Student Aid Simplification

Simplification initiatives in the new law primarily focus on changes to the Free Application for Federal Student Aid (FAFSA) to ensure it is not a barrier to college success.

UMHB endorses Principles of Student Aid Simplification proposed by the National Association of Independent Colleges and Universities (NAICU).

NAICU Principles of Student Aid Simplification

As Congress and the Administration consider student aid simplification, we want to ensure that four main principles are carefully considered.

1. Individual students should not lose aid. Any changes made to student aid eligibility, program design, or program funding should not result in a loss of aid to individual students. A system based on one grant, one loan, and one work study program using current funds will not equitably redistribute aid to needy students. The current system of Pell Grants, campus-based aid, LEAP state grants, and loans provides aid to students across the income spectrum and across all sectors of higher education.
2. The federal government should not weaken the partnership. Paying for college has historically required partnerships among the federal government, states, colleges, private philanthropy, and students and their families (see related "Together We Can" document). This multi-pronged structure ensures that students have the aid they need to attend the college of their choice. The LEAP federal-state partnership is key to ensuring access to higher education, and to providing additional grant dollars in a student's aid package. As state budget shortfalls put pressure on higher education budgets, this federal matching grant program helps counter state trends toward merit aid. LEAP assures that funds remain available to needy students by requiring states to maintain their current level of need-based aid in order to continue receiving the federal funding. The campus-based programs supplement the broad-based distribution of aid by income in the Pell Grant and subsidized student loan programs. For example, the SEOG program, created as a supplement to Pell Grants, provides up to an additional $4,000 to needy recipients; Perkins Loans provide up to $5,500 per year in low-interest loans with options for public service loan forgiveness and favorable repayment plans; and Federal Work Study provides opportunities to help students earn money for college, while increasing persistence rates through on-campus jobs. By allowing financial aid officers on campus to build a package based on the individual needs of each student, these programs have become important tools of both access and choice for low-income students. The campus-based programs also are an important federal tool to accommodate students with special situations not accounted for in a simplified federal need analysis, through a more personalized aid package.
3. Don't lose non-federal dollars going to students. When the federal system of aid was developed, Congress also wanted to leverage state and institutional resources to supplement the federal programs. States and institutions of higher education matched federal dollars in the campus-based and LEAP state grant programs to the tune of more than $500 million in FY 2008, without regard to overmatches or the $1.1 billion in annual Perkins loans. For many years, overmatching has been the norm, with states going beyond the one-to-one requirement in LEAP, and institutions vastly over-matching the one-to-three requirement for campus-based aid. Now, with states facing touch budget deficits and institutions facing turmoil from the economic crisis, pulling the federal dollars out of these programs could cause states and institutions to cut their funding for need-based aid as well.
4. Making the federal student aid application form simpler should not result in a longer, more complicated overall process for students. While the notion of a vastly simplified FAFSA is appealing, this simplification could backfire. If too few questions are asked in the new form, states and colleges might no longer consider the federal system valid and reliable for use in awarding their own aid. This was the situation prior to 1992, when Congress created an integrated federal application system to entice states and colleges to also use the federal form, at no charge to students. The creation of the FAFSA has been extremely successful. We support efforts toward further simplification. However, these efforts should carefully test proposed changes, adopting only those that reach the proper balance between adequate information and simplicity. We should avoid the pre-1992 situation, with low-income students routinely charged high fees to complete complicated private forms in order to access state, college, and philanthropic aid. This added layer complexity and expense kept many students from receiving the state aid for which they were qualified.

The recent reauthorization of the HEA provides a creative balance in authorizing the Department of Education to explore many new and promising simplification approaches without jeopardizing the widespread acceptance of the free federal form. We encourage the Department to move aggressively, but wisely and carefully, in using these new tools to bring further improvements ot the system.