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"This damn form was killing us," [Secretary of Education Arne] Duncan said to a small group of reporters after a more formal presentation Wednesday to the White House press corps about the Obama administration's plan to simplify the Free Application for Federal Student Aid. He was talking about how big a deterrent the federal form was to getting students from low-income families to apply to college...
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<p>Among the proposals,
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January will also mark the start of the department's test of a system to allow students who apply for aid for the spring 2010 semester to retrieve relevant tax information from the Internal Revenue Service to help them complete the online FAFSA. "When you're online filling out the FAFSA, there'll be a button that says, 'Want to go get your IRS data?' " said Shulman of the IRS.
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<p>Is this really wise. to open an avenue for hackers to access IRS data via FAFSA? In addition there is the,
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thorny question of whether to use year-old tax data -- which creates potential challenges for financial aid officers and students alike when families' financial fortunes change significantly.
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Other changes the department seeks would require Congressional approval. Department officials said they would ask Congress to eliminate a total of 29 questions about students' and families' finances that are not on the federal tax form. Several of those relate to families' assets ("As of today, what is the net worth of your (and spouses) investments, including real estate (not your home)?"), and eliminating the consideration of assets for most students by abandoning those questions would be among the more controversial steps the Obama plan calls for.
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<p>Here's why this might not be such a good idea.
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...some college officials worry that states and colleges might stop using the FAFSA -- and require students to fill out other forms to apply for state or institutional aid -- if they no longer believe the federal form gives them sufficient information on which to base their decisions.
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<p>This last point is quite significant as public universities may end up like the private schools that require FAFSA and profile or FAFSA and supplemental forms. The only reason they use FAFSA is to determine eligibility for federal aid. The simplification of FAFSA may just end up pushing the complexity down to the state and individual colleges.</p>
<p>by doing this they would NOT be collecting data on assets and 401K deposits made with before tax income. That changes the ENTIRE formula and schools WILL ask for more info.</p>
<p>The fafsa is not a hard form to fill out if you have a paystub and a tax form.</p>
<p>If they want to ONLY include income and exclude assets as a determination for Pell grants then that is an entirely different story</p>
<p>I am DREADING it! I own a business, but it’s a corp, so I’m not technically self employed, but it’s an S corp so I am sort of self employed. Not having filled one out I’m desperately hoping there are places that explain that my AGI is mostly used to pay taxes after the fact. I withhold taxes AND pay extra AND pay at the end of the year AND pay estimated…to the tune of many many many dollars. I also pay for all our health insurance etc etc. I’m worried I’m going to look like I have a lot more money than I do. So, whoever said “if you have a paystub and a tax form”…is not really talking to a number of people out here who have a lot of complications. This is, of course, just the START. My “income” is based on the business profit. But I don’t really GET that money. Well, I’m OBVIOUSLY not the first so I’m sure it will work out just fine.</p>
<p>I think they should dump the form all together and go based on your tax returns. All you do is submit the name of your school(s). Let the schools have their own forms for anything else.</p>
Actually, if they are using data supplied by the IRS as indicated by the “want to use IRS data” button, the pre-tax 401K contributions are captured on your W2 (which the IRS matches up to your return). So it should be available for the calculation of EFC.</p>
<p>I think asset tracking will be more problematic though as I’m not sure that banks and other financial institutions are required to report balances (just interest income) to the IRS on an annual basis. It wouldn’t be difficult though to require that of them, I guess.</p>
<p>Second homes and other non-IRS-registered assets would be problematic, I’m sure, so I’m guessing you’d have to either declare it or not, but that is true today as well. However, I’m guessing more than 80% of FAFSA filers don’t have any of these assets.</p>
<p>Heck, if the IRS already collects all of this data, you’d think they’d have the ability to do most simple tax returns automatically and just present you a bill or check depending upon your taxes due.</p>
<p>I was just at a meeting where this subject was discussed. The purpose of the FAFSA will be to determine Pell eligibility. Programs such as ACG, SMART, and SEOG may be done away with in favor of increasing Pell. If at all possible (not yet), a direct link with the IRS would be established. The streamlined FAFSA would not determine an EFC; it would determine a Pell grant amount.</p>
<p>The rest of the info - assets, etc. - wouldn’t be needed because the idea is to do away with aid to all but the lowest income. I even heard discussion of ending subsidies for loans (that is, all student loans would be unsubsidized) and education tax credits in order to fund the Pell. I did raise opposition to this. The middle class gets the shaft once again - not that subsidized loans and tax credits were the be all & end all, but every little bit helps. Instead, the proposal is to provide encouragement to save for college (I even heard a proposal to give every kid $500 to start a savings account for college). </p>
<p>All of these things are preliminary discussions. There are no concrete plans for any of this.</p>
<p>If you can’t fill out a form for financial aid, then I really question your motivation to go to college. If your parents don’t want to fill it out because it is too complicated (remember, the poor who are on government benefits just say that they are and don’t have to fill the rest out, or at least so I recall), then I really question their need.</p>
<p>My coworker received a nasty note on a verification worksheet today. A parent who made $40,000 & hadn’t filed taxes was extremely perturbed that we would not process her daughter’s aid if mom didn’t file taxes. She lambasted my coworker for not helping her daughter - she stated that she was providing financial info on the worksheet “under duress” - and she indicated that she had filed an extension and has no intention of hurrying to do her 1040. However, she expects the aid to be processed, just the same. There is no end to the expectations parents have of the system.</p>
<p>“Sounds like the changes would be made Immediately” one might wish, but it also has the ring of political campaign phase two: announce bright programs that never quite happen. </p>
<p>IRS data at the press of a button will never happen. It would be a security nightmare. For example, 45,000 student names and SS# were just hacked from Cornell. Using that data, anyone could create a FAFSA account, hit enter and have full access to 45,000 Ivy League families tax returns: a data miner’s dream come true. The Ivy League alumni networks will never let this happen.</p>
<p>I don’t think they’d ever put the actual values on an online form from the IRS, but probably just compute and show the EFC (if they decide to even continue doing this from the above posts) and most likely show the Pell and/or other Government aid eligibility figures. </p>
<p>I would imagine though that you might be able to request a printed report to be sent to the address on the 1040 with the actual figures so that you can verify the results.</p>
<p>Why is this a surprise? Benefits to “the middle class” costs big money. And, since the middle class pays a bunch of taxes, it’s extremely inefficient and a waste, IMO, to raise their taxes to just to give them benefits. </p>
<p>btw: I disagree strongly with sue’s earlier post (#2). I can see where it would be a huge impediment to the really poor and uneducated parents. I did taxes/fiinance for a living in the dark ages (so I’m knowledgeable about terms and forms), and believe that fafsa ain’t easy, even for a simple return (W-2s, married, etc.). Heck, most CPA’s I know complete fafsa incorrectly on behalf of their clients. OTOH, I don’t know that it can get a whole lot easier IFF assets are to be included. In our school district, many families have zero/little US income, but receive $$ from parental units offshore. They neighbors own a house (bought with parents’ gifts) and cars, but yet have zero/little income; thus, the kids (born here) would easily qualify for need-based aid if it was income-only.</p>
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<p>UVa already does this; they ask for assets and most other items captured by the Profile. Even worse, UVa requires all finaid applicants to rekey all fafsa data into its own finaid system – you’d think the IT techies at UVA woulda figured out a way to upload the fafsa electronically like every other college. Or, better yet, UVa would just use the Profile as well.</p>
<p>^^^ then I must be a genius because it took me maybe 15 minutes to fill out the fafsa after I had my done my taxes. I have 1 w-2 a couple of bank accounts and nothing special. In fact, my tax return software printed a page with numbers to put on the fafsa. it isn’t rocket science. It’s a form. it’s no harder than doing taxes (which took maybe 45 minutes to do both mine and my son’s and he had 4 jobs in 2 states)</p>
<p>I found the FAFSA form to be fairly easy to fill out. The key is to do your taxes first. After that, it is mostly just trying to find the line the FAFSA form is asking form. It never took me more than 30 minutes to fill it out. I did it as both a dependent and independent student. It did not take that much effort for my parents to add their information, and they have a moderately difficult tax return.</p>
<p>Consider the questions that come up on this forum regarding FAFSA. The most difficult questions are about deadbeat parents, i.e., parents that can’t be found or won’t provide the information. For these types of problems it is not a question of FAFSA being overly complicated; it’s a problem with irresponsible and uncooperative parents or step parents.</p>
<p>The issue of simplicity vs. fairness is huge here. To be fair in meting out financial aid, schools need accurate information about income and assets. If simplicity results in data that fails to provide a comprehensive summary of a family’s financial condition, fairness will suffer. That must be weighed against the unfairness of complexity that creates a barrier to even applying for aid. Personally, I don’t think the form is too hard to figure out, but I can imagine that it’s a daunting task to many people.</p>
<p>It is the colleges, not the Dept. of Education, that have the final say on simplicity. What I see happening is the development of a two-form system. It already exists at many private colleges as evidenced by the requirement to file FAFSA and Profile. Even schools that only use FAFSA often require a supplemental form to be filled out. A simpler FAFSA will result is pushing the complexity on to a supplemental form.</p>