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Author(s):Susan Dynarski and Mark Wiederspan
Title:Student Aid Simplification: Looking Back and Looking Ahead
Date:Fed 2012
Organization:National Bureau of Economic Research
Short Description:Each year, fourteen million households seeking federal aid for college complete a detailed questionnaire about their finances, the Free Application for Federal Student Aid (FAFSA). At 116 questions, the FAFSA is almost as long as IRS Form 1040 and substantially longer than Forms 1040EZ and 1040A. Aid for college is intended to increase college attendance by reducing its price and loosening liquidity constraints. Economic theory, empirical evidence and common sense suggest that complexity in aid could undermine its ability to affect schooling decisions. In 2006, Dynarski and Scott-Clayton published an analysis of complexity in the aid system that generated considerable discussion in academic and policy circles. Over the next few years, complexity in the aid system drew the attention of the media, advocacy groups, presidential candidates, the National Economic Council and the Council of Economic Advisers. A flurry of legislative and agency activity followed. In this article, we provide a five-year retrospective
Annotation:While there has been desultory progress in simplifying the aid system, the generosity and size of the Pell program have grown by leaps and bounds. Pell spending grew by $15 billion between 2007–08 and 2009–10 and was estimated to grow by another $5 billion by the end of 2010–11 (College Board, 2011). Drastic change has occurred in the generosity of the Pell program, which throws into even sharper relief the halting progress in reducing the program's complexity. A fraction of the dollars spent increasing the Pell maximum could be used to drastically simplify the aid process, thereby making the dollars that are already being spent more effective in increasing college attendance. We spend tens of billions of dollars on federal student aid, and the bill is rising rapidly. Simplifying student aid is a “last-mile” reform that costs little but requires sustained political and administrative attention.

Associated Keywords: Affordability, Tuition and College Costs; FAFSA ; FAFSA Simplification; National Perspectives; Simplification