Report Questions Impact of FAFSA Simplification Efforts, Like IRS Data Retrieval Tool

By Joelle Fredman, NASFAA Staff Reporter

While FAFSA simplification is among just a handful of proposals that have received bipartisan support from lawmakers as they draft their bills to reauthorize the Higher Education Act (HEA), a new report questions whether streamlining the process of applying for financial aid has a significant impact on student outcomes.  

Research has shown that the complexity of the financial aid system has deterred many prospective students from pursuing a college degree, and NASFAA has long advocated for reducing the number of questions on the FAFSA as a first step in increasing access to higher education. NASFAA’s FAFSA simplification proposal includes a tiered application that would identify applicants who — according to their existing means-tested benefits eligibility and tax filing status — have low presumed financial resources, and would present them with a bare minimum number of FAFSA questions. Families with more complex financial circumstances would answer more questions. 

Lawmakers on both sides of the aisle are also taking aim at fixing the FAFSA. The House Democrats’ HEA reauthorization bill — the College Affordability Act (CAA) — adopts a similar, three-tiered FAFSA approach, and Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, introduced two reauthorization bills last fall targeted at FAFSA simplification — one in late September and a bipartisan bill the following month alongside Sen. Doug Jones (D-Ala.).

However, the new report, written by Harvard graduate student Ayushi Narayan and published in the Economics of Education Review journal, suggests that fixing the FAFSA alone may not be enough to improve postsecondary education.

“My findings suggest that just reducing the paperwork hassle of the financial aid process — either at the initial or verification stage — fails to meaningfully improve college access outcomes,” Narayan wrote. “... It thus appears that channels related to face-to-face contact like information provision, accountability, and encouragement are important ingredients for effective complexity reducing interventions.”

To determine the impact of simplifying the FAFSA, Narayan analyzed the period of time when the Internal Revenue Service’s Data Retrieval Tool (IRS DRT) experienced an outage that spanned half of the 2017-18 application cycle, leaving students to file a lengthier and more complicated FAFSA and at a greater risk of being selected for verification, she wrote.  

Using data from before and during the outage from students at 1,600 institutions, Narayan did not find a statistically significant impact on submitted FAFSAs or Pell Grant disbursements, nor any change in enrollment and persistence. 

Specifically, Narayan found that losing access to the IRS DRT only lowered FAFSA submissions and Pell Grant disbursements by 0.2% and 2.5%, respectively, and actually raised the average Pell Grant awards by 0.6%. Narayan wrote that estimates for enrollment and persistence rates did not yield statistically significant results either, even when weighted for properties such as selectivity and enrollment size.

Notably, changes are being implemented to the IRS DRT to bypass the need for applicants to initiate the process of importing their own income information, which can confuse students. NASFAA has advocated for a smoother process for importing data, and supported a bill — the bipartisan Faster Access to Federal Student Aid (FAFSA) Act — to amend both the Internal Revenue Code (IRC) and HEA to allow for cross-agency data sharing between the Department of Education (ED) and the IRS, without applicant initiation. The Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act, which President Donald Trump signed into law in December, includes the same data-sharing provision from the FAFSA Act.

In Narayan’s report, however, she also broadly questions a sole focus on fixing the FAFSA in place of face-to-face interventions, and concludes that “form simplification alone would be unlikely to yield the same benefits as personal assistance.” At the same time, she added that she is not implying that FAFSA simplification be completely disregarded.

“There could also be other benefits stemming from the IRS DRT and similar policies, such as those related to maintaining the integrity of the system, improving the targeting of aid, or simply saving applicants time, and these benefits could motivate the expansion of these policies as well,” she wrote. “A simpler form may interact with other interventions too, such as by making it easier to provide personal assistance.”  

While lawmakers and higher education stakeholders — like NASFAA — have pushed for a better form to apply for federal student aid, simplifying the FAFSA is just one of many proposals and efforts in the works to help improve postsecondary education. For example, in 2019 alone, NASFAA advocated for the elimination of origination fees, tweaks to the Public Service Loan Forgiveness (PSLF) program, and has continued work to help students displaced by their institutions, among many other efforts.


Publication Date: 2/5/2020

James C | 2/5/2020 12:3:45 PM

And, filling out a FAFSA and going through the verification process are two of the biggest roadblocks for students based on my personal experience despite what this report is saying. I'll be James JC to distinguish myself from the other James C who left a separate comment at 9:12 am.

James C | 2/5/2020 11:15:31 AM

Many colleges do not have the resources to do numerous face-to-face contacts with students and helping them fill out a FAFSA. A simplified FAFSA is the answer! The FAFSA asks too many income questions that no one in the universe is required to verify like untaxed income and wages. Lamar Alexander's proposal to just enter the AGI and household size is brilliant! It would make filling out the FAFSA much easier and make financial aid verifications much easier and faster.

Ben R | 2/5/2020 10:22:19 AM

This is like the self checkout at the gas station. The transaction is much easier, but by itself it does not improve your car, the trip or the driving conditions.

Ashraf M | 2/5/2020 9:52:05 AM

I was glad to see that Narayan’s study mentioned how face-to-face contact were more effective than actually redesigning the FAFSA. Like many FAOs I have worked at schools where we’ve had students file the FAFSA on their own, as well as schools where we actually took the time to sit with students (and parents) to help them complete their FAFSA and other related forms, taking the time to explain their financial aid packages to them. It is true that when there is that face-to-face contact, many students are prevented from falling through the cracks imbedded in the process What’s more, it is a nice vindication to what each college financial aid office does to help our students and families!

James C | 2/5/2020 9:12:00 AM

And the folks working in the field (us) have been saying this for years. The FAFSA is not complicated and is not a roadblock for students. The Dep't selecting the same students for verification year after year with no impact on EFC is a bigger roadblock. The DRT should be mandated for those who can use it as It benefits everyone.

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