The FAFSA and the Furious: Financial Aid Now and Beyond

Numbers stretching past $60,000 are becoming the new standard for annual tuition expenses at private, four-year liberal arts institutions, Connecticut College included. This sum makes paying for college difficult to impossible for thousands of Americans, given that the 2016 median household income in America was $57,617.

Business Insider reported in 2015 that in the 34 years between 1980 and 2014, the average price of college tuition increased by 260%. That number is still on the rise and showing no signs of plateauing.

A dark and frightening online search will reveal that the College Board has a “College Cost Calculator” available online. Using $68,000 dollars as the average cost of tuition at private liberal arts institutions and a 5% inflation rate, this calculator predicts that in five years, the expected cost for college will be $86,787 per year: $374,063 total for four years.

How about ten years from now? With the same average price and rate of inflation, college students in a decade may be faced with an annual bill for $110,765: $477,410 after four years.

Currently, most Americans are unable to pay the face-value cost of a college degree. Analyzing the numbers of the future certainly does not help to curb fears. This is where financial aid strategy becomes vital to the industry of higher education.

According to reminder emails in the inboxes of college students and parents across America, it is time to renew the FAFSA for the upcoming academic year. FAFSA stands for “Free Application for Federal Student Aid.” Completed annually by families of college students, these forms determine a student’s eligibility for federal funding. This funding may be supplied in the form of federal loans (subsidized and unsubsidized), work study, and federal grants, such as the Pell Grant.

In addition to the FAFSA, around 400 institutions in the United States also require the submission of the CSS Profile, a College Board-controlled process. The CSS Profile asks similar questions as FAFSA, but requires further depth and detail, creating a more comprehensive image of a family’s finances.

A conversation with Sean Martin, Conn’s Director of Financial Aid, clarified many questions surrounding the world of financial aid. An important theme which Martin reinforced is that Conn is unique because it promises to meet full demonstrated need of students. Not many other schools in the nation operate under this criteria. Martin acknowledged that the College always wants to be more generous, but the College does not have unlimited resources, especially compared to schools with much larger endowments.

Further emphasized was that the financial office is, unquestionably, a valuable resource for students and parents alike. The goal of the financial aid office is to improve families’ understanding of financial aid and make the process more transparent. After all, as Martin claimed, “financial aid is a study in choices.”

The difficult choice comes into the conversation when a family’s ability to pay is contrasted with their willingness to pay. Conn students and applicants complete the CSS profile in order for the College to obtain and evaluate information and generate numbers, notably the EFC (expected family contribution). In this technical regard, FAFSA and CSS, according to Martin, offer “fair and equitable” assessments, provided the information supplied is accurate. However, although a family, according to their federal aid award and expected family contribution, may possess the money equal to that needed for tuition, they are usually not able to fully commit these finances to education. Most families juggle a variety of expenses and financial tasks, including mortgages and retirement savings. Additionally, information provided on FAFSA and CSS documents that changes between years can negatively impact students’ awards. When families with more than one college-aged dependent sees a child graduate, the award granted for those who remain enrolled in an institution often decreases. But graduating from college is not an alleviation of financial burdens. If anything, it’s the opposite. Graduates and their families face piles of loans and debt. A student having graduated from a tuition-driven institution does not mean families are then able to afford a higher bill for their enrolled student(s), despite that FAFSA and CSS claim their ability as such.

Criticism of the financial aid assessment process continues in many directions. The way people obtain their income, for example, can impact how helpful of a gauge FAFSA and CSS forms can be. Wage-earners generally have predictable numbers, since their annual earnings do not experience much fluctuation. Self-employed people, on the other hand, can have good and bad years, sometimes exhibiting drastic financial differences. Many see this as a feature issue with the FAFSA process: information presented may not accurately paint a picture of a family’s ability to pay.

In 2015, the Obama administration made two notable changes to the FAFSA. The form is now open for completion earlier in the year, on Oct. 1, as opposed to Jan. 1. The second, and probably most important change, concerns which year’s worth of tax information parents and students supply. The FAFSA now demands the information from prior-prior year taxes. For example, students applying for financial aid in 2018 will not report 2017 taxes, but rather, 2016. As a result, institutions will receive 2015 tax information from two pools of applicants.

A recurring issue with FAFSA seems to be the general confusion with how to approach completing the paperwork. The Department of Education recognizes several common mistakes people make surrounding FAFSA and financial aid. These include not completing the form, neglecting to fill out the form as early as possible, and not using the IRS Data Retrieval Tool, an online database which allows people to access their tax return data, designed to consolidate data and eliminate confusion.

Beginning this year with the class of 2018, the state, of Louisiana, in accordance with Louisiana Bulletin 741, Section 901, is instituting a graduation requirement in public high schools mandating that students and their parents file the FAFSA or complete a waiver opting out of applying for federal financial aid. The state hopes this requirement will show families the value of filing the forms and that, by not filing, they sacrifice opportunities to obtain aid. As a new and untested strategy, it is unclear whether or not this will become precedent for other states. It is also questionable whether this will benefit the process overall, given that more people applying for aid means the amount of money available must be spread thinner.

This spring, the Atlantic reported that in the first week the FAFSA forms for the 2017-2018 academic year were made available, 196,736 were submitted. This number is up considerably from the previous academic year, where 135,387 applications were sent within the first week of availability. It is encouraged for families to complete FAFSA forms as quickly as possible in order to be considered for a larger portion of available money. Having an earlier accessibility date seems to be meeting the Obama administration’s intended goals, but also boasts the same concern as an increased pool of federal aid candidates.

Despite the frequent confusion and frustration surrounding FAFSA and financial aid awards, a single message remains clearly supported by colleges and the government: all students should be completing the FAFSA. With the application being free, students and parents do not stand to lose anything other than the few hours it requires to complete the forms. Even though there are issues with how aid is evaluated, any money awarded is better than no money awarded, and students know this.

Tuition and financial aid packages are increasingly important factors in students’ college decisions. In speaking with the Chronicle of Higher Education in 2014, Kevin Eagan, the Interim Director of the Higher Education Research Institute at UCLA, likened prospective students to “shoppers” who are looking for “the best deal.” As the supply and demand for financial aid remains unbalanced, families express dissatisfaction with the process, and students graduate with substantial loans and debt.

Since the education belongs to the student, students should be involved in the financial process. As Martin phrases, typically the financial aid process sees “parents doing the legwork.” And this is completely understandable, as students, in their late teens and early twenties, often do not have a substantial understanding of personal and family finance. But if students make conscious efforts to involve themselves in the process, they may strengthen their understanding of the monetary aftermath of their undergraduate education.

As it stands, Conn remains committed to meeting full demonstrated need of its students, which is good news for current and prospective attendees. However, close attention must be kept to tuition trends. As these prices rise, the sustainability of meeting full demonstrated need is called into question. To what extent can this method be supported? If patterns continue, and they are expected to, future students and parents will be seeing even higher tuition bills.