Federal Dishonesty in Needs Analysis for Financial Aid for Low Income Students

The financial aid “system” was created to help students pay college attendance costs. This is not so much a system as it is a hodgepodge of policies, practices and paperwork that gets money to students in time to pay their college bills.

A major component of this hodgepodge is the federal need analysis used to get Pell Grants to students of low and lower-middle income families. This need analysis is fed by data supplied by students and their families on the FAFSA—the Free Application for Federal Student Aid. The federal need analysis produces an EFC—or Expected Family Contribution—based on family resources that presumes ability (not willingness) to pay college attendance costs. This approach is based on the widely shared view that students and their families have the first obligation to pay college attendance costs to the extent that they have income and assets beyond basic levels to do so.

But a careful examination of the federal policy decisions used to determine the Expected Family Contribution reveals profoundly troubling practices applied to students from the very lowest family income backgrounds. These practices deliberately minimize or even hide the very serious financial barriers to higher education that students from very low income backgrounds face when they seek to pursue higher education. We describe two of these federal practices here.

Converting negative values to zero in calculating the Expected Family Contribution. When FAFSA data supplied by students and their families is fed through the federal methodology to calculate the EFC, negative values are changed to zero. This is a federal policy decision. It applies only to very low income families where incomes fall below maintenance levels deemed by others to be required to maintain a minimum living standard in the U.S.

In these very low income families students play breadwinner roles. Earnings from their work help support the family. When they leave the family to attend college, the loss of their earnings leaves the family worse off—a sacrifice some students from these families are unwilling or unable to make.

Over the years several policy analysts have recommended calculating and reporting EFCs that include these negative values. These policy analysts have included Kornfeld, Kantrowicz, myself, and Merisotis. ACT used to report a coded negative EFC for financial aid officers to use to help them sort out different zero EFC students. Most recently Goldrick-Rab has observed that zero EFC students at the Univ. of Wisconsin-Madison have family incomes several thousand dollars higher than do zero EFC students at the University of Wisconsin’s regional campuses. The issue of the conversion of negative values in the federal methodology has been well known for decades. Yet the federal government chooses to hide, ignore and deny the reality of this additional financial barriers to higher education faced by students from very low income families.

Converting negative values to zero in the National Postsecondary Student Aid Study. This federal practice of converting negative values to zero has been carried over into the NPSAS files used to study how well financial aid in its broadest application meets students’ financial needs. I was introduced to this problem (although I did not understand it then) when a colleague at JBL Associates did some initial tabulations from one of the early NPSAS files. I was looking for unmet financial need. She prepared the tabulations through her online access.

I took these printouts home and went over them carefully. The numbers did not add up. She checked her work and assured me she had retrieved the data correctly. So I abandoned her tabulated numbers for unmet need and calculated them myself from the tabulated components of costs of attendance, less expected family contribution, less total aid received. The numbers my calculations produced both added up (because they were derived), and were far larger than the tabulated unmet needs of my colleague. I have continued to ignore tabulated financial barriers in NPSAS analyses, and calculated the financial barriers I report in OPPORTUNITY.

The federal government has been dishonest in assessing both ability to pay as well as measuring financial barriers to higher education for students from very low income families by following its chosen practice of converting negative values to zero. This hides a true picture of the real life conditions faced by those most in need of financial aid to be able to attend college. The practice should be stopped immediately, larger EFCs for these very low income students should be reported, and adequate and appropriate financial aid should be provided to help these students pay their college attendance costs. This practice should also be stopped and reversed in constructing the NPAS files on which policy judgments about financial aid are based.