It’s Time to Act (FAST) on Student Loans

By Danielle Bernstein

Maybe it’s just because I’m a student, but it seems like every day there are new articles online about the decline of the American education system. Whether it’s test scores or school funding, we are constantly competing with other countries on several metrics. We know highly skilled workers drive our economy, so what are we doing to encourage people to go to college? Not enough.

The choice whether or not to attend college is generally only made once, where costs—including both tuition and information costs—are imposed up-front, and benefits—potential earnings—are spread out over a long period of time. For many people, college seems unattainable or not worth it. In fact, 64% Americans think that President Obama’s goal of regaining the highest proportion of college graduates by 2020 is “not at all likely to happen” because “most people can’t afford college.”

To tip the cost-benefit analysis in favor of attending college, the federal government provides student aid to lower costs. Still, to even have a chance at receiving federal aid, students must first navigate the bureaucratic beast known as the Free Application for Federal Student Aid, or FAFSA. When faced with the 108-question long complex form it is not hard to see why hundreds of thousands of students who are eligible for federal aid grants forgo applying altogether every year.

Although it may be shocking to some that the FAFSA’s 88-page instruction manual is not all that helpful, many people don’t fill out the FAFSA simply because they don’t know how. In 2008, consultants at H&R Block performed an experiment where they offered families with incomes less than $45,000 help filling out a FAFSA. Their results were astounding: families who received help were a whopping forty percent more likely to file a FAFSA, and thirty three percent of those who filed it out received a Pell grant. Pell grants are federal grants (and so do not need to be repaid) for undergraduates strictly based on need and often dictate whether or not a student can attend college at all.

Currently the FAFSA is not even available until January 1, so students do not find out whether or not they can receive aid until spring of their senior year, after they have already applied to college. Federal aid might then help students decide where to go to college, but not whether or not they can go in the first place. For the students who depend on Pell grants, this information is much too late in the game to make a real difference. These students have to apply to college before knowing whether they can afford it, which deters them from applying in the first place. This is especially true considering that the complexity of the process itself causes people to procrastinate, thereby missing deadlines for other available state or local aid programs that depend on FAFSA data.

With Presidential campaigns in full swing, we do not really need another reason to be fed up with politics. Still, it has been almost a year since Senators Lamar Alexander (R-Tenn.) and Michael Bennet (D-Colo.) introduced the potentially revolutionary Federal Aid Simplification and Transparency Act (“FAST Act”) and, unsurprisingly, the Senate has not taken any further action. Financial aid reform remains a ripe source for rhetoric, but a dismal blip on the Congressional agenda.

The FAST Act’s six main components would dramatically decrease both college tuition and information costs of applying to college for millions of Americans by replacing the 108-question long FAFSA with two simple questions: What is your family size? And, what was your household income two years ago? These two questions provide the government with enough information to determine whether to make a Federal grant or loan with 95 percent accuracy.

Although eliminating more than 98 percent of questions on the FAFSA may seem risky, researchers have found that dozens of questions contribute practically nothing. For example, students whose families earn less than $15,000 annually are automatically eligible for the maximum Pell grant. By forcing these students to complete 106 extra questions—none of which make a difference to determining that student’s aid—the system sets up barriers to higher education for the students whom we seek to help the most.

Additionally, the FAST Act provides students with information earlier in the process by using tax data to create a look-up table that all students can use to estimate their federal aid in their junior year of high school. Therefore, students can use this information to make “better, smarter, and more-informed decisions about higher education,” as Senator Booker (D-NJ) said in support of the FAST Act. By helping those most in need attend college, the government “increas[es] access to college and boost[s] not only enrollment but the economic output of our citizenry.”

While some researchers have called for eliminating the FAFSA altogether, the FAST Act is a viable option that has already garnered bipartisan support. With the staggering amount of federal student debt—estimated at $1 trillion—this issue deserves a real spot on the Congressional agenda.