Starting in fall 2016, students will be able to complete the FAFSA as early as October and use two-year old tax data to complete the form. Advocates say these changes will make applying for college much simpler for students, but what do the changes mean for college administrators?
Jim Day, VP and managing director of Hardwick Day, is an expert in financial aid optimization, enrollment strategy, and net price calculators.
Peter Farrell, senior enrollment management consultant at Royall & Company, studies effective recruitment strategies and financial aid.
In an interview with EAB Daily Briefing's Kristin Tyndall, Day and Farrell discussed why you should be paying attention to the FAFSA news—even if you don't work in the enrollment management office.
Q: Some of our readers have been following the debate over FAFSA for months; for others, this is newly on their radar screen. Why is FAFSA being changed now?
Farrell: Changes to the FAFSA are being driven by new consensus in the political arena—a combination of advocacy from Senator Alexander's office and the Obama administration. So, political will along with an appetite in Secretary Duncan to "shake things up" are the ingredients for long-discussed change.
Q: A lot of people are talking about how these FAFSA changes will make it much easier for students to apply to college—do you think we could see a big effect on enrollment? What about yield rates?
Farrell: On the margins, the changes will make it easier for more students to navigate the aid process, so enrollment impacts are possible, most likely at less-selective publics and 2-year colleges.
Any changes to the aid process have the potential to disrupt yield. On the plus side, earlier opportunity to place compelling and accurate aid awards in front of families should make it easier to yield them. On the other hand, there's now a longer "soak time" to contemplate costs/value/aid with a clear head and full vision into all the metrics. No telling what impacts on yield that will have (we're still talking about 17-year-olds).
Day: Probably not a big impact on enrollment; nearly everyone who would apply for aid is already. Changes in yield, maybe, but mainly I suspect from how much more accelerated and competitive the whole process is likely to become.
Q: Might we see more students locking in their attendance decisions earlier, helping colleges finalize that delicate end-of-year enrollment, yield, and budget calculus sooner?
Farrell: Potentially—or, longer, more protracted negotiating periods. In any case, the new rules will up the ante on the wooing of students for longer stretches of time.
Day: Maybe. But colleges can't require a deposit until May 1. Students will have longer to shop and negotiate aid. I think the main thing is the acceleration of the process as colleges compete for consideration—to get into and remain in the choice set, which will be a more "matured" or serious set of students, earlier.
Q: How might using "prior-prior year" tax data affect institutional aid? With discount rates already reaching "unsustainable" levels, do you worry that colleges are going to be giving out more aid to students who may not need it or may not need as much as they're getting?
Farrell: There's an argument that this could create greater precision in the award of institutional aid, but that really only applies to need-based aid. A lot of institutional aid is awarded without much consideration of actual need; the awards are intended to inflect enrollment behavior and are more tightly aligned with where the student falls within the school's applicant pool.
However, it turns out that at most schools, these scholarships still typically meet any and all of students' demonstrated need once FAFSA data becomes visible.
Day: Well, in an environment in which we had a growth-oriented set of policies at the federal level I'd worry that packages would be too generous relative to income two years after the fact, but generally with stagnated incomes I don't see prior, prior having much impact on aid levels.
Also see: Nudge students to complete financial aid forms and graduate on time
Q: Do you see earlier FAFSAs changing colleges' relationships with prospective students at all?
Farrell: For some colleges, this won't create major changes (typical regional public, less selective privates).
But for many colleges, there will be substantial changes. Selective privates that compete with flagship publics will find these changes allow them to more aggressively present the cost/value conversation much earlier. These schools do need FAFSA data to award much of their institutional aid. If I was leading one of these teams, this would be a big call to make sure I aligned my recruitment practices to move more activity early. So, more calls for students to apply by October 1. More admitted student visitation opportunities prior to January 1. It's a footrace to capture the attention of many of these students so this allows you to more competitively compete.
It will be fascinating to see how elite colleges respond with their admissions practices. Early admission programs have deadlines of November 1 and regular decision deadlines of January 1. If the elites want to compete on cost/value/price, they're going to find that many of the small dogs nipping at their heels just got a big advantage on them.
Day: Yes, quite possibly. More colleges will make affordability a part of the marketing. And an earlier engagement with families could lead to financially better counseled and prepared families.
Q: How do you see these FAFSA changes might trickle down across campus beyond the enrollment management offices?
Farrell: The biggest factor will be locking down pricing models and discounting plans much earlier. In the past, there was some flexibility to manage these functions into late fall (as late as December). No longer.
Day: Not sure what you might be thinking here, but if, for example, I'm right and the whole process of recruitment, consideration, application, and admission gets accelerated then faculty involvement—critical and most colleges—would also feel change that might be disruptive to academic roles and schedules.
Q: This weekend the White House also launched their revamped College Scorecard website. How do you see the combined effect of these two tools changing the way prospects apply to college in the next cycle?
Day: In reality there's already a lot of useful information about any college out there, on college web sites, and places like College Board. Then there are the Yelp and Trip Advisor kinds of sites like College Prowler. Even IPEDS for an enterprising shopper. The truth about colleges is not that hard to find.
So, what do we have in all of these changes that's worth something? In the end, we'll have a simpler process for applying for financial aid. That's about it. The unintended consequences probably will include acceleration in the college selection process. This may give students more power as "shoppers" in the marketplace, and it is this that could drive discount up. But the FAFSA changes themselves shouldn't have that effect.
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