With the cost of school weighing heavy on the pockets of college students, building their awareness and simplifying the process for applying to the variety of available financial aid options is key to helping more students afford college.
Yet the students who most need the help are often the least likely to know it exists. A report from New America’s Education Policy Program reveals that most prospective college students ages 16-40 do not know of or understand all the options available to them.
The report, titled Familiarity with Financial Aid, showed that although most students are familiar with institutional scholarships (82%) and student loans (79%), they are much less familiar with other forms of financial aid, including the Pell grant (44%), tax deductions (35%), veterans benefits (29%) and state aid (61%).
Such lack of familiarity is particularly true for low and moderate-income students who would benefit most from such programs. Nearly half of the student respondents with annual household incomes of under $50,000, most of whom would likely qualify for a Pell grant, were not familiar with the federal need-based aid program. As result, a significant proportion of students who qualify for federal aid are losing out on up to $5,730 in Pell grants annually. Lack of knowledge also results in fewer students completing the Free Application for Federal Student Aid (FAFSA) which qualifies students for Pell grants, other federal student aid, and non-federal sources such as institutional need-based aid. As Florida College Access Network has previously reported, this is a significant issue in Florida. In recent years, Florida’s graduating high school seniors have annually missed out on over $100 million in Pell grant dollars alone by failing to complete the FAFSA.
The report suggests policy reforms and better ways to build awareness about financial aid options, including:
- Streamline the FAFSA process by basing eligibility on the tax return filed before the most recent year, also known as “Prior-Prior Year (PPY)” tax returns. The current FAFSA application requires the most recent year’s taxes, often causing students and their families to scramble to file their taxes well before the deadline or amending their FAFSAs after completing their returns. Accepting PPY tax returns would allow students to apply and complete the FAFSA closer to when the application becomes available in January.
- Create early awareness campaigns and programs that target low and moderate-income students and inform them about their financial aid options. The FAFSA is often what states and institutions use to disperse their own need-based aid.
- Provide students with better access to Net Price Calculators (NPCs). Although all public universities are mandated to make NPCs available, these tools are often difficult to find on a school’s website. College Abacus is a tool that allows students to compare the NPCs of over 4,000 schools, but it does not include the NPCs of all institutions. The study suggests that either all schools provide their NPCs through College Abacus or that the U.S Department of Education develop a tool on which all institutions are required to share their NPCs.
The report is the third of a series released throughout the summer as part of the 2015 College Decisions Survey, which studied how all prospective students (regardless of age at the time of enrollment) engage with the degree-seeking and financing process. The next report will focus on students’ capacity to pay their loan debt and monthly payments, as well as their plans to repay student loans.
Read the full report here.