Freshmen entering college this fall left $2.3 billion in financial aid on the table by not filling out the free application for federal student aid or the FAFSA, according to an analysis published Monday by NerdWallet, a personal finance site. Researchers at the site came to this number by estimating the number of high school graduates who didn’t complete the FAFSA and would also have been eligible for a Pell grant, the money the government provides to low-income students to pay for college. They multiplied that by the average amount of Pell aid disbursed to students.
The FAFSA functions essentially as “the gateway to free money for college,” said Brianna McGurran, a student loan expert at NerdWallet. Students need to fill it out to get access to federal grants, federal student loans, work-study and in some cases, state and university grants. “The FAFSA is an incredibly important part of any student’s college application and financing strategy,” McGurran said. “It really is a first step to making college affordable.”
The complicated financial-aid system may deter students
The analysis echoes other research indicating that our complicated financial-aid system may deter students interested in attending college and who could benefit from grants or loans from seeking the money out. Of the 20% of students who didn’t apply for financial aid during the 2011-2012 academic year, about 44% said they didn’t apply because they thought they wouldn’t be eligible for help, according to a separate study published last year by the National Center for Education Statistics.
Others cited the complexity of the FAFSA as a reason for not applying. “There’s a sense that only low-income students and families are eligible for aid, when that is false,” McGurran said.
Not all colleges cooperated with the timeline, but the opportunity to get the financial aid application done sooner appears to appeal to students and families. Nearly 238,000 students filled out the application the first day it was opened this year, an 8% increase from the same day last year, according to the Department of Education.
This application cycle also marks the second year students and families haven’t had to take a guess at their family finances when applying for financial aid. That’s because the government recently began requiring applicants to use tax-return information from the tax year two years prior to the year they’re applying for aid. (For example, a student applying for financial aid for the 2018-2019 academic year would use their family’s tax return from 2016.) That way, they’ll be able to use completed tax information and take advantage of the IRS data retrieval tool, which pulls a filer’s income information into the FAFSA directly from the IRS.
Still, despite efforts to make the financial aid process smoother, critics say it still creates too many complications. Requiring low-income students to raise their hands for funds by filling out a complicated form and, in many cases, repeatedly prove how poor they are through various follow ups can deter those who need it from seeking aid.
The NerdWallet analysis indicates that simple messaging may convince more students to seek financial aid. Tennessee had the highest FAFSA completion rate of any state, according to the study. That state also has a robust free community college program, which requires students to fill out the FAFSA to become eligible. “There’s such an appetite for these programs that whatever students need to do get access within reason, I think they’re willing to do,” McGurran said.
Article originally published on Market Watch.