Making College More Affordable By Simplifying The Student Financial Aid Application
June 24, 2009

"I'll simplify the financial aid application process so that we don't have a million students who aren't applying for aid because it's too difficult."
— President Barack Obama

America's future economic strength depends on the quality of our education. Countries that out-teach us today will out-compete us tomorrow. President Barack Obama is calling for America to once again lead the world in college graduates. He has proposed nearly $200 billion in new scholarships and tax credits for college tuition, and Vice President Joe Biden is examining new ideas for college affordability through his Middle Class Task Force.

Today, U.S. Secretary of Education Arne Duncan outlined another key component of the Administration's higher education agenda: its plan to simplify the Free Application for Federal Student Aid (FAFSA). The form imposes a needlessly difficult obstacle in the path of 16 million college students and their families each year. Each student is asked as many as 153 questions, most of which have little or no effect on actual financial aid packages. Experts believe that the difficulty of the application and unpredictability of the aid awards undermine student aid's ability to reach students who are unsure whether they can afford college. And there are 1.5 million enrolled students who are probably eligible for Pell grants but failed to apply.

In the coming months, the Departments of Education and Treasury will work together to simplify the financial aid process by modernizing the online application, seeking legislation that will eliminate unnecessary questions, and creating an easy process for students to apply by using tax data already available. The end result will be an application that requests only easily obtainable personal information. Students will be able to complete an application with only basic, personal information and a few clicks of their mouse.

Three Steps To A Simpler Application

Today, Secretary Duncan is announcing (1) a shorter and simpler online application that skips unnecessary questions, (2) legislation to remove more than half of the financial questions, and (3) a web application that will let some families easily answer the remaining financial questions with data from the Internal Revenue Service (IRS).

First: Overhaul the Online Application. The Department of Education is making a series of improvements to the online application. Although 98 percent of students apply online, much of the online form simply reproduces the paper version rather than taking advantage of the interactive potential. Improvements to the form—which will eliminate 250 million questions a year—include:

Second: Eliminate Questions through Legislation. Applying for financial aid is far more complicated than filing a tax return; students and their parents must answer as many dozens of questions about their income and assets that are not on the federal tax form. These questions are often difficult to verify, and they add very little to the rest of the aid formulas. The six questions related to assets, for example, only affect the awards of 3 percent of Pell grant recipients, while penalizing those families for saving for college and opening up loopholes for sophisticated applicants to game the formula.

Today, Secretary Duncan called on Congress to let students and families apply for financial aid with the information on their tax returns, without needing to gather bank statements, investment information, and documentation of any untaxed income. These changes would make the student aid application simpler and fairer, and they would open the door to using IRS data for the remaining financial questions, reducing the FAFSA to easy personal questions.

Third: Answer the Remaining Financial Questions with Tax Data. When applying for student aid, more than 90 percent of students and families are giving the federal government information it already has—information they provided when they filed their taxes. The answer to up to 20 financial questions—all questions that will remain if the proposed legislation is enacted—could be provided by the IRS. Students applying online will only need to provide easily available personal information.

Beginning in January, students applying for financial aid for the spring semester will be able to seamlessly retrieve their relevant tax information from the IRS for easy completion of the online FAFSA. The Departments of Education and Treasury will be working together to examine the possibility of expanding this option to all students in the future.

The Obama-Biden Agenda For College Affordability

The simplification initiatives announced today build on President Obama's accomplishments and commitments to higher educational opportunities, including:

Last Modified: 06/24/2009