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Nearly 180,000 additional graduating high school students filed the Free Application for Federal Student Aid, or FAFSA, compared to last year. College access advocates say the jump in filings is mostly thanks to recently enacted tweaks to the system that made the process more convenient for students. These changes included pushing up the start of the FAFSA filing season by three months, and giving students the permission to use “prior-prior year” tax information to determine their aid eligibility. The good news comes in spite of high-profile technical failures that cropped up in the spring and may have prevented the filing numbers from rising even faster.

The newly released statistics, compiled by the National College Access Network, or NCAN, show that overall FAFSA completion rates for all students (including those already enrolled in college) increased by six percent over last year, while the completion rates for graduating high school seniors were up nine percent. Kim Cook, NCAN’s executive director, spoke with InsideSources about this year’s FAFSA numbers and about the additional changes her group is pushing for.

“It’s excellent news that we’ve gotten more word about the FAFSA out to all students, particularly high school students. We hope this means that more low-income students will stop leaving money on the table by applying for the aid for which they are eligible for, and that [this trend] supports higher post-secondary completion for the entire country,” said Cook.

There were three main changes that went into effect for students completing the FAFSA this year as compared to last year: two positive and one negative. Cook linked both of the positive reforms to the FAFSA process to actions taken by the Obama administration.

The first was to allow students to use prior-prior year tax information to complete the application. Under the old system, a student filing for aid for the academic year beginning in the fall of 2016, would have had to show personal or family income information from 2015. Because tax returns from 2015 weren’t due until April of 2016, months after the college admissions process was already finalized for many students, some were making post-secondary decisions without knowing how much aid they were eligible for. Under the new system, a student filing for aid for the academic year beginning in the fall of 2017 would be eligible to use their 2015 tax return information, and would therefore be able to establish their aid eligibility much earlier in the admissions process.

The second tweak to the system also has to do with timing. Under the old system, FAFSA applications could only be filed starting at the beginning of January. Actions taken by the Obama administration allowed students to start filing their applications as early as October, which again, helped provide many students with a clearer picture of the weighty financial commitments they were undertaking.

Under the new system, “a low-income student could now, in October, file a FAFSA, learn they are eligible for a Pell Grant of $5,920 and likely also be eligible for a subsidized loan, and have that in their back pocket as they go shopping and think about whether college is ultimately affordable or possible for them,” said Cook.  She likened the new process to how most other major purchases in life are made; noting that when one buys a house or a car, the purchaser generally knows how much he or she is pre-approved for from a bank and what various repayment plans would look like.

The big headwind working against FAFSA completion for this year was the unexpected failure of the Data Retrieval Tool in March. Federal officials pulled the plug on the online application, which allows FAFSA applicants to automatically populate tax information from the Internal Revenue Service’s online databases into the Education Department form, when evidence emerged that criminals were using the service to steal personally identifiable information. While access to the Data Retrieval Tool was disabled late in the filing season, it also came unexpectedly, and at a critical moment when many students were still working on their applications.

Cook is heartened that the overall FAFSA numbers rose in spite of the failure and by the news that the government expects to have the tool back up by this October. But, she said there is reason to believe that some of the neediest students were the hardest hit by the outage.

“Those who file later, and aren’t aware of deadlines, are typically the lower-income and first generation students who lack the information about financial aid. So we are still quite concerned, we also realize that in some aspects we were fortunate that so many students were able to take advantage of the earlier filing time this year and were already in and done,” said Cook.

With the timing of the aid cycle improved and the Data Retrieval Tool problem being addressed, the next big item on the college access advocate’s agenda is a push to cut down the total number of questions on the highly complex form. Nevertheless, despite momentum on their side and a strong bipartisan majority of lawmakers on Capitol Hill who support FAFSA simplification, getting the reform through might be easier to accomplish in theory than in practice.

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The Free Application for Federal Student Aid, or FAFSA, currently weighs in at over 100 questions and is so daunting that hundreds of thousands of students forgo billions of dollars in aid and low-interest loans every year by not filling it out, according to some studies. Top members of Congress from both parties have introduced legislation that would simplify FAFSA, and the noncontroversial reform has had support from interest groups across the ideological spectrum for years.

The chairman of the Senate education committee, Lamar Alexander, R-Tenn., tried to reduce the FAFSA form to two questions in 2015, along with senators from both parties including Sen. Michael Bennet, D-Colo. More recently, Rep. Lloyd Doggett, D-Texas, seized on news of a massive data breach at the IRS and Education Department that has made the FAFSA more complicated for this year’s applicants to push his own FAFSA simplification proposal that has widespread support among House Democrats. Nevertheless, a serious bipartisan push to simplify the application has yet to take shape in this Congress.

Despite bipartisan support for FAFSA simplification, one large political consideration and two technical complications stand in the way of bringing relief to the students who struggle with the form every year. Mamie Voight, the vice president of policy research for the nonprofit Institute for Higher Education Policy, spoke with InsideSources about the sticking points lawmakers in Washington face when grappling with changes to the FAFSA.

The first technical obstacle to FAFSA simplification is the worry that if the form is pared down too far, students could paradoxically end up having to fill out more paperwork to secure their full financial aid packages. Currently, state and higher education institutions use data gathered through the FAFSA to create their own financial aid packages to supplement the federal support offered to students. While Congress may be satisfied with reducing the FAFSA to two or three questions, college access advocates are worried that states and universities may then decide to step in with their own supplemental forms, which could multiply the number of questions students need to answer to receive aid.

According to Voight, any simplification effort would have to be dedicated to “finding the right balance,” as otherwise there is a “risk of having a proliferation of forms that could overly burden students.”

Another risk associated with FAFSA simplification is the concern that a simpler form would confuse efforts to channel support to the students that most need the aid. For example, Voight said that she has seen some proposals that would remove questions that ask how many students are enrolled in college in an applicant’s family. By striking questions like this and others, Voight said that financial aid would have to be distributed according to less sophisticated formulas.

This last technical concern is also tied up in the overarching political obstacle facing FAFSA simplification. Because cutting questions out of FAFSA would necessarily mean altering the calculations used to determine federal aid eligibility, policy experts like Voight who have studied the problem believe that FAFSA reform is unlikely to take the shape of a standalone bill. Instead, experts are predicting that FAFSA simplification will end up getting tied into a larger push to reauthorize the Higher Education Act, which is the main federal law regulating higher education policy.

The advantage to such an approach is that the Higher Education Act is coming up for renewal, and a systematic overhaul to college access pathways could create a sustainably simpler FAFSA form. The disadvantage is that while both parties generally agree that the FAFSA should be easier to complete, the GOP and the Democratic Party have strong ideological disagreements over other provisions in the law that is hundreds of pages long and oversees billions in federal grants. In particular, disagreements over the regulation of for-profit colleges, devolution of power to states, and the role of higher education authorizers, all covered by the Higher Education Act, could derail the entire process and jeopardize FAFSA simplification.

Chairman Alexander appeared to tacitly acknowledge the importance that the wider effort to reauthorize the Higher Education Act will play in any FAFSA simplification effort in a statement released to InsideSources:

“My top education priority for the Senate HELP committee this Congress is reauthorizing the Higher Education Act to make it simpler and easier for students to go to college and reduce the jungle of red tape that’s making it harder for college administrators to educate. We already have several bipartisan proposals to: simplify the dreaded FAFSA and the maze of loan and repayment plans so it’s easier for students to go to college and to repay their loans; reduce the burden of regulations on colleges, which receive one new regulatory guidance document from the federal government each work day; and improve student success with policies that help students complete their programs.”

In other words, students and college access advocates hoping for quick fixes to FAFSA in time for next year’s application cycle will likely have to wait for Congress to move on a more complicated and comprehensive reform package.

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Identity protection weaknesses beleaguering a digital tool that streamlines access to federal financial aid for higher education cannot be fixed easily or quickly, according to federal officials. While eligible students are still technically able to access government support for their education, college access advocates say the process has gotten more complex, and they worry that some families won’t have the patience or wherewithal to complete by hand the detailed forms required of them.

On March 3rd, days before state deadlines for federal student aid applications, a software program, known as the Data Retrieval Tool, or DRT, went dark and was replaced by an error message blaming “system maintenance.” The DRT, which is operated by the Internal Revenue Service in conjunction with the Department of Education, allows families to automatically input their tax return information into the Free Application for Federal Student Aid, or FAFSA.

Neither the IRS nor the education department acknowledged the tool’s failure for days, as millions of students nationally were coming up on filing deadlines that allow them to secure thousands in grants and low-interest educational loans. Congressman Lloyd Doggett, D-Texas, was the first member of Congress to demand answers from the executive branch, and he has since been joined by the chairmen and ranking members of both House and Senate education committees.

In hearings, press releases, and media reports, news has emerged that the DRT’s weaknesses are extensive, and apparently too difficult to rectify before aid is doled out for the 2017-2018 academic year. According to IRS Commissioner John Koskinen, his agency is reviewing an estimated 100,000 instances of questionable DRT requests. It appears as though criminals posed as students seeking financial aid to access private information and then filed fraudulent tax returns in a bid to steal tax refunds. Koskinen said in an April Senate hearing that his agency found an estimated 8,000 cases where they believe that fraudulent refunds were issued at a cost of $30 million. The agency said it is reviewing tens of thousands of additional DRT requests for possible wrongdoing.

On Monday, the top lawmakers on the Senate education committee, Sen. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., sent a letter to Secretary of Education Betsy DeVos requesting details about the actions being taken to mitigate the fallout from the tool’s abrupt disappearance. The committee leaders wrote to request “regular bi-weekly briefings” at the staff level so they can stay apprised of the progress taken by DeVos’s team.

A GOP Senate education committee spokesperson issued the following statement lauding the Department of Education’s responsiveness to the DRT data breach:

“The Department has been helpful and informative in explaining why the IRS Data Retrieval Tool is down and the steps they are taking to fix it. This letter sets the expectations for the Department to keep the HELP Committee informed during this ongoing process so we can track progress towards fixing the problem in a timely manner.”

Other Republican leaders on Capitol Hill appear to not share the view that the IRS and education department’s Federal Student Aid branch were handling the problem effectively. Education and Workforce Committee Chairwoman Virginia Foxx, R-N.C., made blistering remarks during a House Oversight hearing on Wednesday. She accused officials of failing to take responsibility for the breach of taxpayer data, and said to the officials charged with response: “either you’re in denial or incompetent.” Members of Congress from both parties have reflected constituent frustrations that details regarding the identity protection problem took so long to emerge.

During Wednesday’s hearing, James Runcie, the chief operating officer of the education department’s Federal Student Aid division, explained how the DRT system would be fixed in time for the 2018-2019 FAFSA filing season. Officials are planning to reinstate the DRT but will keep the information pulled from IRS databases encrypted, even after it has been entered into the FAFSA form, said Runcie. By keeping personal information hidden from the user, the agencies are hoping to only make the DRT useful to those students and families actually hoping to secure federal student aid.

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Top education committee leaders from both parties in both houses of Congress called on the Secretary of Education to explain why a critical tool used by students to apply for federal higher education aid was taken out of service without notice.

The Free Application for Federal Student Aid (or FAFSA) is filed every year by students seeking loans or grants to help pay for their education. Because the benefits distributed by the government vary by family income-levels, tax return information is required to complete the form.

In an effort to streamline access to federal higher education benefits, the Department of Education and the Internal Revenue Service (IRS) had partnered to create a “Data Retrieval Tool” that would allow tax information from the IRS to be automatically transferred into the education department’s FAFSA form. Millions of students use the Data Retrieval Tool every year.

Earlier this month, in the middle of FAFSA filing season, the Data Retrieval Tool, went dark without warning. A week later, after pressure began to mount for an explanation, the education department and the IRS issued a joint statement explaining that the tool was pulled for identity protection reasons. The agencies said that the tool, which is hosted by the IRS, would be down for “several weeks.” More recent reports suggest that officials have opened criminal investigations into misuse of the tool.

While an inability to access the Data Retrieval Tool does not bar students from accessing federal aid, it can make the process more difficult for some students. Without the tool, families must either have their 2015 tax-returns on hand, or they must to formally request a copy of their tax transcripts—a process that can take up to ten days for some. States like Texas and Indiana delayed their FAFSA priority deadlines in response to the Data Retrieval Tool outage.

On Thursday, in a show of bipartisan concern, the Chairs and Ranking Members of the education committees in both the House and Senate issued a formal letter to the Department of Education seeking an explanatory briefing by Friday, March 24th.

After writing that they “appreciate” the first steps taken by the agencies to address the issue, the lawmakers wrote:

“We would like to hear about the timeline of events from the start of the outage to an estimated reinstatement date; steps the Department is taking to remedy the situation for students, borrowers and parents; and the actions the Department will take to protect applicants’ data privacy and security during and after this outage.”

Lawmakers from House and Senate oversight committees also sent letters to the education department and the IRS noting that their committees are supposed to be notified within seven days of a major data breach. Those committees have also called for answers and documents explaining what happened to the tool.

The complexity of the student aid process in general, and the FAFSA form in particular, has been a bipartisan concern in recent years. Washington inertia has prevented passage of a reauthorization of the Higher Education Act, which was originally set to expire in 2013. There are proposed reforms to the law that both parties appear to agree on, though a packed legislative agenda, and disputes over regulations of for-profit colleges could derail reauthorization efforts in this Congress.

The powerful Chairman of the Senate education committee, Lamar Alexander, R-Tenn., is among those who have called for a radically-simplified FAFSA form. Until the problems at the IRS and Department of Education are resolved, however, the process families will go through to apply for aid for the upcoming year will be more complex than it was in years prior.

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The Internal Revenue Service pulled the plug on an online tool that streamlines parent and student completion of federal student aid forms without giving advance warning, according to college access advocates. Millions of students use the system every year, according to federal statistics.

The IRS Data Retrieval Tool allows federal aid applicants to automatically transfer their tax return information into the Free Application for Federal Student Aid (or FAFSA) form. Students first reported problems with the IRS’s software Friday, March 3rd when an error message on the agency’s website said the tool was down due to “system maintenance.”

Over the past week, pressure mounted on the Department of Education and the IRS to offer an explanation. On Thursday, Rep. Lloyd Doggett, D-Texas, sent a letter urging the agencies “investigate and rectify” the issue. As Doggett’s letter noted, early March is a particularly bad time for technical problems in the student aid process. Numerous states, including Texas, have FAFSA deadlines coming up in the next few weeks.

Later, on Thursday, the education department and the IRS issued a joint statement that explained: “the IRS decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.” Neither the IRS, nor the Department for Education would comment further on the nature of the identity theft problem that led to the suspension of the Data Retrieval Tool.

According to the statement, the Data Retrieval Tool is expected to be down “for several weeks.” The agencies assured Americans that “this does not limit families’ ability to apply for aid.”

Austin Buchan, the CEO of College Forward in Texas, a state that has a March 15th priority deadline for FAFSA completion, said the technical disruption “is going to complicate our lives pretty significantly.” College Forward is an Austin-based nonprofit that assists underserved students in securing a college education.

Buchan said the government is forcing students to “switch horses mid-stream,” and lack of access to the online tool will “add confusion” to a process that is already highly complicated. Buchan said he expects numerous students in his state to end up missing the March deadline, which could increase the likelihood of their not receiving all of the federal benefits they are entitled to. The situation is even more dire in Indiana, where the state’s priority FAFSA completion deadline is March 10th.

To manually complete the portions of the FAFSA form that the Data Retrieval Tool would ordinarily automatically populate, families need copies of their 2015 tax returns on hand. For those that do not have their tax records immediately available, transcripts can be obtained online or by mail.

Carrie Warick, the director of policy and advocacy for the National College Access Network, argued that both work-around solutions are imperfect. Accessing tax records online is particularly difficult for low-income families because of identity confirmation requirements, and the mailing process can take up to ten business days—which is not viable for students facing deadlines as early as March 10th or March 15th, she said.

Furthermore, manual entry of a family’s financial information puts a student at greater risk for a process called “verification,” said Warick. Verification is like an audit of the information on a student’s FAFSA form, and requires additional paperwork that poses yet another obstacle to affordable college access, she said.

Federal data from 2015 to 2016, suggests that over 7.4 million, or about 38 percent of the 19.8 million students who filled out FAFSA forms during that aid application cycle used the IRS’s Data Retrieval Tool. Prior to the system’s malfunction, college access advocates were hoping that changes intended to make the federal aid system more user-friendly would drive up use of the tool this year.

Instead, the technical problems came as a complete surprise to the college access nonprofits around the country that Warick’s organization represents in Washington, including Buchan’s College Forward. At a minimum, Warick said stakeholders should have received advance notice from the education department or the IRS that there was a looming problem with the tool.

“It’s caused a week of scrambling,” she said.

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In Washington, it is not uncommon for both parties to agree that a federal program needs to be fixed—typically the debate starts over what good reform looks like. In higher education policy, however, there is the more unusual additional agreement on a few policy points over what common sense changes could be workable.

The Higher Education Act, the federal law that governs the bulk of higher education policy in Washington, has been awaiting reauthorization since 2013.

In that time, Congress has made some changes to the law, but has mostly settled for appropriations procedures and continuing resolutions to extend the most recent 2008 version of the law. Congress has yet to present the White House with a comprehensive bill updating the legislation.

Ted Mitchell, an undersecretary of education in the Obama administration, said in 2014 that the law had “silted” and produced some “bad outcomes” as a result of “perverse incentives” buried in it.

More recently the Chairwoman of the House Education and the Workforce Committee, Virginia Foxx, R-N.C., has said that updating the law is “a top priority” for her committee in the 115th Congress.

Some of the proposed changes are relatively uncontroversial and have bipartisan support. It is expected that Congress will act to simplify the federal student aid form, add flexibility to the Pell Grant program, and streamline loan repayment programs.

Possible sticking points that could derail reauthorization include: fights over the role the government should play in determining accreditation, a conservative push for deregulation and limiting education department power, and progressive proposals for how to address the problem of sexual assault on college campuses.

 

FAFSA Reform 

Both the left and the right generally agree that the Free Application for Federal Student Aid, or FAFSA, form that prospective college students fill out is too long.

Sen. Lamar Alexander, R-Tenn., who chairs the Senate committee that oversees education, has helped spearhead a bipartisan effort to simplify FAFSA from over 100 questions down to two. The proposal would determine aid eligibility based on two metrics: family size and adjusted household income.

Carrie Warick, who directs policy and advocacy for the National College Access Network (NCAN), said in an interview that the current convoluted process discourages students from applying for aid and results in $24 billion in grants and loans being “left on the table” each year.

NCAN is a Washington, D.C.-based 501(c)(3) that represents organizations who make college more accessible for low-income and underrepresented students. While Warick agrees that FAFSA should be cut down, her organization promotes a “streamlined” version that finds a compromise between Sen. Alexander’s postcard-sized application, and the current accordion-style foldout form that millions of students wrestle with each year.

She explained that while the federal government might be contented with two questions, state officials and higher education institutions that base aid and loan packages on FAFSA often want more information.

NCAN member organizations have expressed concerns that cutting the form down too dramatically could end up forcing students to fill out more paperwork overall to receive sub-federal level aid.

 

Year-Round Pell Grants

Another area where experts expect Congress to reach an agreement, is a proposed tweak to the Pell Grant program, an aid program of nearly $29 billion annually, that would give eligible students the flexibility to avail themselves of summer course offerings.

Transitioning the grants from a 9 month program to a year-round program would be beneficial for students who work, take classes part-time, or have otherwise irregular schedules.

While some proposals would mean increasing the $5,920 cap that a student can receive per year under the program, the hope is those students would also be using the summers to satisfy degree requirements more quickly.

Some conservatives, such as Speaker Paul Ryan, have previously proposed a freeze on increases and a restructuring of the Pell Grant program in a bid to cut spending.

Warick’s group, NCAN, opposes cuts to the program, but she believes that adding flexibility to how students use the program still has bipartisan viability.

“The devil is in the details,” she said. Many of the proposals she has seen, however, share the goal of helping students graduate more quickly.

 

Loan Repayment

Finally, there has long been a push in higher education policy circles to cut through the maze of student loan repayment options offered by the government.

The Department of Education, which directly backs a trillion dollars worth of student loan debt, oversees a byzantine system of programs and services that structures debt repayment plans.

In a 2014 panel, Mitchell, the former Obama administration official, called the system “a crazy matrix.” There is concern that many borrowers are struggling to figure out which programs are available to them and in their best interests.

The government’s loan repayment apparatus has been in the news recently as the outgoing Obama administration hit the student loan management company Navient with a series of consumer protection lawsuits.

 

Potential Snags and Context

While there are some areas where Democrats and Republicans are likely to find common ground, there are also areas where the two parties will have to hammer out fundamental ideological differences if they plan to work together to reauthorize the Higher Education Act.

In particular, Democrats and the former Obama administration favored a more active role for the federal government in determining accreditation, which determines what schools are eligible for participation in federal aid programs.

Sen. Patty Murray, D-Wash., the ranking member of the Senate HELP committee, has called for federal action to combat sexual assault on campus under an expansive reading of Title IX. Such efforts clash with Republican talking points that stress restoring local control to universities and colleges.

The Obama administration had also staked out some combative stances on for-profit higher education that higher education policy watchers are expecting the Trump administration to soften.

Backers of for-profit schools took particular exception to the revelation that a coding error in a government database and Obama era education department regulations had resulted in damages to or even closings of for-profit higher education institutions.

News broke yesterday that Jerry Falwell Jr., the president of Liberty University, has agreed to lead a task force on higher education policy for the new administration. Details are still emerging on what the task force will focus on and how the move could impact the discussion surrounding the Higher Education Act.

Finally, the pitched national debate over the nomination of Betsy DeVos for U.S. Secretary of Education has hardened partisan battle lines in an area where historically the two parties have found ways to work together. The fallout over the sudden national focus on the direction of education policy could potentially alter the landscape for how new bills and regulations are received moving forward.

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