How the FAFSA is Crippling our Financial Aid Program

The Free Application for Federal Student Aid (FAFSA) is the United States’ creation for helping colleges and universities determine a student’s eligibility for federal financial aid. Is it flawed? I believe that it is, and I think that most professionals in the financial aid field would agree. The goal of the FAFSA is to determine an Estimated Family Contribution, or EFC. This is the amount that the government has determined that a family can afford to pay for college. In most cases, colleges subtract the EFC from a student’s cost of attendance. The amount remaining would be the amount of financial aid that could be awarded to the student.

For example:

Cost of attendance $10,000 – EFC $5,000= $5,000 financial aid eligibility

Students may or may not receive that entire $5,000; it all depends on the college’s awarding process. 

The problem with the FAFSA is that it doesn’t delve deep enough to truly determine a family’s ability to pay. When working in the financial aid office of a private university, we used the FAFSA, but we also used the CSS Profile, a product of College Board, to determine our institutional awards. Comparing the FAFSA to the CSS Profile is like comparing your sixth grade history test to the SAT. The FAFSA basically wants to know what you earned the previous year, what your taxes were, how many people lived in your household, and how many of them will be in college. 

The CSS Profile asks for everything, including business income, which is not considered by the FAFSA. In my opinion, this is where the government begins to dole out money to those who do not really deserve it. Consider a four-person household with one student going to college. The mother is a school teacher who brings home $45,000 a year. The father owns his own business that makes millions of dollars per year. When this family files their FAFSA, it looks as though they are a family of four living on $45,000 per year. The business income is not considered. So, while the family has millions of dollars available to fund their child’s education without aid, they will most likely receive a great financial aid package, and might even qualify for the Pell Grant. This type of system is filtering money to the wrong places, while families with very real need sometimes do not qualify for aid that could make the difference in their children attending or not attending college.

On the other hand, if this family applies to a private university and completes the CSS Profile it is likely that they will qualify for nothing in financial aid. Because the FAFSA doesn’t ask for business information, the government has no idea that this family even owns a business, much less that it is bringing in millions of dollars per year. If the FAFSA would delve just a bit deeper into a family’s finances, we could save our country and financial aid program millions of dollars in unnecessary aid. Perhaps then we wouldn’t need to do an overhaul of the federal financial aid system, which has been discussed since the president’s recent State of the Union Address.

Steven Crisp is the owner of Crisp College Advising and a former financial aid and admission professional.