Solving student debt starts with access, not availability

Americans owe a whopping $1.75 trillion in student loan debt.

With this in mind, it’s undeniable that something has gone off the rails in our attempts to make higher education more affordable. 

But wait, it’s even more complicated. The high school class of 2021 left an estimated $3.75 billion in Pell Grants on the table by not completing the Free Application for Federal Student Aid (FAFSA), according to a new National College Attainment Network (NCAN) analysis. And it’s moving in the wrong direction! FAFSA completion rates continue to decline, with recent reports citing a 9 percent decline in 2022 completions compared to the previous year.

Identifying the contributing factors certainly does not require a degree in rocket science. The financial aid process is opaque and complex; it requires reams of documents. And the pandemic put usual support structures, such as guidance counselors, after school programs, and community services for FAFSA completion out of reach. The fact of the matter is that multiplying the amount of aid available is not enough, we must also make the application process easier; otherwise, post-secondary education will continue to feel out of reach. The end result is that hundreds of thousands of students have exited the higher education arena since the start of the pandemic.

Technology is key to making aid more accessible by streamlining the process—from determining eligibility, packaging and awarding aid, through to disbursements and reporting— for the federal government, state governments, higher education institutions, private sector partners and ultimately, students.

Here’s how technology and these key players can come together to improve access to student aid, and in turn, swing wide campus’ gates:

Policy changes play a part

The recently passed FAFSA Simplification Act, part of the Consolidated Appropriations Act, will bring about significant changes to federal financial aid, including changes to the FAFSA form, need analysis and procedures for schools that participate in Title IV programs.

For students and supporters, these changes will significantly streamline the application. The current FAFSA has a maximum of 108 questions, which will be reduced to roughly three dozen under these new provisions. That reduces the application from about six pages to two pages. The FAFSA format will also align more closely with the Internal Revenue Service’s income tax regulations, helping households to pull information on the IRS site and automatically transfer relevant information to populate parts of the FAFSA automatically. These changes should reduce FAFSA friction for students and supporters and encourage completion of the application.

While these are welcome changes for aid applicants, these new provisions will require changes to most of the processes and systems used to award federal student aid, and university administrators are understandably anxious about the reality of these changes. A recent survey from Oracle and the National Association of Student Financial Aid Administrators (NASFAA) found that more than half of respondents (52%) at US colleges and universities have not yet begun to prepare for the changes to financial aid processes coming in the 2024-25 school year. Teamwork between the Department of Education, NASFAA, software providers and institutions will be key to ensure that schools and students are set up for success.

States are stepping up

Increased access to post-secondary education benefits the common good, but states have a “personal stake” to consider: they need a highly-skilled workforce to attract businesses and bolster their economies. To encourage pursuit of a college degree, many states are getting involved in the financial aid process.

Some states are adopting FAFSA-completion policies. Alabama has made completing the FAFSA a secondary school graduation requirement. Fifty-seven percent of Alabama high school seniors have completed their FAFSA, up 29.4% from last year, making it the highest increase in the country and is using Oracle Student Financial Planning (SFP) to help counselors manage the process.

At the local school level, secondary counselors are best positioned to assist and ensure that students complete the FAFSA; however, overextended workloads (the national average ratio is 424 students to one counselor) means additional help is needed. Alabama has enlisted the help of technology through Oracle Student Financial Planning to provide that assistance. This added automation allows the counselor to identify missing links in order to assist individual students.

For each public school student in the state, Oracle SFP pulls a report and uploads it into a state database to identify which students have not completed, submitted or have errors or missing documentation in their applications. These red flags allow counselors to concentrate on individual students who need more personalized attention.

“Missed applications are not just about lost money,” according to Jim Purcell, executive director of the Alabama Commission on Higher Education. “It is really a loss of human capital for the state, a reduction in human potential for the individuals and their families. It is about helping people achieve their American Dream when they need help the most.”

States are adopting other approaches, too. California implemented a California Promise grant program to make its community college system, the largest in the nation, tuition free for low-income students. At the state’s four-year universities, about 60% of students at the California State University and University of California campuses attend tuition-free as well, as a result of Cal grants, federal Pell grants and other forms of financial aid. Tennessee adopted a similar program, TN Promise, which has since boosted community college enrollment in Tennessee increased by 24.7%.

Tech is a top priority

Many institutions simply don’t have the resources, expertise, and tools to enact all the adjustments that are coming to student aid processes. As circumstances evolve, the need for technology will only become more acute.

Technology can smooth the aid process by guiding students through the application, automating tasks and lessening opportunities for error. Moreover, technology is always on and always working on behalf of the student and the institution.  

Florida Agricultural and Mechanical University (FAMU) is further proof of the profound impact technology can have on application completion rates. As the only public HBCU in Florida, the university has an important mission of promoting academic excellence, affordability and diversity for its students. And with 95% of incoming first-year students receiving financial aid, improving the student experience at each stage of the process is critical to FAMU’s ability to execute this institutional mission. In an effort to make student services more effective, FAMU invested in Oracle Student Financial Planning.  

Two years into their journey with Oracle Student Financial Planning, the university has seen a 47% increase in financial aid awards, a 26% increase in FAFSA completions, and a 42% YOY increase in financial aid disbursements on the first day. Oracle Student Financial Planning automates 90% of financial aid processes from beginning to end. Not only does this better support students to more easily access the right financial aid for their needs but it also frees university administrators from manual tasks so they can rededicate time to individualized student support.

While bold steps are being made to improve it, paying for college is still hard. Students need easier access to financial aid programs. Technology will greatly reduce the complexity of the aid application process, helping institutions and their administrators and educators get back to their central mission of supporting students’ academic pursuits. Most importantly, improving the aid process ensures that more students will have the financial peace of mind to pursue post-secondary education and realize the dream of a college degree.

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