On Wednesday, the 24th, Paul had a thoughtful post on college financial aid. In Leveling with colleges about your financial problems he offers up some sound advice for families that have had a setback during the Great Recession.
It got me to thinking about the Free Application for Federal Student Aid (FAFSA). Parents have to fill it out if they want their student to get financial aid. It’s a complicated form despite recent efforts to streamline it. The financial aid system that developed in the post World War 11 era was initially modeled after the U.S. progressive income tax. Over the years, like the tax code, it has evolved into a messy stew of Byzantine rules.
One of my favorite stories about FAFSA came from Thomas Kane, one of the nation’s leading education economists. He worked at the White House Council of Economic Advisors during the Clinton Administration. The head of the Council at the time was Joseph Stiglitz, a Nobel laureate and brilliant scholar. Kane recalls walking into Stiglitz’s office, finding him surrounded with papers, looking extremely frustrated. What was up? A recession in the making? The details of fiscal policy? No, Stiglitz was struggling to make sense of financial aid forms for a college-bound child. Imagine how bad it is when the process confuses someone like Stiglitz?
Here’s the thing: FAFSA’s complexity plays a role in the long running and highly disturbing gap in college attendance between students from high income families and students from low income families. In The Role of Simplification and Information in College Decisions: Results from the H&R Block FAFSA Experiment (NBER Working Paper No. 15361), scholars Eric Bettinger, Bridget Terry Long, Philip Oreopoulos, and Lisa Sanbonmatsu make the case that simplification and counseling together could boost college attendance and aid, especially among low income students. Better information alone won’t do the job.
The scholars targeted families unlikely to know about much about college and financial aid. The professional tax service H&R Block participated in the experiment. (There’s a fitting symmetry to this considering the evolution of financial aid.) Tax professionals helped low- to moderate- income families complete FAFSA. The families were given estimates of their eligibility for government aid. They were told about schooling options.
A randomly-chosen group only got personalized aid-eligibility information.
The payoff from counseling? The students who worked with the professionals were 40 percent more likely to apply for financial aid than the information-only control group. The submission rate of aid applications almost tripled for independent students with a high school degree but no college education.
There are many reasons why students from low income families don’t attend college anywhere near the rate of their better off peers. A number of the issues are difficult to tackle, like poverty and lousy schools. However, this scholarly paper suggests there are some relatively easy changes to make that could dramatically improve the college attendance and life prospects of many young people from low-to moderate-income backgrounds.