Panel envisions life after the FAFSA

A panel supported by the College Board has recently released a report proposing the elimination the Free Application for Federal Student Aid, better known as FAFSA, from the federal financial aid system in order to simplify the process and better assist families.

The group, Rethinking Student Aid, was formed in response to the members’ concerns about the enrollment and graduation rates of students from low-income families, despite their preparation for college.

Rethinking Student Aid has studied the financial system for the past two years and hopes to eventually change it.

“The near-term goal is to share ideas with people all across the country … and generate conversation about the idea and gain support. Hopefully, pressure will be applied to Congress to pass the legislation,” said Kathleen Little, College Board Senior adviser for student aid policy.

The report, “Fulfilling the Commitment: Recommendations for Reforming Federal Student Aid,” proposes that rather than using the FAFSA, student information would be released to colleges directly from the Internal Revenue Service, simplifying the application process.

From 2003 to 2004, 1.8 million U.S. college students who were potentially eligible for Pell Grants did not apply. The American Council on Education attributes this to the complexity of the FAFSA.

Pell Grants ““ need-based grants given to low-income students ““ would be linked to the Consumer Price Index, which would allow the grants to adjust based on inflation.

“The Rethinking Student Aid study group proposes to use an average of the most recent three years of income information, adjusted for inflation, to provide a more reliable picture of the student’s or parents financial circumstances,” the report said.

The group also proposed changes in the loan repayment program by shifting from the 10-year mortgage style repayment plan to a graduated repayment plan.

Students would pay less money at the beginning of their repayment, and the amount would increase with the student’s income until the loan is paid off.

There would also be a stronger parent loan program to discourage private student loans.

“I don’t think the way the FAFSA asks for financial information demonstrates how much money you have to spend for college. Our budget was over the cap, so we got no offer, but our budget doesn’t allow us to pay. Now I have to take out students loans,” said Adam Marcus, a first-year who recently filed the FAFSA.

One of the biggest changes would be a savings program for low-income families.

Based on tax information, families with young children who would qualify for a Pell Grant if the child were of college age would have a postsecondary education fund set aside for the child’s use in the future.

Money proportional to the grant would be put into the fund, and the sum would be reevaluated each year, and payment would be stopped if the family no longer qualified for the grant. However, the money would always be available for student use on future education once it is set aside.

The money would accrue tax-free interest until its use and would not take the place of a Pell Grant when the child reaches college age.

“Imagine the impact on the single mother of a 7-year-old who receives a letter informing her that the federal government has just put aside $250 toward the college education of that child and that this money will earn interest until the child is ready to enroll,” the report said.

The panel, which was comprised of higher education professionals and policy experts, was led by Sandy Baum, a senior policy analyst at the College Board and professor of economics at Skidmore College, and Mike McPherson, president of the Spencer Foundation.

In the long run, the group hopes to increase college attendance rates from low and moderate-income families and increase graduation rates, Little said.

“We believe that the most important purpose of student aid is to expand the educational opportunities available to those young people and adults who face financial barriers to college enrollment and success,” according to a statement on the College Board Web site.

Ronald Johnson, director of Financial Aid at UCLA, said he thinks that the changes would streamline and greatly simplify the financial aid process. Rather than spending so much time doing bureaucratic paperwork, the administration at UCLA would be able to help families with individual concerns, he said. UCLA would request less information from families because the figures would come directly from the IRS.

Although this is simply a proposal, Johnson said he couldn’t see the University of California system not supporting these goals.

He said that there are no implications about the effect it would have on UCLA’s budget as the details have yet to be worked out.

“These are recommendations that I think will ultimately help families and that’s what we should be all about, helping families, and ensuring optimal amount of individuals within our society have access to higher education,” Johnson said.

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