Saturday, February 28, 2009

Simplifying the FAFSA by Simplifying Financial Aid

When I’m asked to complete a form, I get nervous. What if I fill something out wrong? What if I make a careless error? No matter how simple the FAFSA gets, the form is still going to be an intimidating experience for students and parents. Why? Because all forms are scary.

But that doesn’t mean that reform is not needed. To make getting started with the FAFSA easier, one popular and positive idea is to consolidate the many financial aid programs (Pell grants, SEOG grants, Direct Loans, Perkins loans, and Stafford loans) into one grant program and one loan program. Earlier this week, Secretary of Education Duncan announced his intention to make the Department the primary issuer of student loans, nationalizing what is now a competitive marketplace of private lenders. Under the plan, which is strongly contested by private lenders, the Department of Education would increase lending through its Direct Loan program to $60 billion annually, up from $13 billion last year.

I imagine that Duncan and his team will soon announce their FAFSA simplification plan. What I already like is that they’re focusing on not just the form but the whole process.

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