Financial Aid Reform: Beyond Prior-Prior

In fall 2016, we will see one of the most radical changes made to the financial aid process in 50 years: the move from prior year’s income to using two year’s prior income. This change will impact millions of students, but does it go far enough?  Brent Benner, Director of Enrollment Management at The University of Tampa, will highlight the problems with the current financial aid process,and provide information about a bold, comprehensive financial aid reform proposal sweeping the country, going beyond prior-prior.


Financial Aid Reform: Beyond prior-prior from GuidedPath

View the webinar recording here:

Financial Reform: Beyond Prior-Prior- FAQ's
1. With only one FAFSA filing, how would you notify the Dept. of Ed. that you now have another student in college?
You would need to complete a FAFSA for each student, and thus each student enrolled would need a completed FAFSA.
2. The future trend is for people to work on contract job or starting own businesses. This will cause increased variability of income year to year. Wouldn't that make it more important to have FAFSA data every year?
US Dept. of Commerce indicates that historically (past 20 years) incomes are flat and do not vary. In actuality, income is NOT variable from year to year, thus the logic of one-time FAFSA filing.
3. What good is a cultural expectation for saving a certain % of income for college if parents’ incomes don’t allow any savings for any purpose?
Many people in our society DO have the means for saving, but most choose not to. This cultural expectation is important and certainly worthy of more salience than it currently has. Saving for a college education certainly affects many and is a major issue in our society.
4. I think what we always overlook as a society, is that those companies that have low interest rates, also have tangible assets to recover, if payment isn't made. Student loan debt is "unsecured" debt. Nothing to go after. Thus, the higher risk and the higher interest rates.
Actually, recent studies indicate that 75% of the increase in default rates during the past decade can be explained by the surge of borrowers at for-profit institutions. Default rates are comparatively low at non-profit colleges. It’s also interesting to note that default rates are higher amongst borrowers with small loans versus those with large ones.
5. Has there been any research into how a lower interest rate might reduce loan defaults?
Not to my knowledge.
6. With the "first wave" date, would families supply estimated numbers since they haven't received W2 etc. that comes end of Jan.?
Because of Prior-prior, they will be able to have their EFC by then.
7. I'm sad to see on UT's financial aid award, that you don't list books, travel and personal, misc. which very often is close to $4,000. I'm in Seattle, so transportation is a big issue.
Don’t be sad – we DO list total costs in addition to direct costs. You were only able to see part of our financial aid package on that PowerPoint slide. The view didn’t allow the complete page on the slide, which would have shown you more information and numbers.
8. In the interest of full disclosure, why aren't you telling the student and families about their indirect costs? books, supplies, travel, personal costs.
See previous answer – the complete financial aid package was not visible on the slide and indirect costs were delineated on the package.
9. With your idea of having a onetime FAFSA are you pushing colleges to also package for 4 years so parents can understand the 4 year cost? I think that’s the biggest need.
There is already some rumbling about providing 4-year packages to prospective students, and I think the number of colleges providing this will increase slowly, but surely.
10. It appears that your 1st Wave application deadline of Oct 15 reflects start of high school year in early to mid-August whereas regionally in the Northeast, high schools tend to begin just before or after Labor Day/September. Your proposal feels like the date is picked more from university processing perspective as opposed to what works best for student in terms of advising, time for fall visits, and above all -ability of student to focus on first quarter grades. Why wouldn’t a first wave deadline of Dec 1st (or Nov 15) be doable so long as family has submitted FAFSA/Profile forms no later than date of application deadline?
To keep with the goal of providing students and parents a true net cost comparison, I would stick with the October 15th deadline. Perhaps schools will have to provide more preparation during the Spring semester of the student’s junior year, which I surmise will happen. Maybe the school board will have to move up the school start date to accommodate.
11. Why is it that the federal and institutional methodologies for determining EFC are so out of touch with reality? Even for wealthier/upper middle class families, how would any methodology figure that a family has an extra $120K of pocket change available per year for college when you have multiple kids in college? And why don't they take Cost of Living in various parts of the country into account?
Good question – the methodology is rooted in the mid-20th Century, and we need to get the methodology in sync with 21st Century reality.
12. What is the maximum size of the tuition tax credit?
Up to $2500 of the cost of tuition, fees, and course materials paid during the taxable year.
13. With nearly 40% of dependent students having parents who are divorced, what can we do to make a NPC that works for this population for colleges that currently consider non-custodial parent/step-parent income?
An NPC will work based upon the student’s EFC. The parents’ divorce will not affect the accuracy per se.
14. I'm also disappointed that the Federal Template is used by many colleges. Are you proposing that the federal gov't pay for the cost of one of the vendors to use nationally?
Absolutely not. The university should pay, like most of them do.
15. Maybe instead of an appeal process every time the financial situation changes, we could just call for an option to fill out a new FAFSA if there's a major change, including an additional student going off to college. Maybe with a caveat that the award doesn't change unless the EFC changes a certain amount (at least $3000???)
The latter is highly variable amongst universities that use need based aid, so each “trigger point” at which an EFC increase will lead to a financial aid change is different depending upon each institution.
16. If income fluctuates drastically, most parents don't know they can appeal if we use only one base year for aid. This might mean again that the more affluent families, that understand they can appeal, will be at an advantage. How can a non-english speaking parent understand the appeal process?
What you are describing already happens to some extent. A non-English speaking parent needs to do what English speaking ones do, be vigilant and communicate openly and regularly with the student, as ultimately financial aid is the student’s responsibility to manage.
17. Will the CSS Profile be using prior-prior year number, as well?
Yes, I believe so.
18. Under Prior Prior, will families still need to amend their EFC once their taxes are completed for the prior year?
Since the FAFSA will not be ready until October 1st, most families will already have competed their taxes 5 months previously, so this will not typically be an issue.
19. What is your view about which FAFSA will be used for the independent scholarships that are offered by independent organizations? Are you consulting their requirements?
By their nature, independent organizations that offer scholarships can award them however they like, but I imagine that most will follow the Prior-prior protocol.
20. I've never understood why a private school would go to the trouble of packaging a student before admitting him. Getting an EFC is very different from getting a package from a private school with merit aid.
I have heard of estimated packaging prior to admitting a student, but perhaps I’m not aware of schools who package before admitting.

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