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


Dennis C | 10/19/2015 8:37:45 AM

The SEOG is a saving grace for so many students. High need and, high credit loads are our major factor in making the first pass of who gets SEOG. However, we have "emergency" situations all semester long where we can leverage SEOG funds with institutional funds to truly help a student in need. Instead of cutting SEOG every year as it has been, I would like to see more funding, especially to us schools that have so many "ZERO" EFC's and never have enough funding to help all of them.

Helen F | 7/21/2014 7:53:40 PM

Ironically, filling out and mailing a postcard and then waiting for the results would be considerably slower than the current online FAFSA, which is remarkably fast for most filers. Any aid administrator with a significant percentage of aid recipients who fail SAP and a high percentage of students in developmental coursework can attest that the FAFSA isn't the barrier politicians make it out to be. The barrier? A Pell Grant that has not kept up with the pace of tuition increases. That's it. Restore Pell to its original purchasing power and a huge piece of the problem will magically disappear. Of course, that does mean that we would have to allocate more money, not less, to federal financial aid programs at a time that the U.S. government is trying to cut spending. I would suggest that the solution is more revenue, not more cuts to programs that help the needy.

Jennifer G | 6/23/2014 9:28:20 AM

Are you kidding?? No to year round PELL it was a nightmare before and will be again. One size does NOT fit all.

Jon S | 6/23/2014 8:57:27 AM

Put in place a 150% sub limit and then intorduce a bill to simplify the process...only in washington.

David S | 6/20/2014 4:37:17 PM

There's a big difference between "one grant" and eliminating SEOG. Yes, SEOG distribution is messy and inconsistent between schools, but it's probably naïve to think that SEOG funding will be folded into Pell and increase the awards. It's just going to mean no more SEOG.

State agencies will go nuts at the suggestion of major FAFSA simplification, even if it's not as radically simplified as the Senators are suggesting now. And this is probably music to the College Board's ears, because they can push more schools to use the Profile so they can better differentiate between the needy by traditional need analysis and the needy thanks to 95% of the data being stripped away.

What I'd like to see is the FAFSA being one time only, unless a student/family decides to do another one in a subsequent year to override the original one. If they don't, the original one stands. This way students could pick a college with a four-year aid commitment (in many cases, at least). When we buy houses and cars we want to know how much it will be costing us over time, not just one year at a time. And for graduate students, if there's going to be no more Perkins, no FAFSA at all.

Lynn M | 6/20/2014 1:8:39 PM

Would eliminating the FAFSA also effectively eliminate the distinction between dependent and independent undergraduate students?
It doesn't make sense to me why we're still calculating awards for dependent borrowers based on income that isn't theirs. How can that methodology result in anything other than a major discrepancy between the amount of debt borrowers are taking on and what they will be able to afford to repay? How is it possible to achieve transparency and simplification when the core methodology isn't based on the relevant parties and their actual circumstances?

Bert L | 6/20/2014 12:44:38 PM

Lamar's my man! I recall he advocated to eliminate ED soon after he completed his appointment as Secretary. He's always been on the right track (though unsuccessfully) toward eliminating barriers to the delivery of student aid.

James C | 6/20/2014 11:44:43 AM

What's ironic is that "simplification" for students frees up more money which the country can't afford and the federal government then tries to recoup that money by increasingly complex regulations on schools such as gainful employment, credit hour definitions and R2T4. Part-time loans for part-time students is a great idea. Year round Pell is OK if there is no accleration cause and schools can decide to continue to use it as a trailer or header semester but aren't reqired to do the "EFC comparison." But I do think that if there is year-round Pell, full-time for Pell should change to 15 credits because many students will reach their 600% limnit before graduating based on the current full-time definition for Pell. If more benefits are going to be given on the back-end for Stafford loans then eliminating the up-front subsidy makes sense but let's keep Perkins. It serves a useful purpose for needy undergraduate students whose parents can't take out PLUS loans and also graduate students who pay a full percentage rate higher on Stafford and outrageously high interest rates on GradPlus.

Raymond G | 6/20/2014 11:26:00 AM

Year Round Pell was an administrative nightmare before. Did they forget the problems we had? It was especially difficult when students transferred between proprietory to public colleges.

Phillip E | 6/20/2014 9:46:45 AM

Hopefully if the year-round PELL is re-instated the "simplification" process will also extended to the fed regs, which were a nightmare of red tape and systems issues and which (at my institution) only resulted in more student's hitting the PELL LEU earlier and be forced into taking higher interest rates loans by the time they needed to graduate. Using one (and only one) fiscal year's info for year round PELL makes sense, both logically and for accounting purposes.

John G | 6/20/2014 9:33:21 AM

A postcard? Are they serious? Might as well eliminate the FAFSA altogether and go by a handshake and smile.

I appreciate the option for aid administrators to limit loan but I wonder what is meant by "well-documented".

Jose E | 6/20/2014 9:4:26 AM

With the undergraduate-centric approach to simplication, I worry that graduate and professional students will be swept up in that simplification that would limit options that are currently very instrumental in funding their education as well as managing their debts after graduation.

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