While colleges and universities contemplate how they will evolve as a consequence of the pandemic, we believe one change certainly needs to happen before students even enroll. It’s time to end the mysterious “verification” requirement to receive financial aid that places an undue and unnecessary burden on college applicants most at risk.
Even if they’ve filled out the Free Application for Federal Student Aid (FAFSA), most students and families probably haven’t heard of verification. The percentage of financial aid applicants required to take the arduous additional step to “verify” the accuracy of their FAFSA information by providing additional personal and financial records has hovered around 20 percent since 2018 (but has been as high as 38 percent). At the end of August, the Biden administration took a step in the wrong direction, saying the narrower verification standards put in place during the pandemic will be reversed next year.
The burden isn’t spread equally. The verification rate is more than double — 44 percent compared to 18 percent for all FAFSA applicants last year — for the low-income applicants eligible for federal Pell Grants, the National College Attainment Network (NCAN) estimated. Family income for most Pell recipients is $20,000 or less. By comparison, the Internal Revenue Service (IRS) audits fewer than 1 percent of taxpayers at those income levels.
A Washington Post investigation found that students from predominantly Black and Hispanic neighborhoods have been audited through verification disproportionately for more than a decade (students from majority Black neighborhoods face verification at a rate almost twice that in majority white neighborhoods, for example.) Even the tool created to funnel IRS data to the Education Department helps some families respond, but not others, such as those with the lowest incomes who aren’t required to file tax returns, those with missing returns in some years, and those who are undocumented.
We understand and support the goal of verification — to ensure that too-limited financial aid dollars end up helping the right students. Verification saved taxpayers more than $400 million annually in misdirected Pell Grant funds. While that’s a lot, it’s also only about 1.5 percent of annual Pell Grants awarded.
That sliver of savings, however, doesn’t reflect a widespread problem. NCAN found that Pell Grants either stayed the same or went up for most applicants whose FAFSA was audited. And any fair assessment of the costs and benefits also must consider the enormous opportunity cost overall to the country and the economy, including lost contributions to tax revenues, when students faced with another confusing, time-consuming step to get financial aid give up on their college dream.
The Education Department estimates verification “melt” — or the failure to provide information to satisfy the audit — resulted in about 32,000 students not getting federally subsidized aid in 2019-20. Given data showing financial aid applications already down amid the pandemic, particularly among low-income students, we can’t afford another hole in an already leaky pipeline to affordable higher education.
In the short term, the federal government, institutions, college counselors and stakeholders need to acknowledge that the need for financial aid coaching and support doesn’t end for nearly half of low-income students when they hit send on the FAFSA. Supports need to consider the verification hurdle that too many families can’t overcome alone. We see the value of this extended counseling through our work at the Education Trust and at CollegePoint, a free, virtual college advising program funded by Bloomberg Philanthropies.
In the long term, we need to find a better way to root out the misdirection of financial aid dollars without placing a heavier burden on far too many families who are exactly who they say they are.
The Education Department announced two years ago that it was beginning to use machine learning to improve identification of applications in need of verification. Too little has been shared about how that process works, ostensibly to protect the security of the audits. We think the identification process must be more transparent. We don’t believe being clear about verification standards opens the door wider to fraud and abuse.
Finally, the sharing of information that other lenders and credit bureaus compile on identity theft and fraud may be valuable in finding ways to lessen the burden on low-income families already struggling through the college application process by better identifying actual risks.
The return on investment in verification is too small. The price of tens of thousands low-income students who give up on their college dreams is far too high for them individually and for our country.
Nick Watson is program lead for CollegePoint, which provides free virtual college advising to low-income, high-achieving students, at Bloomberg Philanthropies. Brittani Williams is a senior higher education policy analyst at the Education Trust and was randomly selected for verification several times as an undergraduate.