The federal government recently announced a one-year delay in the FAFSA Simplification Act. Here’s why that matters.
Simplifying things can get really complicated. That’s what happened to the FAFSA Simplification Act, which Congress passed in December. The legislation will make life easier for college students to get federal aid, and it came with a strict deadline: the start of the 2023 school year.
Even with a two-year head start, that won’t happen. Instead, the Department of Education announced in mid-June that the rollout won’t be ready until the 2024 school year.
Streamlining the “Free Application for Federal Student Aid” process can’t come quick enough for frustrated applicants. At the same time the federal government was announcing the bad news about the blown deadline, Debt.com was announcing even worse news: Many otherwise intelligent young people and their parents are perplexed and unprepared to answer all 108 questions.
Debt.com polled more than 1,000 people and found…
- 44 percent didn’t know all the derailed financial information that the FAFSA form required until they were already facing those questions.
- 89 percent said they thought they qualified for financial aid – but only 68 percent actually did.
- 18 percent got an error message while filling out the form.
But that’s not the only research that reveals major confusion with the current FAFSA.
Student loan education site Student Loan Hero just published a survey that finds more than 8 in 10 college students aren’t “aware that the FAFSA determines eligibility for free gift aid, and not just loans.”
The misconceptions are so bad, 1 in 5 students told Student Loan Hero they “don’t plan to fill out the FAFSA this year.”
Research shows more than $2 billion in free money for college through FAFSA goes unused every year.
How the FAFSA Simplification Act can help
The FAFSA Simplification Act would eliminate some of the problems both Debt.com and Student Loan Hero uncovered. For starters, those 108 questions will be trimmed to 36. And the most time-sucking part – listing all the assets of both students and parents – can be avoided under certain conditions.
The Act will do other things, too. It also makes it easier to get a Pell Grant (a need-based program for undergrads) and it requires the application to be translated into more languages (11, instead of just English and Spanish like it is right now).
But for Howard Dvorkin, the chairman of Debt.com, the most crucial changes are the simplest.
“Getting access to federal student loans shouldn’t be harder than filing your taxes,” he says. “I’m glad to see the Department of Education trying to make it easier – although it literally took an act of Congress.”
The delayed deadline doesn’t dismay Dvorkin.
“I’ve been a business owner for nearly three decades, and I’ve marveled at the complexity of the government documents I’ve had to fill out, so I know it will take a long time to break everything down and rebuild it better,” he says. “I just hope it doesn’t stop there.”
Dvorkin says after the FAFSA Simplification Act, Congress needs to revisit all the student loan repayment programs. With similar-sounding names like Income-Based Repayment and Income-Contingent Repayment – and with rules and requirements even more complex than FAFSA – Dvorkin says there’s a lot more simplifying to do.
“You could argue it’s even more important to streamline the repayment programs than the actual FAFSA form,” he says. “FAFSA gets you access to federal student loans, but once you have them, many Americans can’t afford to pay them back. Every day they spend trying to navigate that overly complicated system, more interest accrues – and they fall further behind.”
If Congress can simplify the student loan process, Dvorkin says it will be able to simplify anything – “and hopefully, they’ll be emboldened to do just that.”
Published by Debt.com, LLC