaining assets, suggesting the
median net worth excluding both home equity and retirement savings
could be well under $10,000.
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On the second question, regarding the efficacy of college savings
programs, the evidence is somewhat mixed. An evaluation of a 529
savings match program in Oklahoma (OK SEED) found that take-up was
surprisingly low--only 16 percent took up the offer to open an account
with $100 in seed funds--and that disproportionately higher-income
families opened and used accounts (Marks et al., 2014). A study of the
Michigan SEED program, which offered a $1000 account-opening incentive
as well as a match incentive for participants to contribute their own
funds, found that only 67 percent opened accounts and only 22 percent
contributed their own funds, with 55 percent of the amount contributed
simply representing shifts from other types of savings (Engelhardt et
al., 2012). Both of these studies note that procedural hassles to
account set up and maintenance, paired with the young age of children
in targeted families, may help explain the findings.
Early findings from one recent study, on the other hand, are more
encouraging. A study by Long and Bettinger (2017) explicitly examines
the effect of combining account-opening assistance with a small ($50)
account opening incentive. In their study, the program is targeted to
families of children much closer to college-age (7th-10th grade). They
find that account-opening assistance alone had little impact, but
families that received the small financial incentive in addition to
assistance were 22 percentage points more likely to open a 529 account,
and 7 percentage points more likely to sign up for automatic monthly
contributions, leading to account balances that were nearly $2,000
higher on average than families who received no assistance or
incentive. While they find no impacts on college enrollment overall,
assistance-plus-incentives does appear to increase the chances that
students enroll in 4-year rather than 2-year institutions (Long &
Bettinger, 2017).
One important caveat is that none of these studies, even the most
optimistic ones, find impacts on savings that would be large enough to
substantially fund a college degree. Thus, while they may be a helpful
tool in the college access toolkit, they are unlikely to take the place
of a robustly funded and accessible system of student financial aid.
______
[Whereupon, at 11:49 a.m., the hearing was adjourned.]
[all]