Biden Department Of Education Makes It Easier To Get Financial Aid This Year

Proving you are poor takes a lot of work. You have to collect documents showing all the money you do not make, show evidence of family members supported by very little money and answer probing questions about how on earth your family can survive on so little.

Sound awful? It is. Unfortunately, that is precisely how the financial aid verification system works. Thankfully, for the second year, in news likely to be welcomed by students, families, and exhausted financial aid staff, the Department of Education (ED) has announced that it will not select most students for financial aid verification. This will reduce the administrative burden on the lowest income students and families who typically have to jump through the verification hoops every year.

Verification is a process that is meant to ensure that students who receive need-based financial aid, like the federal Pell grant, need that financial support. It requires students, and often their parents, to provide detailed financial information, complete various forms, and then submit everything for painstaking review by the financial aid office of the student’s college. The problem with this process is that it does not change how much financial aid a student is eligible for in most cases. There is also compelling evidence that a substantial number of students selected for verification end up not enrolling, an issue known as verification melt.

ED chose to reduce verification last year, recognizing that the pandemic was already creating enough stress for students and that schools were overstretched. Instead of selecting 18-30% of financial aid applicants for verification, as it had done historically, verification was targeted to only select aid applicants who appeared to be high fraud risks. Advocates and financial aid staff had called for similar adjustments to be made this year, calls that have finally been heeded.

Based on estimates from ED, approximately 18 percent of students would have been selected for verification again this year. If patterns from last year hold true, this will be reduced to 3-4 percent under the new guidance. Advocates have long argued that too many students are selected for verification. Compared to the 1 percent of tax filers chosen for audit by the IRS, it becomes clear why 18 percent seems excessive.

The new guidance from ED allows institutions to stop verifying students even if they were in the middle of the process. Given that institutions estimate they spend 25 percent or more of their staff time on verification, this should free up staff time for other essential work advising and supporting students.

It seems likely that a more targeted approach to verification is more effective at detecting possible fraud. In 2019 the Department of Education (ED) chose to verify 15% fewer students than the prior year, a reduction of 400,000 students having to go through the verification process. In return, improper payments decreased by $24 million compared to 2018. Given that data and now two years of a more targeted process, it might be time for ED to consider if this pandemic approach should be the new normal.

It certainly seems likely that ED will be assessing whether this more targeted approach is as or more effective than verifying a larger number of students to figure out if it can keep the number of students selected lower in the future.

Verification will continue to have a place in preventing fraud in financial aid. Hopefully, this more targeted approach will continue, rather than returning to verifying millions of students every year. It would certainly be nice if being poor wasn’t considered an automatic flag for the process.

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