Las Vegas — What would happen if financial-aid eligibility were based on two-year-old tax data rather than the year-old data used now?
It seems like a dry, technical question. But advocates of the practice think using older data would let students apply for and receive notice of their aid much earlier, setting the stage for a more student-friendly aid system. And new research released by the National Association of Student Financial Aid Administrators at its annual meeting here on Monday suggests that the practice could be put into effect without much change in which students qualified for Pell Grants.
Prospective students are currently encouraged to file the Free Application for Federal Student Aid as quickly as possible after it becomes available, on January 1. But even if they do, they won’t find out until March or April what they will have to pay at each college that has admitted them. By then, the deadline for choosing a college is right around the corner.
That compressed timeline has long struck many who work with students as problematic. Applying for aid with older tax data, the thinking goes, would give students more time to make an informed decision. It could also make the filing process simpler, by allowing students to depend more heavily on the Internal Revenue Service’s data-retrieval tool.
The association, known as Nasfaa, wanted to build on previous research that looked into how much accuracy would be lost if two-year-old data were used. For its study, supported by a grant from the Bill & Melinda Gates Foundation, the association hired Robert J. Kelchen, now an assistant professor at Seton Hall University, to examine records for 70,000 students enrolled at eight colleges from 2007-8 to 2011-12 to see how older tax data would change their Pell Grant eligibility.
In short, switching years didn’t make a big difference, Mr. Kelchen found. Most students in the sample either qualified for Pell Grants under both calculations or under neither. Students whose eligibility did change tended to be on the edge of qualifying for a Pell Grant and to be independent students without their own dependents. The association expects to release a full report of its findings next month.
Nasfaa wanted to get feedback from its members before making policy recommendations based on its findings, said Gigi G. Jones, director of research. Presenters of the findings did get quite a bit of feedback during their session, but that was not a big surprise: Using “prior-prior year” data has been discussed and debated for years.
William Cheetham, for one, is sold on the idea. The neediest students stand to benefit the most from using older data, said Mr. Cheetham, director of financial aid at Le Moyne College, a New York institution that participated in the study. “I volunteer now to work on the task force to implement this,” he said during the session.
Many in the room agreed with Mr. Cheetham. But not everyone. “For a cohort of schools, this could cause a tremendous disconnect for families,” said David R. Gelinas, director of financial aid at Davidson College, in North Carolina. That’s because some private colleges, Mr. Gelinas said, would still ask for more-recent data to determine their level of institutional aid.
Like so many things in the financial-aid world, the question of prior-prior year boils down to the tension between simplicity and accuracy.
But it’s not as if the current system is 100-percent accurate, pointed out Deborah F. Cochrane, research director at the Institute for College Access and Success. Already, the system assumes last year’s numbers predict this year’s.
That’s something staff members at the Education Department looked at back in the 1990s, said Daniel T. Madzelan, who worked there for three decades before retiring last year. They found that last year’s income predicted 86 percent of the variation in current income, he said. Two-year-old income accounted for 82 percent of the variation. The question, Mr. Madzelan said, is whether those four percentage points outweigh getting early information to students.
Still, questions remain. Some aid administrators worry that using older data would require their offices to do more case-by-case adjustments of students’ aid. States, too, might be affected because many use the federal application to award their own aid—a topic the College Board has studied.
Some audience members here also wondered how changing the financial-aid timeline would affect the admissions process, and suggested that Nasfaa raise the issue with the National Association for College Admission Counseling.
Some aid administrators think it’s worth wrestling with all of those questions to push for a big change. At the end of the session, one attendee asked everyone to hold up their smartphones. The technology exists, he said, to make the famously overwhelming federal aid form into something students could fill out in five minutes using one of those devices.