Urban Wire How to simplify the complicated process of applying for federal student aid
Sandy Baum, Judith Scott-Clayton
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The Pell Grant program is the nation’s largest need-based college scholarship program, providing nearly $35 billion a year to over 9 million students, including about 4 million recent high school graduates . Although the program has been around for over 40 years, too many prospective students and their parents don’t have any idea how to get federal financial aid—if they know it exists at all. If students ask around, they will find out that if they and their parents fill out a complicated form with many questions about personal finances, they might get some money from the federal government.

Research has documented the consequences of this incomplete information and complexity: too many children in low-income families grow up believing that they will not be able to afford to go to college. If a student believes college is unaffordable, he or she may see little point in taking all of the steps that are necessary throughout high school to prepare.

For students who “know” they can’t afford college, what’s the point of taking a college-prep curriculum? What’s the point of signing up for the ACT or SAT? What’s the point of exploring the variety of postsecondary institutions and programs nearby?

Getting a job and helping to support the family—rather than pursuing seemingly unrealistic ambitions—may seem like the more responsible option. By the time such students do learn about Pell, it may be too late.

We could end this tragic waste of human potential by proactively reaching out to students about their Pell Grant eligibility before it is time for them to apply to college—without requiring them to take the first step.

President Obama has already proposed simplifying the aid application process. And Senators Lamar Alexander and Michael Bennet have introduced legislation that would reduce the application to as few as two questions. But once we’ve gone that far, we could eliminate the application process altogether, at least for those who go to college shortly after high school.

Basing recent high school graduates’ Pell Grant eligibility on just their parents’ income and family size—which, for most families, is information the IRS already has—would yield about the same awards for most students as the current complicated formula. (Even those who are not required to file taxes because of their low incomes usually do, in order to claim the Earned Income Tax Credit.) Basing the grant amount on an earlier year of income would not make much difference either.

If eligibility were determined using information the IRS already has, we could automatically tell high school students about the Pell Grants for which they will be eligible if they go to college. If students and parents got a letter with this information, the decision not to go to college would mean leaving money on the table, giving up the funds they have been promised.

As our Hamilton Project proposal for reforming the Pell Grant system recommends, students would simply activate their promised funding by applying to and enrolling in college. If they did not go to college within a few years after high school, they would lose the money—although they could (and should be encouraged to) apply for Pell funding to go back to school later in life.

Automatic Pell eligibility would remove a significant barrier to college enrollment for students from low- and moderate-income families. It would eliminate considerable bureaucratic costs at the Department of Education. Above all, it would move our nation closer to our goal of equality of opportunity.

Research Areas Education Children and youth Economic mobility and inequality
Tags Higher education Economic well-being Public and private investment Beyond high school: education and training
Policy Centers Income and Benefits Policy Center Center on Education Data and Policy