Center for American Progress

Further Reduce Financial Barriers to College Completion
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Further Reduce Financial Barriers to College Completion

The vast majority of the general public does not know what opportunities for aid exist, how to access the various programs, and what one can expect to receive.

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Concerns about how to finance college are common among students and families from all economic backgrounds. But federal financial aid policy has historically emphasized the importance of credit to college access rather than college success. Moreover, in important ways, current financial aid policy may unintentionally discourage success.

The primary difficulty with current federal financial aid policy is that it is poorly understood by nearly all of its constituents. With the exception of the relatively small population of financial aid directors at colleges and universities, the vast majority of the general public does not know what opportunities for aid exist, how to access the various programs, and what one can expect to receive.

To correct this, the process of applying for financial aid should be simplified. The Free Application for Student Financial Aid often requires more work to complete than a federal tax return. And the U.S. Department of Education should provide families with widely accessible and detailed information about the opportunities for financial aid, what programs are available, and how aid is calculated and distributed over time.

In addition, the federal formula for distributing financial aid should exclude student work from its calculation. The current formula absorbs student earnings from work very quickly (especially for independent students), taxing them (above a low-income protection allowance of $2,500) at a very high rate of 50 percent. Finally, financial aid policy should support academic course-taking wherever and whenever students are able to engage in higher education. This means making changes to allow for Pell grant recipients to receive that grant during the summer months, and making aid available to less-than-half-time students.

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