New legislation was introduced last week to reform Financial Aid in Higher Education. One of the major proposed changes was scrapping the current, 108-question and 10-page form for a 2-question form that could fit on a postcard. The authors of the bill, Senator Lamar Alexander (R) of Tennessee and Senator Michael Bennett (D) of California have tentatively named the draft the Financial Aid Simplification and Transparency Act or (the appropriately-named) FAST Act. The drastically shorter questionnaire is just one of the proposed changes of the FAST Act, which seeks to make the process of applying for and paying back student loans much easier overall for American students and their families. Part of the design is to increase the number of low-income students who apply for financial aid.
The length of the current form and its often convoluted questions can be a challenge for high school students and their families, particularly for low-income students whose parents may not have gone to college. Parents of potential college students have also complained that the detailed questions of family-income can be difficult to answer and parents don’t always feel comfortable divulging those details to their children. The new form would simplify that process by asking two-questions: “What is your family size? What was your household income 2 years ago?” By asking for the household income two years ago, families won’t be caught in a situation where they have to finish their previous year’s taxes early in order to file by the March 31 deadline.
In addition, the FAST Act would increase communication with families much earlier in the process so that they know what they can expect in terms of student loans. The senators unveiled full details of their bill, which will make other changes to simplify the process. The bill also seeks to streamline the federal grant and loan programs by combining the two federal grant programs into one, year-round Pell Grant. It will also consolidate the six different federal loan programs into 3: an undergraduate loan, a graduate loan and parent loan.
Switching to a year-round Pell grant gives students greater flexibility in choosing an educational path that meets their needs. In addition, the bill seeks to discourage over-borrowing by limiting what students can borrow based on their enrollment. Finally, the bill seeks to reduce the complex prepayment plans into two easy-to-understand plans: a 10-year repayment plan and an income-based repayment plan. In essence, the bill would simplify the entire process from beginning to end.
The bill proposed last week is not the first of its kind as several advocates and experts have been calling for a simplification of FAFSA for quite some time. According to The Chronicle, both of the most recent Secretaries of Education, Arne Duncan in 2009 under President Obama and Margaret Spellings under President Bush in 2008, have called for reforms to the FAFSA application, However, as the article points out, there is expected push-back as there always has been. Some states and colleges will resist the changes due to the value of information gleaned from the longer questionnaire form currently in practice. This is often used in the awards model of various states and institutions, which can be rather complex depending on where you go.
While there are many voices calling for reform to the FAFSA application and financial aid overall, it remains to be seen how far this bill will travel in congress. One advantage this legislation has over early attempts at reform is the overall push to improve student loan programs. As student loan debt has topped $1 trillion and many recent graduates are un- or underemployed, many have begun viewing the current system as deeply flawed. As the White House calls for a new college ranking system to evaluate college value, the FAST Act might find the political collateral necessary to stand-up to critics and opposition.
We here at Higher Ed Hero hope you found this information about the newly proposed FAST Act helpful.
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Kevin – Higher Ed Hero