How Free is the FAFSA?
The Free Application for Federal Student Aid is free according to the U.S. Department of Education. It costs you nothing to fill out the form. But it costs families thousands of dollars in lost financial aid if done incorrectly.
The first word on the Free Application for Federal Student Aid, the form all students must use to apply for federal financial aid programs, is “Free”. However, the FAFSA costs many families a lot of money in lost aid.
The FAFSA is a 128 question form that is used to determine a family’s eligibility for need-based financial aid and results in a number called the Estimated Family Contribution, or EFC. The U.S. Department of Education claims that it takes one hour to complete. How complicated is the form? According to the Department of Education, approximately 80% of the forms submitted for processing are done incorrectly or are incomplete. After submission, families receive a Student Aid Report and are asked to confirm their answers and make corrections. Assuming the family notices errors or omissions and corrects these, the corrections are then resubmitted. Usually, each time the process goes from the family to the government back to the family one can expect a four to six week processing time. Federal financial aid is awarded on a first-come, firstserved basis. Processing and correcting errors costs families money because there is less aid available the longer it takes to submit correct aid reports to the government, who then passes the information along to the colleges who distribute federal money in the form of loans and grants.
If the 128 question FAFSA takes one hour to complete, how does that compare to the much more familiar tax forms? Most families file either the 1040A or the 1040EZ for federal tax purposes. Form 1040EZ asks 37 questions; Form 1040A asks 83 questions. If we use U.S. Department of Education math, that means that the 1040EZ should take 17 minutes to complete and the 1040A should only take 39 minutes. The Internal Revenue Service, however, suggests that the forms take 8 and 13 hours to complete, respectively.
For lower income families the complexity of the financial aid process can be overwhelming as by and large there is little in the way of coaching or assistance for these families. The complexity, the timing - spring of senior year is too late to learn how much college will cost so as to ‘plan’ for college costs - and the increasing gap between aid awarded and actual need all prevent lower income students from getting a college degree.
Middle income families are suffering from a very large disconnect between what they see as their ability to pay and what the FAFSA formula determines they should be able to afford, even if the form is done correctly and on time. Many families either don’t bother to apply, given the confusion in the process, or do file the FAFSA and are shocked by their EFC. How, for example, is a family earning $75,000 per year supposed to pay $20,000 per year for college?
Many upper income families do not fill out the FAFSA because they just “know” they will not qualify for aid, setting aside the hassle factor. However, almost every family gets an offer of some kind of aid, even if it’s just a loan package, by going through the process.
The fact that many families of all income levels don’t apply because of the confusion, misinformation, and hassle of the forms and processes is unfortunate, and costs families many thousands of dollars per year in college costs and/or missed opportunities.
In a recent draft of a report by the U.S. Secretary of Education’s Commission on the Future of Higher Education, the commission notes that “The existing convoluted, complex and counterproductive financial aid system for students should be restructured and the current federal aid form (the Free Application for Federal Student Aid, or FAFSA) should be eliminated...” We couldn’t agree more, but don’t count on a massive overhaul anytime soon. While you wait for systemic change, be advised to start the financial aid process as early as possible. And remember to set aside more than an hour to fill out the (somewhat free) FAFSA.
Bill McCumber is the founder of the iCollegeCoach program, a leading provider of comprehensive high school to college family services, including college search, admission, financial aid, and college funding programs. For more information please call 1-877-Coach-13 or visit http://iCollegeCoach.com.
The reason is that college graduates traditionally face low starting salaries and minimal savings but this generation also faces the challenges of far higher educational and credit card debt than did previous generations. New Jersey research firm Student Monitor pegs that average student loan debt at a staggering $25,760, which takes the average student nearly eight years to pay off. Compounding this student loan debt load is credit card debt, which for the 40 percent who do not pay off their cards in full each month amounts to an additional average unpaid balance or debt of $617.