National Association of Student Financial Aid AdministratorsFederal Student Loans| Graduate...

National Association of Student Financial Aid Administrators

State of Student Aid2018

July 24, 2018

at22,000+Financial Assistance

Professionals

3,000Colleges, universities,

and career schools

Who We AreNASFAA member institutions serve 9 out of every 10 undergraduates in the U.S.

Our VisionShaping the future by promoting student

access and success in higher education

Our MissionNASFAA provides professional development and services for financial aid administrators; advocates for public policies that increase student access and success; serves as a forum on student financial aid issues, and is committed to diversity throughout all activities.

About NASFAA

Agenda

• New to the Profile

• Overview of Federal Student Aid Programs

• Need Analysis

• Pell Grant, Campus-Based Aid, Direct Loans

• Legislation, Budget, Appropriations

• Lifecycle of a Student: A Financial Aid Administrator’s Perspective

• Hot Topic in Student Aid: FAFSA Simplification & Verification

• Questions & Discussion

• Repayment, loan status, and delinquency data

• Public Service Loan Forgiveness data

• NPSAS data disaggregated by:• Gender

• Race/ethnicity

• Age

• Income

• Parent education level

• Undergraduate/graduate status

*NEW* to the Profile

Need Analysis

Concepts & Definitions

Cost of Attendance (COA)Estimate of the total annual cost (including direct and indirect expenses) of attending a particular institution.

Free Application for Federal Student Aid (FAFSA)Collects demographic, income, and asset information to determine eligibility for all Title IV programs.

Expected Family Contribution (EFC)Measure of a family’s financial strength calculated based on FAFSA responses; used by schools as one factor to determine federal and institutional aid awards.

See page

24

10

15

20

25

06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16

FAFSA Filings (in millions), 2006-07 to 2015-16

14.0M

21.9M

19.8M

Source: U.S. Department of Education, FAFSA Volume Reports, 2006-2016.

Overview: Federal Student Aid Programs

Federal Pell Grant Program 7.8MTotal Recipients, 2015-16

$26.6BTotal Federal Volume, 2016-17

$6,095Maximum Award, 2018-19

$3,760Average Award, 2015-16

70%Recipients with family incomes <$30,000, 2015-16

Distribution of Pell Grant Recipients by Type of Institution, Award Year 2015-16

Source: U.S. Department of Education, Federal Pell Grant Program End-of-year Report, 2015-2016.See page

4

Provides grants to low-income undergraduates with the greatest demonstrated financial need_________

32%

36%

15%

17%

Public 2-year

Public 4-year

Private nonprofit

Proprietary

Pell Grant Funding

$12,817

$35,677

$26,562

$15,157

$39,381

$26,562

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

Current

Inflation-adjusted

Federal Pell Grant Program Volume in Current and Inflation-Adjusted Dollars (in millions), 2006-07 to 2016-17

Source: The College Board, Trends in Student Aid, 2017.

See page

5

» Includes both discretionary (annual appropriations) and mandatory (set in law) funding

» Functions as an entitlement

» Funding levels subject to fluctuations in the economy and other unpredictable factors

Campus-Based Aid

Federal Supplemental Educational Opportunity Grant (FSEOG)

Federal Work-Study (FWS)

Federal Perkins Loan

FSEOG Program1.5MTotal Recipients, 2015-16

$1BTotal Federal Volume, 2016-17

$100 - $4,000Award Range, 2018-19

$649Average Award, 2015-16


25%Minimum Institutional Funding Share

Distribution of FSEOG Recipients by Type of Institution, Award Year 2015-16

Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.

26%

31%

1%

22%

9%

11%

Public 2-year

Public 4-year

Private non profit 2-year


Proprietary 2-year

Proprietary 4-year

See page

6

Provides grants to undergraduates with the greatest demonstrated financial need (requires institutional match)_________

FWS Program 634,000Total Recipients, 2015-16

$1.1BTotal Federal Volume, 2016-17



25%Minimum Non-federal Funding Share *Some exceptions apply

11%

35%51%

1% 2%

Public 2-year

Public 4-year

Private nonprofit 2-year

Private nonprofit 4-year

Proprietary 2-year

Proprietary 4-year

Distribution of FWS Recipients by Type of Institution, Award Year 2015-16

Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.See page

8

Provides part-time jobs to financially needy undergraduate and graduate/professional students (requires non-federal match) _________

Federal Perkins Loan Program422,000Total Recipients, 2015-16


73%of independent recipients withincomes <$20,000, 2015-16

33%Minimum Institutional Funding Share

Sept. 2017Statutory authority to make Perkins Loans expired

Distribution of Perkins Loan Recipients by Type of Institution, Award Year 2015-16

Source: U.S. Department of Education, Federal Campus-Based Programs Data Book, 2017.

51%47%

2%

Public 2-year

Public 4-year



Proprietary 2-year

Proprietary 4-year

See page

13

Provided low-interest loans to financially needy undergraduate and graduate/professional students (required institutional match) _________

Campus-Based Aid | UndergraduatePercentage Distribution of Undergraduate Federal Campus-Based Aid Recipients by Race/Ethnicity, Gender, and Aid Type, 2015-16

Source: U.S. Department of Education, National Center for Education Statistics, 2015-2016 National Postsecondary Student Aid Study (NPSAS:16).

*New NPSAS Data*

See page

32

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Federal campus-based aid FSEOG Federal work-study Perkins loan

Asian female

Asian male

Black or African American female

Black or African American male

Hispanic or Latino female

Hispanic or Latino male

White female

White male

Other/More than one female

Other/More than one male

Campus-Based Aid | UndergraduatePercentage Distribution of Undergraduate Federal Campus-Based Aid Recipients by Attendance Intensity and Aid Type, 2015-16

Source: U.S. Department of Education, NPSAS:16

*New NPSAS Data*

See page

30

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Federal campus-based aid FSEOG Federal work-study Perkins loan

Mixed full-time and part-time

Exclusively part-time

Exclusively full-time

Campus-Based Aid | GraduatePercentage Distribution of Total Graduate Federal Campus-Based Aid Recipients by Student Characteristics, 2015-16


*New NPSAS Data*

See page

39

0% 10% 20% 30% 40% 50% 60% 70% 80%

Male

Female

Other/more than one

White

Hispanic or Latino

Black or African American

Asian

30 or above

24-29

15-23

$100,000 or more

$80,000-99,999

$60,000-79,000

$40,000-59,999

$20,000-39,999

Less than $20,000

Gen

der

Rac

e/et

hn

icit

yA

ge g

rou

ps

Ad

just

ed G

ross

Inco

me

(AG

I)Adjusted Gross

Income

Age

Race/Ethnicity

Gender

Federal Loan Programs

Federal Family Education Loan Program (FFELP): Utilized private and nonprofit funding alongside federal guarantees and support – ceased operations in 2010

William D. Ford Direct Student Loan Program:» Direct Subsidized Loans

• Undergraduate students only

• Must demonstrate financial need

• Gov. pays interest while student is in school, 6-month grace period, and deferment

» Direct Unsubsidized Loans • Undergraduate and graduate/professional students

• No income/need requirement

• Recipients charged interest at all times

» PLUS Loans• Parents of dependent undergraduates

• Graduate/professional students

• No income/need requirement (must pass credit-check)

See page

15

Federal Direct Loan Programs

Subsidized Loans Unsubsidized Loans PLUS Loans

Total Borrowers2016-17

5.8M 7.1M855,000 parent

403,341 graduate

Total Loan Volume2016-17

$22B $49B $22B

Average Loan2016-17

$3,743 undergrad$4,023 undergrad

$18,132 graduate

$14,665 parent

$23,228 graduate

See page

3

Origination Fees

» Direct Loan borrowers must pay an origination fee on every new loan disbursed:

• 1 percent (+ annual increase) for subsidized and unsubsidized loans

• 4 percent (+ annual increase) for PLUS loans

Origination fees on loans first disbursed on or after

Oct. 1, 2017, to Sept. 30, 2018 Oct. 1, 2018, to Sept. 30, 2019

Subsidized and Unsubsidized Direct Loans 1.066% 1.062%

PLUS Loans 4.264% 4.248%

See page

15

Interest Rates

See page

16

Subsidized/Unsubsidized

Undergraduate

Unsubsidized

Graduate

PLUS Loans

Parent/Graduate

2016-2017 3.76% 5.31% 6.31%

2017-2018 4.45% 6.00% 7.00%

2018-2019 5.05% 6.60% 7.60%

Loan Limits» Annual loan limits vary by dependency status and academic grade level

» Aggregate loan limits:

Dependent Students Independent Students(and students whose parents cannot obtain a PLUS loan)

Undergraduate Students $31,000No more than $23,000 can be subsidized.

$57,500No more than $23,000 can be subsidized.

Graduate Students N/A$138,500

No more than $65,500 can be subsidized. Undergraduate

borrowing counts toward graduate aggregate limit.

See page

17

Federal Student Loan Volume (Inflation-Adjusted Dollars, in millions), 2006-07 to 2016-17

$29,580 $29,201

$21,715

$28,793

$59,341

$49,852

$12,087

$18,303$22,240

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Stafford Subsidized

Stafford Unsubsidized

PLUS

Source: The College Board, Trends in Student Aid, 2017.

See page

19

Federal Student Loans| Undergraduate

47%

8%

13%

8%

6%

8%

4%2% 2%

None

$1-4,999

$5,000-9,999

$10,000-14,999

$15,000-19,999

$20,000-29,999

$30,000-39,999

$40,000-49,999

$50,000 or more

Cumulative Federal Loan Amounts for Undergraduates, 2015-16


*New NPSAS Data*

See page

44

Federal Student Loans| UndergraduatePercentage Distribution of Undergraduate Federal Loan Recipients by Race/Ethnicity, Gender, and Loan Type, 2015-16


*New NPSAS Data*

See page

37

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Subsidized Unsubsidized Subsidized andUnsubsidized

Parent PLUS Total federal loans(incl Parent PLUS)

Total federal loans(excl Parent PLUS)

Asian female

Asian male

Black or African American female

Black or African American male

Hispanic or Latino female

Hispanic or Latino male

White female

White male

Other/More than one female

Other/More than one male

Federal Student Loans| GraduateCumulative Federal Loan Amounts for Graduate Students’ Undergraduate and Graduate Education, 2015-16


34%

6%

8%15%

12%

9%

5%

11%

None

$1-9,999

$10,000-19,999

$20,000-39,999

$40,000-59,999

$60,000-79,999

$80,000-99,999

$100,000 or more

*New NPSAS Data*

See page

45

Federal Student Loans| GraduatePercentage Distribution of Total Graduate Federal Loan Recipients, by Student Characteristics, 2015-16


0% 10% 20% 30% 40% 50% 60% 70% 80%

Male

Female

Other/more than one

White

Hispanic or Latino

Black or African American

Asian

30 or above

24-29

15-23

$100,000 or more

$80,000-99,999

$60,000-79,000

$40,000-59,999

$20,000-39,999

Less than $20,000

Gen

der

Rac

e/et

hn

icit

yA

ge g

rou

ps

Ad

just

ed G

ross

Inco

me

(AG

I)Adjusted Gross Income

Age

Race/Ethnicity

Gender

*New NPSAS Data*

See page

41

Loan Repayment

$0 $50 $100 $150 $200 $250

Fixed Payments: 10 Yrs or Less

Fixed payments: More Than 10 Yrs

Graduated Payments: 10 Yrs or Less

Graduated Payments: More Than 10 Yrs

Income-Sensitive

Income-Contingent

Income-Based

Pay As You Earn

REPAYE

Alternative

Other

Direct Loan Portfolio ED-Held FFEL Portfolio

Dollars Outstanding (in billions) by Repayment Plan, as of September 30, 2017

Source: National Student Loan Data System (NSLDS), available from FSA Data Center

See page

20

Loan Status

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Direct Loan Portfolio ED-Held FFEL Portfolio

Repayment - Current

In-School

Deferment

Forbearance

Cumulative in Default

Repayment - Delinquent

Grace

Other

Dollars Outstanding (in billions), by Loan Status, as of September 30, 2017


See page

21

Delinquency

Distribution of Direct Loan Dollars Outstanding (in billions) for Borrowers in Repayment Status, by Delinquency Status, as of September 30, 2017


85%

13%

2%

Current Repayment

31-270 Days Delinquent

In default

• A loan becomes delinquent the first day after a borrower misses a payment

• At 90 days delinquent, loan servicers report borrowers to national credit bureaus

See page

22

Public Service Loan Forgiveness (PSLF)

• Established under the College Cost Reduction and Access Act of 2007

• After making 120 qualifying loan payments, eligible borrowers’ remaining balances are forgiven

• Must submit an “Employment Certification Form” (ECF) confirming public service requirement to receive forgiveness

• Fewer than 1,000 borrowers are expected to receive loan forgiveness in 2018

25,683

222,387

378,839

611,598

802,040

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2012 2013 2014 2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

Cumulative Borrowers with One or More Approved ECFs, 2012-17

Source: FedLoan Servicing, available from FSA Data CenterSee page

23

Legislation, Budget & Appropriations

Student Aid Legislation Introduced by Topic, 2017

30%

15%

14%

11%

8%

6%

5%

5%

5%2%

Loans & Repayment

Quality & Accountability

Consumer Information & Transparency

Pell Grants

Tax Issues

Military & Veterans Aid

Student Aid Funding

FAFSA Simplification

Immigration

Campus-Based Programs

Source: NASFAA Legislative TrackerSee page

25

FY 2018 Budget & Appropriations

• Increases:

• Pell Grant

• FSEOG

• FWS

• Children of Fallen Heroes Scholarship

• Public Service Loan Forgiveness funds

Program Change FY17 - FY18

Pell Grant (discretionary) $0

Pell Grant

maximum award+$175

FSEOG +$107 million

FWS +$140 million

See page

26

FAFSA Simplification & Verification

The Challenge of Verification

• The Department of Education (ED) requires schools to verify information submitted on the FAFSA.

• The concept of verification is important.

• Selection for verification is based on internal ED calculations, though Pell Grant recipients are most likely to be selected.

• Verification is inherently confusing, and for those students selected, the process may result in postponing college-going temporarily or permanently.

Source: “On the Sidelines of Simplification” – TICAS – 2016


JUST ONE IN TEN FINANCIAL AID

ADMINISTRATORS SURVEYED SAID THAT

VERIFICATION OFTEN RESULTS IN A

SIGNIFICANT CHANGE TO A STUDENT’S AID

PACKAGE

FAFSA Simplification

As Congress and the higher education community work toward the reauthorization of the Higher Education Act (HEA), broad themes have emerged, including the concept of simplification, with a particular focus on the federal student aid application process. The National Association of Student Financial Aid Administrators (NASFAA) has long been interested in ways to make the Free Application for Federal Student Aid (FAFSA) and the overall application process more efficient and streamlined for students and families.

Early FAFSA and Prior-Prior Year (PPY)In September 2015, President Obama and then-Secretary of Education Duncan announced their intention to use their existing authority in HEA [Sec. 473(a)(1)(C)] to adjust the year of income tax data used to determine federal aid eligibility, a move supported by NASFAA and other higher education advocates. Before, the Federal Methodology (FM) calculated a student’s financial need using prior year income data. Beginning on October 1, 2016, FM will use income data from the prior-prior year (“PPY”) and the FAFSA release date will move up from January 1 to October 1 (“Early FAFSA”).

With Early FAFSA and a switch to PPY, students and families can:

• File the FAFSA earlier than they do now. Historically, the FAFSA has been made available January 1 of each year, yet it is uncommon for a family or individual to be prepared to file an income tax return in January. Because the FAFSA will now be made available on October 1 using income data from two years prior, students can use already-completed income tax returns.

• More easily submit a FAFSA. The IRS Data Retrieval Tool (DRT), which allows automatic population of a student’s FAFSA with tax return data and decreases the need for additional documentation, can now be used by millions more students and families under PPY.

• Receive notification of financial aid packages earlier. If students apply for aid earlier, colleges can provide aid notifications to students earlier, ensuring that students and families have more time to prepare for college costs. Early notification also means more time for financial aid offices to counsel students and families.

NASFAA Work on FAFSA SimplificationNASFAA has been pleased with FAFSA improvements over the past few years, including “smarter” skip-logic and the implementation of the IRS Data Retrieval Tool (DRT). In July 2013, NASFAA released initial recommendations for HEA reauthorization with several recommendations focusing on simplifying the FAFSA. Recent proposals within the context of reauthorization led NASFAA to revisit simplification with an eye toward making the application process more targeted and efficient through the expansion of existing technology.

In July 2015, NASFAA released a FAFSA Simplification report, a result of NASFAA’s FAFSA Working Group, which was composed of practicing aid administrators. The working group developed a model—predicated on enacting PPY—that would simplify the aid application process while still ensuring program integrity and accurate targeting of federal funds. With PPY now in place, NASFAA’s FAFSA simplification proposal represents a logical next step.

NASFAA Proposal: A Three-Level Application ProcessNASFAA recommends instituting a three-level application process where, after answering demographic and dependency status questions, applicants would be steered down one of three paths based on their responses to screening questions.

PATH 1After answering the initial questions on identifiers, demographics, and dependency status, all applicants would be asked if a parent (for dependent students) or anyone in their household (for independent students) was a recipient of Supplemental Nutrition Assistance Program (SNAP) and/or Supplemental Security Income (SSI) benefits. If the answer is “yes,” the applicant would list the chosen school codes, sign and date the FAFSA, and the FAFSA would be complete. No further financial information would be gathered and the applicant would automatically be eligible for the maximum Pell Grant.

If the answer is “no,” then the FAFSA asks if the applicant filed a tax return or was required to file. For non-filers, the FAFSA would ask about income earned from work and child support received only. All asset questions would be eliminated. Tax filers would proceed further to path #2.

PATH 2Applicants who do not meet the conditions for path #1 would be directed to the IRS DRT. If the tax return is a 1040A, 1040EZ, or a 1040 without any line items that resulted from the completion of a form or schedule, then Path #2 applies.

Information retrieved via the DRT would include:

• Tax filing status

• Untaxed portions of IRA distributions

• Adjusted Gross Income

• Untaxed portions of pensions

• Taxes paid

• Education tax credits

• Income earned from work

• Payments to tax-deferred pension and retirement savings plans

• Tax exempt interest income

• IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans

The question on child support received would be retained.

Related to assets, the FAFSA would ask only about cash, savings, and checking. This question would apply only to dependent students (not parents of dependent students), and independent students without dependents.

PATH 3Having not qualified for paths #1 nor #2, applicants who filed a 1040 with forms and/or schedules will be steered toward Path #3. All of the taxable and untaxed income questions are the same for Path #3 as for Path #2, along with the same expanded use of the DRT.

However, under Path #3, the following adjustments to income would be made:

• Negative numbers carried over from a schedule to the front of the 1040 will not be allowed. The AGI reported through the DRT will be adjusted to account for any negative income and that adjusted AGI will be used in need analysis.

• Any dollar amount listed in line 21 of the 1040 with “Form 2555,” for

foreign income not subject to taxation, would be counted as untaxed income.

For assets, the cash, savings, and checking question would be asked of all applicants. The other existing asset questions on investments and business/farms would be presented if a specific line item on the 1040 is populated, which indicates the potential for assets. For example, if line 12 on the 1040 is populated, that may indicate a business that should be reported on the FAFSA, and the appropriate FAFSA question would then be presented to that applicant.

YES

Did any of the following individuals receive SNAP and/or SSI benefits?

• You (the student) and/or spouse

• Your parent (dependent students only)

• Any other member of your household

Did the following tax filer complete a 1040A, 1040 EZ or 1040 without forms or schedules?

• You/spouse (independent students only)


Did the following individuals file a tax return?



Applicant eligible for maximum Pell Grant. No additional financial information requested

Applicant must provide limited financial information

Applicant must provide limited income and asset information

Applicant must provide complete income and asset information

YES

NO

YES

NO

PATH 1 PATH 2 PATH 3

NO

As Congress and the higher education community work toward the reauthorization of the Higher Education Act (HEA), broad themes have emerged, including the concept of simplification, with a particular focus on the federal student aid application process. The National Association of Student Financial Aid Administrators (NASFAA) has long been interested in ways to make the Free Application for Federal Student Aid (FAFSA) and the overall application process more efficient and streamlined for students and families.

Early FAFSA and Prior-Prior Year (PPY)In September 2015, President Obama and then-Secretary of Education Duncan announced their intention to use their existing authority in HEA [Sec. 473(a)(1)(C)] to adjust the year of income tax data used to determine federal aid eligibility, a move supported by NASFAA and other higher education advocates. Before, the Federal Methodology (FM) calculated a student’s financial need using prior year income data. Beginning on October 1, 2016, FM will use income data from the prior-prior year (“PPY”) and the FAFSA release date will move up from January 1 to October 1 (“Early FAFSA”).

With Early FAFSA and a switch to PPY, students and families can:

• File the FAFSA earlier than they do now. Historically, the FAFSA has been made available January 1 of each year, yet it is uncommon for a family or individual to be prepared to file an income tax return in January. Because the FAFSA will now be made available on October 1 using income data from two years prior, students can use already-completed income tax returns.

• More easily submit a FAFSA. The IRS Data Retrieval Tool (DRT), which allows automatic population of a student’s FAFSA with tax return data and decreases the need for additional documentation, can now be used by millions more students and families under PPY.

• Receive notification of financial aid packages earlier. If students apply for aid earlier, colleges can provide aid notifications to students earlier, ensuring that students and families have more time to prepare for college costs. Early notification also means more time for financial aid offices to counsel students and families.

NASFAA Work on FAFSA SimplificationNASFAA has been pleased with FAFSA improvements over the past few years, including “smarter” skip-logic and the implementation of the IRS Data Retrieval Tool (DRT). In July 2013, NASFAA released initial recommendations for HEA reauthorization with several recommendations focusing on simplifying the FAFSA. Recent proposals within the context of reauthorization led NASFAA to revisit simplification with an eye toward making the application process more targeted and efficient through the expansion of existing technology.

In July 2015, NASFAA released a FAFSA Simplification report, a result of NASFAA’s FAFSA Working Group, which was composed of practicing aid administrators. The working group developed a model—predicated on enacting PPY—that would simplify the aid application process while still ensuring program integrity and accurate targeting of federal funds. With PPY now in place, NASFAA’s FAFSA simplification proposal represents a logical next step.

NASFAA Proposal: A Three-Level Application ProcessNASFAA recommends instituting a three-level application process where, after answering demographic and dependency status questions, applicants would be steered down one of three paths based on their responses to screening questions.

PATH 1After answering the initial questions on identifiers, demographics, and dependency status, all applicants would be asked if a parent (for dependent students) or anyone in their household (for independent students) was a recipient of Supplemental Nutrition Assistance Program (SNAP) and/or Supplemental Security Income (SSI) benefits. If the answer is “yes,” the applicant would list the chosen school codes, sign and date the FAFSA, and the FAFSA would be complete. No further financial information would be gathered and the applicant would automatically be eligible for the maximum Pell Grant.

If the answer is “no,” then the FAFSA asks if the applicant filed a tax return or was required to file. For non-filers, the FAFSA would ask about income earned from work and child support received only. All asset questions would be eliminated. Tax filers would proceed further to path #2.

PATH 2Applicants who do not meet the conditions for path #1 would be directed to the IRS DRT. If the tax return is a 1040A, 1040EZ, or a 1040 without any line items that resulted from the completion of a form or schedule, then Path #2 applies.

Information retrieved via the DRT would include:

• Tax filing status

• Untaxed portions of IRA distributions

• Adjusted Gross Income

• Untaxed portions of pensions

• Taxes paid

• Education tax credits

• Income earned from work

• Payments to tax-deferred pension and retirement savings plans

• Tax exempt interest income

• IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans

The question on child support received would be retained.

Related to assets, the FAFSA would ask only about cash, savings, and checking. This question would apply only to dependent students (not parents of dependent students), and independent students without dependents.

PATH 3Having not qualified for paths #1 nor #2, applicants who filed a 1040 with forms and/or schedules will be steered toward Path #3. All of the taxable and untaxed income questions are the same for Path #3 as for Path #2, along with the same expanded use of the DRT.

However, under Path #3, the following adjustments to income would be made:

• Negative numbers carried over from a schedule to the front of the 1040 will not be allowed. The AGI reported through the DRT will be adjusted to account for any negative income and that adjusted AGI will be used in need analysis.

• Any dollar amount listed in line 21 of the 1040 with “Form 2555,” for

foreign income not subject to taxation, would be counted as untaxed income.

For assets, the cash, savings, and checking question would be asked of all applicants. The other existing asset questions on investments and business/farms would be presented if a specific line item on the 1040 is populated, which indicates the potential for assets. For example, if line 12 on the 1040 is populated, that may indicate a business that should be reported on the FAFSA, and the appropriate FAFSA question would then be presented to that applicant.

YES

Did any of the following individuals receive SNAP and/or SSI benefits?

• You (the student) and/or spouse


• Any other member of your household

Did the following tax filer complete a 1040A, 1040 EZ or 1040 without forms or schedules?



Did the following individuals file a tax return?



Applicant eligible for maximum Pell Grant. No additional financial information requested

Applicant must provide limited financial information

Applicant must provide limited income and asset information

Applicant must provide complete income and asset information

YES

NO

YES

NO

PATH 1 PATH 2 PATH 3

NO

NASFAA’s FAFSA Simplification Proposal

Following demographic/dependency questions, filers directed to:

NASFAA’s FAFSA Simplification Proposal

Number of Questions by Pathway (minus demographics):

» Path 1: 6-30 questions



Current maximum number of questions for a dependent student is 136

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