Filling out financial-aid forms is a notoriously complex part of applying to college. But this year, researchers are using tax season to try to make that task less taxing.
More than 1,700 potential college students and parents who earn less than $45,000 annually and have their taxes done at select H&R Block offices will get free help completing the FAFSA, or Free Application for Federal Student Aid. Later, their levels of college attendance and aid awards will be compared with a group that received only a financial-ad pamphlet. The study aims to inform and improve the national debate on access to higher education.
The difficulty of completing financial-aid applications is one of many barriers standing between low-income Americans and college degrees. An estimated 1.5 million students who might have qualified for federal Pell Grants for college (up to $4,050 a year) did not fill out a FAFSA in 2003-04, according to a report last year by the American Council on Education. Researchers hope that if families can get assistance from someone they trust with financial matters, many more will find that college is within their reach.
"Because we have all their tax information [at H&R Block] ... and we ask them additional questions, we can give them a very accurate prediction of what their family is expected to contribute [to college costs and] the federal financial aid they might receive," says Bridget Terry Long, an associate professor of education and economics at Harvard University. She's also one of the creators of the study. Families also receive information about the costs of various colleges, particularly those in Ohio, where the pilot study is taking place.
Tax preparers from 26 H&R Block sites in Cleveland received training to participate. Thanks to software developed by the research team, they've been spending just eight or nine minutes extra with randomly selected clients who qualify for FAFSA assistance. The clients can later contact a call center for help filling out the remainder of the application; they can then choose to have it filed for them or to hold onto the application until they decide they want to apply for aid.
"I was amazed at the enthusiasm – the tax professionals understood the importance of it ... and they were eager to get their clients involved," says Eric Bettinger, an economics professor at Case Western Reserve University in Cleveland, who visited several sites in late February. He's coordinating with the Ohio Board of Regents to track the state policy implications of the research. One group being looked at is parents with young teens, who may be more likely to plan for college if they get an early glimpse of how affordable it could be.
The study is one of several sponsored in recent years by H&R Block, headquartered in Kansas City, Mo. "[We] knew that there were certain things we could do for a segment of our client base that was beyond pure tax preparation," says Jeremy White, vice president for business development and outreach. In California, for instance, tax preparers offer to enroll clients for food stamps when they qualify.
The goal is to help clients, Mr. White says, but he acknowledges that because research on college aid can eventually increase the number of people who attend college and boost their earnings, "it has clear downstream benefits as well."
All potential college students, not just low-income ones, could benefit from a system that would streamline the use of tax data in the FAFSA, says Lauren Asher, associate director of The Institute for College Access and Success (TICAS), a nonpartisan policy group in Washington, D.C. It would make the process not only easier but also more accurate, she says, because some of the most common mistakes people make on the form involve questions related to income and taxes.
TICAS is proposing that people be allowed to fill out a simple consent form that would allow up to four years of tax information to be shared between the IRS and the US Department of Education. This automated sharing can already be done when people apply for mortgages, for instance. Professor Long of Harvard says that about 65 to 70 percent of the FAFSA can be filled out based on tax information.
There's a growing call to revamp and simplify the entire federal financial-aid system, partly fueled by the Commission on the Future of Higher Education, whose recommendations will be the subject of a summit March 22 in Washington. While those debates are important, Ms. Asher says, "They tend to stall because there are different stakeholders who are invested in different components of the formula."
The TICAS proposal could be implemented quickly, she says, and it would still be relevant with any future simplified formula. Automating the use of tax data "is a very practical way to help students and families apply for the aid they need," she says.