Report: Needy Students Leave Billions in Federal Aid on the Table Each Year

By Allie Bidwell, Communications Staff

The cost of attending college influences many students’ decisions about where to enroll – or whether to even apply to college at all. But many students who are eligible for federal financial aid enroll in college without completing the FAFSA, and leave $24 billion in federal aid on the table each year, according to a new report.

Michael Kofoed, an assistant professor of economics at the United States Military Academy, found that on average, the financial aid gap between students who file the FAFSA and those who do not is $9,741. Of that total, $1,281 are Pell Grants, $2,439.50 are subsidized student loans, $1,986.65 are unsubsidized student loans, and $1,016.04 are institutional grants.

“The failure to apply for and obtain federal aid is of great concern because financial aid can influence whether a student enrolls in college, the type and quality of the institution a student chooses, and the probability that a student persists to graduation,” Kofoed wrote. “While the data used in this study to not permit me to address these education outcomes directly, the financial aid literature provides evidence that failure to complete FAFSA and thus forgoing financial aid has negative consequences for student success.”

The FAFSA doesn’t just open the door to billions of dollars in federal student aid. Many states, colleges and universities, and other organizations use data from the FAFSA to determine aid eligibility for other programs. That’s why the Obama administration, lawmakers, and other advocates in higher education have thrown their support behind simplifying the FAFSA, as its complexity is a primary deterrent for some students.

But there are other characteristics, Kofoed found, that influence whether students file the FAFSA to apply for aid. Using data from several years of the National Postsecondary Student Aid Survey (NPSAS), he found that students who enroll in college but did not complete the FAFSA are more often white, male, independent, and come from families with an annual income of less than $50,000.

Kofoed noted that ensuring more aid-eligible students complete the FAFSA could potentially help in reducing student borrowing. However, there is a chance that increased FAFSA completion could also increase student loan debt as more students receive loan aid, he wrote in the paper.

“The results from this paper can help policymakers and higher education administrators identify certain groups of students who are not reached by school counselors or other programs before they entered college,” Kofoed wrote. “Completing FAFSA and helping students to obtain the financial aid resources for which they are already eligible reduces the cost of attendance and the growing amount of student debt. While increased FAFSA completion would increase the amount of money spent by the Federal Government on education, the returns in the form of increased tax revenue from workers’ increased income, possible health benefits, and a more engaged citizenry may be worth the increased investment.”


Publication Date: 4/29/2016

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.
View Desktop Version