Simple FAFSA Act of 2017 Proposes Major Changes to FAFSA

By Jill Desjean, Policy and Federal Relations Staff 

Democrats on the House Education and the Workforce Committee on Wednesday introduced the Simple FAFSA Act of 2017, an ambitious bill that seeks to remove barriers to higher education by simplifying how students apply for and receive federal student aid.

The bill's supporters cite the fact that only 61 percent of 2017 high school graduates completed the FAFSA – leaving approximately $2.3 billion in unused Pell Grants – and contends that many students don't file the FAFSA because they find it too confusing to complete. Contrary to its title, the bill addresses not only the federal application itself, but also delves into student eligibility issues, the Federal Methodology formula, and even financial aid award letters.

FAFSA application process changes

The bill codifies the use of prior-prior year (PPY) income data on the FAFSA and creates a three-pathway model for the FAFSA similar to the one proposed by NASFAA's 2015 FAFSA Working Group. This bill's three-pathway model diverges somewhat from NASFAA's recommendations but supports the same goals – using skip logic to make the FAFSA simpler to complete for lower-income applicants, and eliminating questions that lead to confusion and that data show rarely apply to them. Dependent, Pell-eligible applicants would also only be required to file the FAFSA one time, rather than  annually. The same Expected Family Contribution (EFC) would be used each year the student self-certifies that they are dependent and have not experienced a significant change in circumstances.

The bill would also require the FAFSA to be made available in at least 11 languages; currently, the FAFSA is available in English and Spanish only. The bill instructs the Department of Education (ED) to enter into a Memorandum of Understanding with the Secretaries of Health and Human Services, Agriculture, and Treasury to facilitate the process of verifying whether applicants received federal means-tested benefits, and to further simplify FAFSA completion for the neediest applicants. ED is also instructed to examine further ways the Internal Revenue Service Data Retrieval Tool (DRT) can be used to streamline the FAFSA, including allowing all types of tax filers to use the DRT, and whether IRS data could be used to generate the EFC without the extra step of FAFSA completion.

Three-pathway model

Under the three-pathway model described in the bill, students who received any federal means-tested benefit during the previous two years would indicate so on the FAFSA and would not be asked any further income or asset questions. This diverges slightly from NASFAA's proposal, which limited this first pathway only to recipients of Supplemental Nutrition Assistance Program (SNAP) or Supplemental Security Income (SSI). Under the bill, students who do not meet the criteria for the first pathway would be directed to the second pathway to answer questions about tax filing status. Students (and parents of dependent students) who were not required to file any schedules (apart from Schedules R, 8812, and EIC) would be asked a limited number of income questions and no asset questions. This is a slightly more relaxed treatment than recommended under NASFAA's plan, which continued to require cash, savings, and checking account information from dependent students and independent students without dependents. All other applicants would be directed to the third pathway, where they would be asked all income and asset questions. ED would be required to report verification selection statistics, by FAFSA pathway, to Congress annually.

EFC formula changes

TheEFC formula would be changed to result in a more generous treatment of student and, in some cases, parent income. The income threshold for automatic zero EFC would increase to $34,000 and would increase with inflation. Independent students without dependents would also now qualify for the automatic zero EFC. For all student categories (dependent, independent with dependents, and independent without dependents), the student Income Protection Allowance (IPA) would see a roughly 35 percent increase (with annual increases based on the Consumer Price Index), keeping more of a student's earnings from being counted in the EFC.

The definition of untaxed income is narrowed significantly under the bill, echoing NASFAA's recommendations, which were based on data showing that many untaxed income items currently required on the FAFSA by statute are only reported by a small number of applicants. Untaxed income would be limited to child support received, untaxed portions of pensions, and pre-tax payments to retirement plans.

Expansion of eligibility criteria

The bill repeals the 1998 prohibition on students with certain drug offense convictions, as well as those who fail to register with the Selective Service System, from receiving federal student assistance, a change NASFAA has supported for some time. It also grants Title IV eligibility to undocumented “Dreamer” students, defined for these purposes as those who entered the U.S. prior to reaching age 16 and have either earned or are in the process of earning a high school diploma or associate's degree, have been eligible for a grant of deferred action, or have served in the uniformed services.

Standardized award letter

Finally, the bill requires ED to create a standardized financial aid shopping sheet to allow for simpler comparison of financial aid offers by different institutions. The shopping sheet would include cost of attendance, federal aid the student is eligible to receive, and student outcome data including graduation rate, loan repayment rate, and estimated indebtedness upon graduation. Use of the shopping sheet would be mandatory but institutions could choose to use the shopping sheet alone, or as a supplement to its own financial aid award letter.

 

Publication Date: 11/20/2017


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