Let’s Kill FAFSA

Friend and colleague Carlo Salerno (@edanalyst) calls for eliminating FAFSA instead of simplifying it. I agree. Let’s do that. Let’s rely solely on the tax return for calculating the Estimated Family Contribution (EFC), Pell grant eligibility, and student loan eligibility. I see no reason for one agency to create and manage a complex form/endeavor with a black box calculation for EFC that relies on data that another agency collects, calculates, holds, and enforces. It is would be more efficient to do things this way, save money, and eliminate  the need for some applications to be verified.

It also eliminates families sending detailed financial information to colleges before they can be told their price.

I have a dog in this fight. I have build a fair amount of reporting based on family income, including graduation rates. For example, we have published for two years now, graduation rates of students from families with incomes of $150,000 and above that pretty much demonstrate that the Pell Institute report that stimulated this blog post by Matt Chingos and Susan Dynarski was wrong on the face of it as the data could only be assumed to be irrelevant if Va was so unrepresentative. In fact, Virginia has just about the highest four-graduation rates of public institutions in the country.

I would be willing to give up access to these income data in pursuit of greater efficiency and less burden.

How would we calculate Pell eligibility?

Perhaps like this:

Pell Value – Total tuition and Fees, plus cost of text books, for most expensive public community college in nation.

0 to 200% of Federal Poverty Level – 100% (No income cut-offs, based on family size, 100% Pell for each family member in college).

EFC = 5% of family income above 150% of poverty level divided by number of family members in college.

201% to 400% of Federal Poverty Level – 50% of Pell for each family member enrolled in college, eligible for 100% of remaining need to covered by subsidized loans covered by PAYE.

EFC = 10% of family income above 150% of poverty level divided by number of family members in college.

2 thoughts on “Let’s Kill FAFSA

  1. This sort of simplification should be welcome as it not only simplifies the application process, but also simplifies the calculation process, which makes it much more transparent for families. However, I’m not sure that I follow all of your logic. Based on your notes, I calculate full Pell to be $12,492 (tuition/fees at the University of Pittsburgh-Titusville plus annual book expenses as estimated by the CollegeBoard). A family of four with one in college would qualify for full Pell up to an annual income of $48,500. If their annual income was above that, but less than $97,000, then they would qualify for $6,246 in Pell. The increased Pell maximum is welcome (but good luck getting Congress to buy that), but the large step between full Pell & 50% Pell is too big. I think you would need more proration. Since I talk with families everyday, imagine explaining if they had made $500 less then they would’ve received $6,000 more in Pell. It would need to be more stair-stepped, but I like the simplicity. Financial aid administrators could actually talk to families well before college about their eligiblity and what they can expect (even better if all of Pell was on the mandatory side of the budget because at the moment, so much is subject to change). As far as your EFC calculations, I’m not sure I follow the logic, but I can see that the simpler formula would be so much easier in many different ways.

    • I am fine with pro-ration of the Pell award. I propose these as a starting point for discussion, not a full-fledged recipe for policy. I don’t know what the right answers to the specific values are, but I have some ideas…and some data. More importantly, I do know we need greater transparency in how need and assistance are determined and that EFC is currently just wrong.

      I am really very interested in what financial aid administrators have to say. Thanks for the response.

Be nice. It won't hurt either of us.

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