The Senate Health, Education, Labor and Pensions Committee proposed a bipartisan bill designed to streamline the FAFSA application process in front of Congress earlier this month.
The Faster Access to Federal Student Financial Aid Act of 2018 enables the sharing of tax information between the IRS and U.S. Department of Education, thereby automating the annual income renewal and recertification processes required for student loan repayment plans.
Borrowers whose loan payments are dependent on their income are required to recertify their income and update their financial status to the government each year. Failure to complete recertification can result in added interest charges or delays in loan forgiveness.
According to a profile of UGA’s 2017-2018 financial aid overview, 44 percent of graduates take out loans. The Office of Student Financial Aid does not make public the percentage of undergraduate borrowers or those with loan repayments tied to their income.
The bill’s proposal of data sharing presents a solution to the contention of manual recertification.
“The IRS data sharing will automate and simplify [the FAFSA process], eliminating delays and barriers to financial aid eligibility,” said Mark Kantrowitz, the vice president of research at savingforcollege.com, in an article published two days after the bill’s introduction. “This is likely to increase the number of students who apply for and receive student financial aid.”
The simplification of the application process also attempts to smooth out other kinks in the financial aid process that often deters the eligibility of students demonstrating financial need to receive appropriate aid.
One issue the proposed automation targets is verification burden, the process by which students must provide documentation to supplement and verify the financial information they provided on their FAFSA. The automated data sharing between the IRS and Department of Education eliminates the need for students to manually locate and provide the necessary tax return information.
Verification is a contentious issue among the financial aid community and is often criticized for placing low-income students at a disadvantage. More than 90 percent of verification audits affect the poorest applicants, according to Time.
Failure to complete verification actions can result in the misallocation of a student’s federal financial aid and skew their eligibility to receive a Pell Grant.
The legislation was referred to the Committee on Finance on Nov. 13, but other immediate actions and plans for action haven't been released.
Wins for borrowers and taxpayers
Emily Minnick, a sophomore psychology and entertainment and media studies double major from Canton, was contacted by the IRS to provide supplemental information after filling out the FAFSA before her freshman year of college.
“During my freshman year, applying to FAFSA was difficult because I had my aunt help me, and she messed up a lot of our information, so I had to provide a lot of paperwork to sign all of the FAFSA stuff,” Minnick said. “FAFSA said that my dad’s information wasn’t correct, and we would have to print out signature pages and mail them, and then they got lost a couple of times. It was incredibly frustrating.”
According to the National College Access Network, roughly half of Pell-eligible FAFSA applicants are flagged for verification — 25 percent of which fail to complete the review process.
“Students may not submit a FAFSA because they do not know how or that doing so is even an option,” said Bill DeBaun, the director of data and evaluation at NCAN, in an NCAN blog post. “They may be debt-averse or think their credit is too low. They may not be pursuing college. They may find the form complicated and become discouraged. The college access field works every day to solve these awareness and aspiration problems, but verification melt is a more odious obstacle.”
In addition to aiding self-reporting students, the automated verification can also benefit the institutions themselves by eliminating the time and resources financial aid administrators spend on solving issues with tracking down paperwork.
“Students may not submit a FAFSA because they do not know how or that doing so is even an option."
– Bill DeBaun, director of data and evaluation at NCAN
Jasmine Vasquez, a freshman management information systems major from Atlanta, similarly had trouble with completing the FAFSA, but she was not selected for verification. Although supportive of the proposed bill, Vasquez does not agree with scaling back verification measures.
“Some people do lie on their FAFSA about their parents’ income, so I don’t think the verification process should be more lenient,” Vasquez said. “Students should provide the forms. It’s a good thing.”
Although the legislation has yet to pass through the Senate, it has received positive attention and support from the financial aid community. Kantrowitz states within his article that it is likely to pass and be enacted.
“If the FAFSA Act becomes law, borrowers would have less paperwork, and there would potentially be a reduction in defaults and delinquencies," said Carrie Warick, the Director of Policy and Advocacy at NCAN, in an article in support of the act. "These outcomes are wins for both borrowers and taxpayers.”
The legislation is a much-needed improvement to a financial aid process that has long needed amendment, Minnick said.
“For first-generation college students, filling out the FAFSA is a really difficult process and hard to navigate if you don’t know what you’re doing,” Minnick said. “Overall, the bill seems like it’s going to be beneficial and make the FAFSA easier to work with, which is really, really great.”
The Office of Student Financial Aid is not able to provide commentary on pending legislation.
