Simpler forms, more student loans?

The form used by millions of college students to apply for financial aid will soon be getting easier to complete. But the effect of this change on college attendance is a little harder to sort out.

Last month, the Department of Education unveiled a simplified version of the Free Application for Federal Student Aid, commonly known as the FAFSA. Scheduled to debut in time for the 2010-2011 school year, it features fewer questions than the current version, more straightforward questions and the option for applicants to automatically download IRS tax data to help fill out the form.

Along with President Obama's proposal of nearly $200 billion in new scholarships and tax credits for college tuition, the FAFSA redesign, the administration hopes, will help boost college enrollment among low- and middle-income students. And Secretary of Education Arne Duncan also wants Congress to simplify the form even further.

So will more students start applying for federal aid? Not necessarily.

Many colleges already require all incoming students to complete the FAFSA regardless of their financial standing, in order for those schools to determine their own allocations of financial aid. At colleges where the FAFSA is not required, most students solicit the government for money after they realize how much that first bursar bill will read.

But the DOE estimates there are currently 1.5 million enrolled students who are most likely eligible for grants but have failed to apply. And Mark Kantrowitz, creator of the valuable financial-aid information site FinAid, thinks that the recent changes are a step in the right direction. The balky FAFSA application form, he says, has created a chilling effect keeping kids out of college. With a more accessible form, he says, applications will go up, as will enrollment, retention, and completion of college by low-income students.

Recent indicators have shown that fewer and fewer low-income students are applying to college to begin with in this economy. Even with financial aid, many are still priced out of attending. However, for those whose ability to attend college relies on the likelihood of receiving federal aid, things are looking up.

But there is one caveat. The elimination of some questions may make it easier for students to receive “undeserved” financial aid. A simpler form with fewer questions to distinguish students may make the financially stable and the financially struggling appear similar in some circumstances, suggests Kantrowitz.

DOE Secretary Duncan stressed that the government isn’t looking at increased accessibility to financial aid as a cost, but rather as an investment in our children’s futures. The question is which children’s futures we are funding.

Kantrowitz said that the balance should be tipped further towards this generous end so that financial aid no longer acts as a barrier to college admissions. “It’s a worthwhile price to pay,” he said. “You have to accept some slop.”