Senators Introduce Bipartisan Student Aid Simplification Bill
By Megan McClean, Policy & Federal Relations Staff
Republican Senator Lamar Alexander (R-TN), ranking member of the Senate Committee on Health, Labor, Education and Pensions (HELP), and Democratic Senator Michael Bennet (D-CO), introduced yesterday the Financial Aid Simplification and Transparency (FAST) Act. The bill, designed to simplify the federal financial aid programs, introduces provisions to streamline the application process while improving transparency and access, including several issues that NASFAA has been advocating.
Official legislative language is not yet available, but according to a fact sheet provided at an event held yesterday to promote the bill, the FAST Act would:
- Eliminate the Free Application for Federal Student Aid (FAFSA) and utilize prior-prior year (PPY) data. The bill would eliminate the FAFSA and instead reduce the application process to a postcard, asking only two questions:
- What is your family size?
- What is your household income (adjusted gross income) from two years prior?
- Provide early information to students and families through a “look-up” table. Beginning in their junior year of high school, students and families would have access to a newly-created look-up table that would provide information about the amount of federal aid for which they would be eligible. The goal is provide this information earlier and align it with the college-search process.
- Establish a one grant/one loan program. The bill would streamline existing grant and loan programs into one Pell Grant Program, one undergraduate loan program, one graduate loan program, and one parent loan program. This would presumably eliminate the undergraduate loan subsidy as well as eliminate the Supplemental Educational Opportunity Grant (SEOG).
- Make Pell more flexible by restoring the year-round Pell Grant. The bill would restore the ability for students to receive a second scheduled Pell Grant award within an academic year. This would allow students to draw down Pell Grant funds at their own pace and have greater access to funds during periods of summer enrollment. Although the fact sheet alludes to earlier completion, there is no indication whether an acceleration clause would also be reinstated. Defining when a student is accelerating his or her program of study was a very controversial aspect of the previous iteration of year-round Pell.
- Provide authority for aid administrators to limit loan amounts. Schools would be allowed to limit the amount their students may borrow in certain well-documented situations.
- Prohibit part-time students from taking out a full-time loan. The bill would limit the amount of federal loans a student can borrow based on enrollment. Part-time students would not be allowed to borrow the full annual loan amount.
- Streamline repayment plans into two programs. Student loan repayment would be streamlined by having only two repayment programs, versus the multiple programs that exist today: an income-based repayment plan and a 10-year repayment plan.
“At a time when a college degree is more important than ever for getting a job and making a good living, red tape and confusion are the adversary for millions of students. Adopting a two-question postcard for federal student aid is a sure step toward offering millions of Americans a brighter future,” said Senators Alexander and Bennet.
Bennet explained that reducing the burden of filling out the FAFSA form is just one of the proposal’s goals. “[W]e heard from students across the country that because of the way the system is currently designed, students don’t find out what they’re eligible for up until their senior year of high school or they’re in college. Under our proposal they’ll find out in their junior year of high school what their eligibility was,” Bennet said at yesterday’s event.
Questions remain about how the short-form aid application would assess dependency status, and if the two questions asked will prove sufficient for accurately assessing eligibility. To that end, both senators reiterated their desire to achieve simplification while not creating an opportunity for fraud and abuse.
NASFAA has advocated heavily for several provisions that appear in this bill, including a move to PPY, the restoration of the year-round Pell Grant, and the authority for aid administrators to limit loan amounts on a broader basis than currently is allowed.
The bill is unlikely to see any immediate movement but represents a clear marker for ideas to be considered during reauthorization. NASFAA will provide a more detailed analysis in the near future once legislative language is made available.
Publication Date: 6/20/2014