It is painfully obvious to students, their families, and financial aid administrators alike that the current system of determining federal financial aid eligibility is incredibly complex and time-consuming. Although there should be broad support for changes to the financial aid system, any progress has been halting at best. I have devoted much of my time to researching and discussing potential changes to the financial aid system. Below is some of my work, going from relatively minor to major changes.
I’ve been working on an ongoing study with the National Association of Student Financial Aid Administrators examining the extent to which students’ financial aid packages would change if income data from one year earlier (the “prior-prior year”) than is currently used were to be used in the FAFSA calculations. Although a full report from this study won’t be out until sometime next month, here is a nice summary of the work from the Chronicle of Higher Education. The key point from this work is that, since family resources don’t change that much for students with the greatest financial need, students could file their FAFSA several months earlier using income data from the prior-prior year without a substantial change in aid targeting.
Under a prior-prior year system, students would still have to file the FAFSA each year. Given the fact that many students don’t see that much income volatility, there is a case to be made that students should only have to file the FAFSA once—at the beginning of college—unless their family or financial circumstances change by a considerable margin. In a piece hot off the virtual presses at the Chronicle, Sara Goldrick-Rab and I discuss why it would be better for many students to only have to file the FAFSA once. I would like to know more about the costs and benefits of such a program (weighing the benefits of reduced complexity and administrative compliance costs versus the likelihood of higher aid spending), but the net fiscal cost is likely to be small or even positive.
So let’s take this one step further. Do we even need to have all students file the FAFSA? Sara and I have looked at the possibility of automatically granting students the maximum Pell Grant if anyone in their family qualifies for means-tested benefits (primarily free and reduced price lunches). We detail the results of our fiscal analysis and simulation in an Institute for Research on Poverty working paper, where we find that such a program is likely to remain reasonably well targeted and pass a cost-benefit test in the long run.
There is a broad menu of options available to simplify the FAFSA, from giving students more time to complete the form to getting rid of it altogether. Let’s talk more about these options (plus many more) and actually get something done that can help all stakeholders in the higher education arena.
Robert Kelchen 
Interesting post. I am all for FAFSA reform, it’s going to take a lot. But my bigger questions still involve a reduction in college costs, and I am not sure how to facilitate that with FAFSA reform.
I agree completely, but I just don’t know if the feds can do anything to noticeably cut college costs. But they can clearly do something on FAFSA reform, and that has the potential to get rid of a lot of headaches and maybe even lower the net price for some students.