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Report: Students stumble over tricky financial aid verification process

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A new report suggests that many California college students don't receive the federal financial aid they're eligible for in part because of the red tape they encounter after submitting their applications.

The survey of 13 California Community Colleges, published this week by the Institute for College Access and Success, found that students whose financial aid applications were selected by the college for "verification" – similar in some ways to an audit – were 7 percent less likely to receive grants than those who were not selected. And the colleges subjected more students to this verification process than they are required to under federal law, at a cost of millions of dollars.

The bottom line of the study is that the good intentions of colleges and the federal government – to protect the massive-Pell Grant spending against fraud or other misappropriation – are having unintended consequences on needy students, creating a barrier between them and federal funding for college study at a time when students need help more than ever.

Low-income students who don't get financial aid are less likely to complete their educational goals. They often work more hours, drop out because of cash-flow problems or encounter other financial hurdles.

If all the students selected for verification at the 13 colleges had gotten financial aid at the same rate as students who weren't audited, an additional 1,200 students would have received the funding, the study found. 

The findings are timely because the U.S. Department of Education just last month proposed changes to the rules that govern the verification process. 

Problems with the process aren't exclusive to California, either. The Flint Journal in Michigan reports that thousands of community college students there lost out on money for school because of paperwork problems with their financial aid forms.

Here's how the verification process works: After students submit the Free Application for Federal Student Aid (FAFSA), the U.S. Department of Education flags some of them for the colleges to verify – a process that requires students to re-submit and document some or all of the information that they put on their application. Nearly all the students who are flagged are low-income, the study found.

This is where the red tape comes in. Some students were told by the agency that their FAFSAs were missing key pieces of information, such as required signatures or Social Security numbers. Four of five students who got these notices submitted corrected information and advanced to the next step of the process, but one out of five never re-submitted.

One student who was flagged for verification told the study's authors, "I tried to apply but my parents don't have Social Security numbers, and I don't know what to do." An administrator who was interviewed for the report said some students who get this notice from the federal government don't understand that it can be resolved so they can get aid.

Under federal law, colleges must verify 30 percent of their aid applicants. They don't need to audit every applicant the U.S. Department of Education flags. But many colleges try to do just that.

At all but one of the colleges surveyed by the report, administrators tried to verify all of the students who were flagged by the agency, which totaled 54 percent of all low-income applicants. That's not a cheap endeavor. Based on the U.S. Department of Education inspector general's 2002 estimates of the per-student institutional costs of verification, the colleges studied by this report likely spent between $1.7 million and $2.5 million on FAFSA verification.

Making matters more complicated, more than half the colleges surveyed collect additional information from students as part of the financial aid-application process that are not required by federal government – including copies of driver's licenses, for example.

It's possible that students who are tapped for the audit process are less likely to receive aid because they are, in fact, ineligible. But if that were true, the report suggests more of the students who actually go through the verification process would be deemed ineligible for aid. As it stands, about 91 percent of students who went through the process got money in the end.

So, how can colleges and the federal government tame the verification-burden beast? The report's authors recommend a few tactics: Colleges should reconsider steps in their financial aid-application process that are not required by federal or state regulations, such as checking driver's licenses.

They also should not verify more students than they have to. For the same reasoning, the report's authors also oppose the U.S. Department of Education's recent proposal to get rid of the 30 percent cap on verifications.

"Unless the college has a specific reason to believe that students' applications contain errors, routinely verifying everyone who applies or is flagged may have more costs than benefits," the report says.


Filed under: Higher Ed, Daily Report


Comments are closed for this story.
KiloWhiskey's picture
Sounds to me like the issues are: When "audited" 7% fewer get money...sounds like a reflection on the info they submitted...perhaps don't lie would be appropriate? The 1 in 5 that did not respond - if you can't bother to respond to get financial aid (in some cases "free" money) then you shouldn't get it. Why should the state have to make it even easier for you? "Don't audit more than necessary"....try telling the IRS that. What a crock - this is taxpayer money and it should be well audited to make sure it's going for its intended purpose. Sounds to me like the author of the article would much prefer they just handed out cash to those who would stand in line for it (but please...not too long a line!)
John IN TEXAS's picture
no kidding!!!!!! you hit the nail right on the head!
ShellyLynn's picture
In response to Kilo's comments: Back when I got financial aid for college, I too was flagged. No, I did not lie on my application but they did not believe that I had no income from the previous year (due to a bout with cancer). I then had to chase after so much information (doctors' notes, several years' worth of W-2 forms, etc.), that it delayed the process by several weeks. That delay made it impossible for me to get the classes I needed because they were all full by the time I got the financial aid. Yes, they need to make sure there isn't fraud involved, but don't assume all of us who have needed financial aid are deadbeats.
John IN TEXAS's picture
I guess you have never been to the damn DMV! Goverment=delay! It is a fact of life! I don't assume everyone is a deadbeat, however if you are wanting aid from private people or the goverment for YOUR education then those offering this have EVERY RIGHT TO TAKE AS LONG AS THEY WANT to ensure fraud is not involved and the person is qualified. If you want "aid" then be greatful that you are being considered and stop moaning becuase they are slow to give it to you-it's not your money to start with! It's like a "gift"
ShellyLynn's picture
It IS my money, as I am a tax payer. Plus, the only aid I received was student loans. Nobody gave me a "gift." Why are you so angry, anyway? I wasn't complaining about my former situation, just pointing out that people commenting on articles should learn to give people the benefit of the doubt rather than espousing such hate and ignorance.
John IN TEXAS's picture
First, DON'T LIE!!! Second, don't expect help from anyone- this is not a "nanny state" you need to WORK FOR THAT WHICH YOU WANT! "Low-income students who don't get financial aid are less likely to complete their educational goals. They often work more hours' NO KIDDING-BUT IT IS CALLED "EFFORT" kids don;t wanna make this effort-they want a hand out in many cases it seems. I went to Modesto JC in the 80's- I worked on my families dairy, drove a truck, and was a reserve police officer for Manteca PD. I still carried a full load of classes to get my 2 year degree. It took me 3 years not two. I then had to go to school part time becuase I moved to Los Angeles and went to work of LAPD at 23. I was working full time and still taking classes to get my 4 year degree. Nobody gave me anything- no "aid", not "scholarships" NOTHING! I WORKED FOR IT! As far as I am concerned these kids can do as I did- you value it more when you work for it.I am now retired at under 50 and fiscally sound- high power 4 year degrees are over rated-WAY OVER RATED! While 4 year degrees are needed in some cases-many fields of employment don't require them. Our Armed service also has college programs if you enlist. Point being, nobody gives you anything, if you want something work for it and do not quit! Don't lie and don't expect help from the goverment (state of FED's). You have a right to a "basic" education after that- it is totally up to the kid or their family to pay for-not the public. I was by no means from a "well off family" but now, I am well off becuase I worked for it and worked hard! Kids need to stop whinning how unfair life is "
John IN TEXAS's picture
"Nearly all the students who are flagged are low-income, the study found." Well, how about this- kids who are wealthy don't need "aid" and usually low income kids DO NEED AID! Kids on "full ride scholarships" usually don't need aid-but low income and middle of the road kids need aid. WHY ARE WE SHOCKED AT THIS STATEMENT- MAKES PERFECT SENSE. WHY WOULD YOU FLAG A PERSON WHO ISN'T IN NEED OF THE AID??
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LMS's picture
"Based on the U.S. Department of Education inspector general's 2002 estimates of the per-student institutional costs of verification, the colleges studied by this report likely spent between $1.7 million and $2.5 million on FAFSA verification." That's $1.7 - $2.5 million in taxpayer dollars. So, for those arguing that we should guard our public monies with extreme hyper-vigilance, consider how much is being spent on catching the nominal share of "liars." $2 million to save a few thousand. Not the most fiscally wise, is it?
edfedder's picture
http://www.Edfed.org helped me stay informed and directed me to information for scholarships, grants, and private loans. Making school affordable. Making more time to concentrate on what matters. School.

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