[Senate Hearing 116-535]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-535

                    TIME TO FINISH FIXING THE FAFSA

=======================================================================

                                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

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions
                                
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                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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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

                              ----------                              

                               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

                              ----------                              


                      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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    Field, Kelly. (2020). ``This may be the worst season of summer melt 
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summer-melt-in-memory-heres-how-some-colleges-are-fighting-it

    Goldrick-Rab, Sara, Robert Kelchen, Doug N. Harris, and James 
Benson. (2016). Reducing income inequality in educational attainment: 
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completion.'' American Journal of Sociology, 121(6), 1762--1817.

    June, Audrey Williams. (2020). ``10 Ways the Coronavirus has shaped 
higher ed and its world.'' Chronicle of Higher Education, August 26. 
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coronavirus-has-shaped-higher-ed-and-itsworld

    Kane, Thomas J. (2003) ``A quasi-experimental estimate of the 
impact of financial aid on college-going.'' National Bureau of Economic 
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    Kane, Thomas J. (2004) ``Evaluating the impact of the D.C. Tuition 
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    Kantrowitz, M. (2009). ``FAFSA completion rates by level and 
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 
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58(1), 1--39.

    Long, Bridget Terry. (2010a) Grading Higher Education: Giving 
Consumers the Information They Need. Washington, DC.: The Center for 
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    Long, Bridget Terry. (2010b) ``Making College Affordable by 
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                                 ______
                                 
    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\
---------------------------------------------------------------------------
    \1\  Statistics retrieved from https://fred.stlouisfed.org/release/
tables--eid=48713&rid=50.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
 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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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).
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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).
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
           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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \18\  34 C.F.R. 30.70 (e)(1) (eff. July 1, 2017) (emphasis added).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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]'').
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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]