It is time to make the FAFSA part of the 1040

This month six states announced that they are considering joining a small but growing group of states that make it mandatory for graduating high school students to complete the Free Application for Federal Student Aid (FAFSA). Mandating students complete the application, the thinking goes, would boost college enrollment in part by boosting perceptions of affordability.

Helping make college more affordable for more people is important, but a state-based approach is a bad one. Targeting high school students ignores that the majority of college students on campus today are not the straight-from-high-school crowd. It also makes the benefit dependent on the luck of living in a state that actually requires it.

Instead of leaving completion to the whims of different states, a much better way to guarantee more students complete the FAFSA is to just fold into another federal form that practically every single American already has to fill out annually: their tax return. Students and families thinking about college could check a box on whatever version of the 1040 they file and trigger a FAFSA worksheet that would automatically get transferred by the Treasury Department to the Education Department.

There are a host of good reasons for doing this. For one, it maximizes accessibility. Tying it to a federal form an overwhelming majority do anyway ensures that no prospective student in any state gets left out. It also ensures that the adult and returning students, again the majority of enrollments today, benefit as well.

A FAFSA integrated into the 1040 also greatly reduces completion friction. Completing it as part of doing one’s taxes means not having to go search for all of that information six or possibly nine months later. Actually filling it out would get easier too thanks to it naturally being incorporated into the consumer-friendly interfaces that most tax preparation software utilize. 

Some of the biggest upside though would be in the non-federal aid it would help prospective students draw. Most states use the FAFSA to distribute their own grant awards, but some states simply turn their aid programs on in October and leave them open until funds are gone or they set application deadlines. That ends up being a recipe for disaster to low-income and adult students who are more likely today to fill out the FAFSA after state dollars and deadlines have passed. A FAFSA completed when taxes are filed would ensure that no prospective student ever again misses out on state grant aid.

No system is perfect of course. Not everyone has to file taxes, though these individuals could get an equivalent standalone electronic form to complete at the same time. Those who file for up to a 6-month extension could use this same form or wait until filing, but even these filers would still have their form completed by October of the same year, putting them amongst the earliest FAFSA filers today. Concerns that the costs of tax software or preparation services would take the “free” of out the FAFSA would be handled just as it is today, through free tax prep software and free preparation services for people filing the simplest forms.

None of these issues are insurmountable and the worst-case scenario would still be better than the current system just by making the form available months earlier than it already is. Having tax day focus on paying for college would set the stage for private scholarship providers and even states themselves to align their applications and processes into a singular national financial aid day. The upside, tens of millions more students and parents knowing more sooner about the kinds of federal and state financial aid options available to them, would go a long way towards limiting the financing friction contributing to today’s college completion crisis. 

Carlo Salerno is vice president of Research for CampusLogic.