Congress this week approved some long-awaited simplifications to the Free Application for Financial Student Aid – widely known as FAFSA – making it easier for students and their families to qualify for grants and loans.
About 20 questions will be eliminated from the lengthy form because the IRS will now be allowed to share income information directly with the Department of Education. That means that students, or their parents, won’t need to reference previous tax returns in order to fill out aid applications.
“This one simple change will have a pretty huge impact for student borrowers,” said Kaitlyn Vitez, a director at the US Public Interest Research Group, a nonprofit that advocates for consumers.
Without filling out the form, students aren’t allowed to take out federal student loans or receive federal grants. But making a mistake on the FAFSA can cost students money.
The legislative change should leave less room for error, and will also make it easier for borrowers enrolled in an income-driven repayment plan after leaving school. The plans allow them to pay a smaller amount each month to pay off their debt, depending on how much they earn.
But currently, those borrowers are required to re-certify their income each year. If they make a mistake or run into problems with their paperwork, their monthly loan bill could be a lot bigger until things are worked out.
By allowing the IRS to share information with the Department of Education, borrowers will no longer have to submit income information annually. It will be updated automatically.
It’s unclear whether the changes will go into effect fast enough for to impact students applying for financial aid during the 2020-2021 school year, Vitez said.
The financial aid changes had bipartisan support and were included in legislation that provides permanent funding for historically black colleges and universities and other minority-serving institutions. It was passed by both the House and Senate on Tuesday. President Donald Trump is expected to sign the bill.
Congress may consider more changes to the financial aid form next year as lawmakers negotiate an overhaul to Higher Education Act. Senate Education Committee Chairman Lamar Alexander, a Republican from Tennessee, is pushing to make the form even shorter, cutting the number of questions down from 108 to between 18 and 30. It’s been a long-standing priority for the Senator, who will be retiring at the end of next year.