2017-18 FAFSA Proposes Significant Change for Low-Income Students

By Lauren Walizer and Amy Ellen Duke-Benfield

A notice of the draft of the 2017-2018 Free Application for Federal Student Aid (FAFSA) has been released, and it includes a significant change for low-income students that deserves attention and recognition: the addition of an applicant’s receipt of Medicaid as a qualification for the Simplified Needs Test (SNT). This will simplify and shorten the FAFSA application process for thousands of low-income individuals and better ensure they receive the full financial aid for which they are eligible. CLASP firmly supports this change and applauds ED for this thoughtful action. We will be formally submitting comments stating our support for this plan, which can be found in the Federal Register online at Docket No: ED-2016-ICCD-0036, and we strongly encourage others to do the same, for the many reasons we describe below. CLASP will release our comments by early May and will encourage others to consider our suggestions as they develop their own comments.

The SNT is an alternative way for the FAFSA to calculate a student or family’s Expected Family Contribution (EFC). An independent student completing the FAFSA would be eligible for the SNT if his (and spouse’s, if any) adjusted gross income (AGI) is below $50,000, and if one of the following are true: he files a simplified tax return or isn’t required to file one; he is a dislocated worker; or he received benefits from one of five[1] means-tested programs in the prior two years. (The rules are the same for a dependent student, except that the tax return and dislocated worker pieces are applied to the applicants’ parents, and the means-tested benefits standard applies to anyone in the household.) The change announced today increases the number of eligible means-tested programs from five to six.

Allowing recipients of Medicaid—who, we would argue, have already proven their low-incomes through receipt of this means-tested program—to use the SNT allows them to have a significantly expedited application process. The SNT requires only six elements, none of which should require lengthy calculations or paperwork, such as AGI, federal taxes paid, and the number of family members in the household.

The length and difficulty of completing the application is a common barrier for students. Three out of 10 undergraduates—but nearly four out of 10 community college students—do not complete the FAFSA. Among students who cited that the “forms were too much work” as a reason they did not apply, half had incomes under $50,000, and close to 40 percent would have qualified for a Pell Grant. While community college students may be among the least likely to complete the form, they may also benefit the most from this change. Recent research on the mental health of college students found that nearly one-quarter of community college students were the recipients of Medicaid (or other government-sponsored insurance). Having a dramatically shorter FAFSA—coupled with the previously announced change to allow for prior-prior year income on the FAFSA—would greatly improve the chances that these students will complete the form and give them access to financial aid they would have otherwise foregone.

This change can improve the chances of students staying in school and completing in other ways as well. Research that controlled for student background characteristics and college experience found that FAFSA filers had a 72 percent greater chance of persisting than non-filers. For Pell-eligible students, this effect was even greater: filers had a 122 percent greater chance of staying in school. For students who would have completed the FAFSA regardless of the announced change, it could provide them with a small amount of additional financial aid, reducing their unmet financial need. Too often, students lack the financial resources to continue their program of study, and have no option but to drop out.

We believe this action will further codify President Obama’s remarkable legacies around education and health care access. The expansion of Medicaid has allowed millions to receive more affordable health care, and has particularly benefited groups such as uninsured adults, parents with dependent children, working adults, and veterans. Individuals with characteristics such as these are the core population of today’s non-traditional postsecondary students, who are more likely to attend college while caring for families or working, or are low-income. Connecting them with available resources is imperative for both their health, and for opportunities to further their education and training.

[1] The five programs are: Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), Free and Reduced Price School Lunch, Special Supplemental Nutrition Programs for Women, Infants and Children (WIC) and Temporary Assistance for Needy Families (TANF).