<p>"The goal of the federal aid system is to get more low-income students into college. Adding complexity to the aid system, which is what FAFSA does adroitly, needs to be weighed against the effect it has on achieving this bigger goal."</p>
<p>This article addresses the idea of omitting questions about assets from the FAFSA in order to encourage low-income families to feel more comfortable applying. Does this simplification benefit the overall goals of the system?</p>
<p>I saw that article when it came out. While the majority of people would see the benefit of less documentation because they are only receiving federal aid, some will still be caught in this
</p>
<p>^If FAFSA is simplified, I’m sure that college & states will come up additional financial aid forms (such as CSS Profile). Unlike Federal government, colleges & states do not unlimited resources for financial aid programs.</p>
<p>I absolutely agree. This may simplify federal aid … which will become one grant (Pell), one loan (unsubsidized), and one campus based program (Federal Work Study) … but it will, IMO, give rise to more supplemental applications. The other part of this is that prior-prior year income would be used (for example, income for 2014-2015 FAFSA would be 2012 instead of 2013). The idea is that it would allow people to know their federal aid eligibility before they apply to schools. It is something some in the aid community embrace, but I see it as only helpful for federal aid. I do believe it could very well complicate things for all other aid.</p>
<p>^^of course, the downside of using a previous year’s income is that it does not help someone who just got laid off.</p>
<p>Sure, the fin aid officer can make a professional adjustment, but that defeats the purpose of the online calculators and the low income are worse off than they are today.</p>
<p>of course, what is a policy recommendation from an Educator that does not end with:</p>
<p>
</p>
<p>“The goal of the federal aid system is to get more low-income students into college.”</p>
<p>If we’re going to have a federal college aid system at all - a dubious proposition in my mind, but one that we as a society seem to have decided on - the goal shouldn’t be simply to “get more students in college” but to get into college more students who have the ability to succeed in an academic program but who couldn’t afford to do so without loans or grants to pay for it. </p>
<p>Simply getting more bodies in classrooms, without distinguishing between those who have both something to bring to and something to get from the classroom, and those who would be better off in trade school or going directly into the workforce, is not helpful either to society or to those in the second group, who end up with massive debt and worthless degrees. As many have observed, it also contributes to the grand upward tuition spiral, as colleges raise their prices because they can.</p>
<p>There are plenty of low-income students who should be in college. There are plenty of other low-income students, and plenty of high-income students, who should not be. Assistance should be available to the first group. The current system uses the wrong criteria, thereby wasting some aid on students who do not justify it, and depleting the availability for those who do.</p>
<p>A stick: Bar schools that accept federal aid from requiring a Pell-eligible student to complete any additional financial aid applications. A carrot: Extra funding, perhaps in the form of a block grant, for schools that follow this guideline.</p>
<hr>
<p>No problem, feds, if you don’t want the school to give any additional money away. As it is, schools cannot keep students from getting federal aid if they complete FAFSA & not any other required forms … but schools with other required forms are also too expensive for a low income student to afford without any aid other than federal aid (meaning if the kid doesn’t fill out the other form, he isn’t going to be able to afford the school). So this just means schools with their own funds to give away are going to say no to the block grant … and those that have no funds of their own will gladly accept a block grant … because they weren’t going to ask for anything but the FAFSA, anyway.</p>
<p>
@Requin, who gets to make the decision? Which students have a chance and which are hopeless? That’s one thing that differentiates us from many European countries. We allow anyone to try.</p>
<p>We have just enrolled our second child in a community college class over the summer because she couldn’t fit it into her packed high school schedule. The red tape there is unreal. Filling out the FAFSA is good practice for all the bureaucracy one can expect in college.</p>
<p>As a practical matter, the more academically marginal students tend to start at low cost community colleges anyway. Community colleges can be a way for such students to turn themselves around academically, but are not super-costly otherwise, and often do offer education for skills that may help getting employment that does not need a bachelor’s degree.</p>
<p>@Picapole, I was in the military for 22 years. My DW says I have to fill out all forms for the family. :)</p>
<p>@Erin’s Dad - It’s certainly not an easy decision at all. I am very glad I’m not a college admissions officer. Overall it is probably a good thing that we in the US don’t channel students into tracks based on their performance on a single test in high school, as most of the rest of the world does. </p>
<p>But the current system under which pretty much every high school student considers him or herself entitled to attend college, and entitled to have it underwritten by federal money, is bad for colleges (which are swamped with applications from students who don’t belong there under even the most sympathetic look), bad for high schools (which find themselves relieved of the responsibility to educate in the fundamentals), bad for the students (who wind up over their heads academically and laden for life with undischargeable debt), bad for parents (who find themselves having to pay more and more every year as tuition inflates simply because it is underwritten by third parties who bear the risk), and bad for the federal treasury (which wastes money that it doesn’t have). </p>
<p>Changing the FAFSA to drop questions about family assets won’t fix the problem. It needs a whole new approach. As a partial fix, I favor the proposal to make colleges pay part of any loan default; right now they benefit from the flowing spigot of federal money, completely insulated from risk. As such, they have a positive incentive to raise tuition and facilities fees effectively without limit. Many have sketched out why and how this should work. Here’s one simple summary of the proposal:</p>
<p>*Among the things to be done to improve the student loan-college price spiral is to address the free riders in the student loan sector: namely, the colleges. They should cease to be free riders on other people’s credit risk and credit losses. … the colleges should definitely have “skin in the game” in student loan credit risk, just as the need for “skin in the game” was one of the biggest lessons of the mortgage bubble.</p>
<p>Each college should be financially on the hook for at least 20% of the losses its own defaulting students cause. *</p>
<p><a href=“http://www.aei-ideas.org/2014/06/student-loans-taking-away-the-free-ride-for-colleges”>http://www.aei-ideas.org/2014/06/student-loans-taking-away-the-free-ride-for-colleges</a></p>
<p><as a="" partial="" fix,="" i="" favor="" the="" proposal="" to="" make="" colleges="" pay="" part="" of="" any="" loan="" default;="" right="" now="" they="" benefit="" from="" flowing="" spigot="" federal="" money,="" completely="" insulated="" risk.=""></as></p>
<p>Great point: The mortgage lending industry was similarly insulated from risk and that worked out well too. </p>
<p>Then the loans will not be automatic, and you’d have colleges underwriting the loans, demanding information about the credit rating of the student and family, and perhaps even the majors. Math majors would qualify and dance majors would not if they are basing it on ROI. A student the college was willing to take a chance on for admissions, the one with a 2.0 GPA, won’t pass the test and either won’t be admitted or won’t get the loan. Since the colleges aren’t actually making the loans, this would change the program entirely.</p>
<p>Do you really want the colleges to be able to deny the Stafford loans?</p>
<p>@twoinanddone - Of the six consequences you list, the first five all seem like positives to me.</p>
<p>On the sixth, it’s not obvious to me that a 2.0 GPA correlates directly to poor credit risk, but maybe you can enlighten me on that. </p>
<p>A student who has a 2.0 coming out of high school has a much higher risk of not graduating (probably not going to an elite school), and thus defaulting. It would seem that in scoring a student’s likelihood of graduating and thus repaying the loan, schools would consider the academic record and the higher the GPA. The elite schools graduate more kids with jobs, so the default rates are lower. Those students could still have their loans while those at Podunk U wouldn’t?</p>
<p>You really want schools to decide that student A gets a loan and Student B because A is in pre-med and B wants to be a gym teacher? Since most college students have no credit rating, what would they use to evaluate except likelihood of graduation and prediction of future salary. A student in Montana might only get $3000 but one in NYC would get the full amount? </p>
<p>This underwriting would change the program where currently everyone is treated the same. I don’t object to getting rid of the government loan program entirely (and I think colleges would drop their tuition by $5500/yr), but if we are going to have a government insured program, I think it should be the same for everyone.</p>
<p>@twoinanddone - Getting rid of the government loan program and dropping tuition across the board by an equivalent amount would be an excellent outcome.</p>
<p>There is no conceivable reason other than emotion for having a loan program that is offered equally to all comers, distorting the market and pretending that all degrees in all fields are equally valuable - and that all students are equally capable. It is magical thinking, and the government ought to be out of it. If a college wants to load up on <insert your="" preferred="" bugbear="" field="" here=""> majors, they should be doing it on their own nickel.</insert></p>
<p>ETA: Obviously there’s some relationship between GPA and default risk, but not the direct correlation that your earlier post seemed to imply. Certainly there’s less of a correlation when you are looking at high school GPA. I’m sure there are studies on this. In any case the larger point is the same: if the college is “willing to take a chance on” a 2.0 student, it should be putting its money where its mouth is. Otherwise it’s not really the college taking a chance, is it?</p>
<p>Many colleges ‘take a chance’ because that is their mission. Community colleges, lower ranked state universities. It’s mutually beneficial, as the student gets a chance and the college gets the money, but if the colleges were to have to pay for all those defaults, for loans they have no say in approving, then the college is going to have to tighten up. You might think that is good, and I’m not sure I disagree, but then we’d all have to accept that some students are just NOT going to college. Those lower ranked state schools can only accept the students because they are backed by the state. Wealthy but academically unsuccessful will still get accepted, but those who need loans, guaranteed (or at least having to be covered) by the schools will not.</p>
<p>We had that system in the early 20th century. People didn’t like it.</p>
<p>The colleges accepting the lower GPA students still have an interest in seeing that they succeed. They want the statistics to show the students remained in school, graduated, and were employed.</p>
<p>The article said a lot, but it seems like it will still come down to how much you made before and after taxes. So, simplified? Yes, but nothing is really changing in qualified standards.</p>
<p>My first reaction was: simpler? How much simpler does it need to be? After the changes a few years ago, I found it so easy that I thought I had missed something. There may be X potential questions, but few need to answer all of them. </p>
<p>Getting lower income kids better access to funding hinges on that funding being available. What makes anyone think that, if the govt doesn’t offer it, the colleges have it standing by? This is not easily summed up by referring to market economics. And what is wrong with pursuing the education? You want to divert some kids to job training, then refer them to job training institutes.</p>