Financial aid reform

The Department of Education and Internal Revenue Service will embark on a joint venture to populate the Free Application for Federal Student Aid with tax data. The news, which was announced on June 23 by Secretary of Education Arne Duncan, will radically change the way prospective students apply for federal aid and how schools become involved in the verification process.

“This plan is a huge win for students, and we are delighted that the Department is moving quickly to simplify the FAFSA, which has been a barrier to college access for so long,” said Dr. Philip Day, President and CEO of the National Association of Student Financial Aid Admin. “We are very excited about the IRS partnership, which would streamline the process for students even more, and, we hope, remove the federal requirement that our schools collect tax returns to verify applicant data.”

The partnership, which is part of President Obama’s initiative to simplify the FAFSA, has received approval from IRS Commissioner Douglas Shulman.

During a White House press briefing, Shulman said his agency was glad to partner with the Department of Education, and that the current FAFSA is “an endurance test,” that collects unnecessary data.

The department plans to make the FAFSA more efficient process through simplification.

During this summer, enhanced skip-logic will be used on the new web-based FAFSA. This will reduce user navigation by more than half because specific answers to questions will eliminate the need for others. Secretary Duncan said that there will be a 20% reduction in the number of questions asked and a 50% reduction in the number of web pages it takes to complete the application.

Starting in January 2010, the IRS will work in conjunction with the Education Department to allow students to easily retrieve relevant tax information when applying for aid.  Students applying for spring semester will be part of a pilot project to examine whether tax information should be made available to all students filing their FAFSA.

Another goal that the IRS and Education Department plan to achieve during their venture involves the elimination of unnecessary financial questions from the FAFSA. The aid calculation formula that is used in the current application uses financial questions that cannot be answered by IRS records. If the introduction of legislation is successful, a total of 26 financial questions, that have little impact on aid awards and can be difficult to complete, will be removed from the application.

The Education Department has published a fact sheet documenting the specifics of their mission, entitled simply, Making College More Affordable By Simplifying The Student Financial Aid Application.

Secretary Duncan gave special thanks to the IRS and Treasury Secretary Timothy Geithner for making the issue a priority, and White House Chief of Staff Rahm Emanuel for taking a special interest in the project.

“Simplifying the FAFSA is another significant action in our quest to keep a college degree within the reach of every person who aspires to higher education,” Duncan said.