On Declines and Verifications: Insights from the Annual Pell Report

July 13, 2017

By Bill DeBaun, Director of Data and Evaluation 

The Pell Grant remains the major federal resource for promoting college access among low-income students, many of them first-generation. Although the Pell Grant has struggled to maintain the same level of purchasing power, it remains an important part of students’ financial aid packages.

The U.S. Department of Education recently released the Federal Pell Grant Program Annual Data Report for the 2015-16 academic year, which provides important insights into Pell trends and recipients. The NCAN team has reviewed this report and now brings you our top insights of which members, policymakers, and the public should be aware.

FAFSA applications declined year-over-year, but there is more to the story.

Total FAFSA applications have declined year-over-year since they peaked in 2011-12. Although this was initially disconcerting, FAFSA applications were so numerous in 2011-12 in part because of students applying to and entering higher education because of the Great Recession. The average year-to-year FAFSA application growth rate in the decade before the Great Recession (program years 1996-97 through 2006-07) was 4 percent. Applying that same growth rate from 2007-08 onward, we see below that actual 2015-16 FAFSA applicants were up slightly over projections of steady application growth without the Great Recession.

Note that this report only contains data through the 2015-16 year. NCAN’s blog recently noted that FAFSA applications increased for the 2016-17 cycle, reversing a four-year trend.

Total Pell Grant recipients also declined year-over-year, but the total still exceeds pre-Great Recession projections.

Just looking at the total number of Pell recipients year-over-year, a casual observer might wonder where all the Pell Grant recipients have been going since 2011-12. Much like FAFSA applications, however, basing charts on once-in-a-generation economic downturns skews them. The chart below plots the actual number of Pell Grant recipients from 1995-96. Starting in 2007-08, we plot two additional projections: 3 percent and 4 percent growth rate increases from 2007-08 onward. These projections correspond to scenarios based on Pell Grant recipient growth in the decade preceding the Great Recession. The bottom line? Although Pell recipients in 2015-16 declined from 2014-15, there are still more recipients than would have been projected had growth held steady without the Great Recession.

A large proportion of Pell-eligible students are selected for verification, and an even larger proportion of verified students are (probably) Pell-eligible.

In the 2015-16 program year, there were 11,443,576 eligible Pell Grant applicants. Of these, 5,746,665 were selected for verification, just slightly over half. Verification is a process that schools use to ensure accurate FAFSA data, but we also know that it can be one of many obstacles keeping students from receiving their financial aid. In 2014-15, nearly all students selected for FAFSA verification were Pell-eligible; there were approximately 5.3 million students selected for verification, and nearly 5.2 million of these were Pell-eligible. That means that Pell-eligible students represented about 98 percent of all students selected for verification and disproportionately bear the burden of this obstacle.

There are way too many students eligible for the Pell Grant who ultimately do not receive it.

In 2015-16, there were about 11.4 million students who submitted FAFSAs and were eligible to receive a Pell Grant. In that same year, just 67 percent of these students ultimately received a Pell Grant. This figure is consistent over time; annually, 30 percent to 33 percent of Pell-eligible students do not receive a Pell Grant. Given what we know about the Pell Grant as a tool for college access, this is deeply concerning to NCAN and its members. But why are there so many students who take the time to complete the FAFSA, find out they are eligible to receive financial aid, and ultimately do not receive it?

Part of the reason Pell-eligible students are not receiving the Pell Grant is because they are submitting incomplete applications.

NCAN has been urging policymakers on Capitol Hill to simplify the FAFSA for years. For too many students, especially those served by NCAN members, the FAFSA is an unnecessarily complicated gatekeeper of the financial aid that could make their postsecondary dreams a reality. Included in Tables 1 and 16 of the 2015-16 program year report is the number of applications returned for insufficient data that were never re-submitted for processing. In 2015-16, 3.6 percent of all applications fell into this category. This figure represents 719,137 students who could have benefited from the support of a college access and success organization. This is for two reasons: With such an organization’s help, it’s more likely that these students would not have submitted an incomplete application in the first place, and even if they did, a program could have stayed on top of these students to ensure they followed through to rectify the situation. This figure speaks to the need for both FAFSA simplification AND more college access support.

Beyond incomplete applications, NCAN strongly believes verification is another reason Pell-eligible students don't receive Pell Grants. This report reinforces that belief.

In 2015-16, just 56 percent of Pell-eligible students who were selected for verification went on to receive a Pell Grant. Using the proportion of Pell-eligible students overall who were selected and the overall Pell Grant receipt rate among Pell-eligible students, we can determine that 78 percent of Pell-eligible students not selected for verification later went on to receive a Pell Grant. The 22 percentage-point difference in Pell Grant receipt between those selected and not selected for verification is troubling.

We know from speaking with members, partners, students, and families that there are many reasons why college-intending students might not actually receive a Pell Grant and make it to campus. The need to work, a lack of transportation, family pressure, and changes in priorities are some of the reasons under the “life happens” umbrella that can melt college matriculation and Pell Grant receipt. Here at NCAN, we think that there is another kind of melt affecting students’ postsecondary aspirations. Call it “verification melt.” Under the verification melt umbrella, there are also numerous reasons a student might not receive a Pell Grant. For example, verification might determine that a student’s EFC actually does not qualify them for a Pell Grant. Verification might also scare, confuse, inconvenience, or concern students and their families enough that they fail to go through the process and, consequently, never receive a Pell Grant.

The idea that “life happens” is true for Pell-eligible students both selected and not selected for verification, and those who are not selected still only receive a grant about 78 percent of the time. These students do not have verification to point to as a reason for not receiving the Pell Grant; they were not exposed to verification as a mechanism for reducing their Pell Grant receipt. Students not selected for verification have only “life happens, something else got in the way” as the reason for not receiving the Pell Grant.

The “life happens” melt rate for non-selected students is about 22 percent. Meanwhile, 44 percent of Pell-eligible students selected for verification do not receive a Pell Grant. Assuming that “life happens” for students in both groups at approximately the same rates, we estimate that the effect of “verification melt” on students selected for verification was about 22 percent for the 2015-16 academic year.

The verification process is not random and works from a “risk model” that identifies students for verification based on elements of their FAFSA. (If it were random, we would have a much clearer picture of verification’s effect.) Admittedly, there are some things we do not know about what might be inherently different between Pell-eligible students who were or were not selected for verification. For example:

  • Were students who were selected for verification less likely to actually matriculate for some reason (did they have a higher rate of “life happens” melt)?
  • Were they selected for verification for good reason, and actually ineligible for a Pell Grant (their EFC changed so much that it took them out of eligibility)?
  • Were they “less prepared” for college in some way?

We do not know the answers to any of these questions, but they could all plausibly impact Pell receipt. To borrow a phrase from research, there is a “causal ambiguity” here. Would the characteristics of students selected for verification make them less likely to receive a Pell Grant, regardless of verification, or does going through verification decrease the likelihood of ultimately receiving a Pell Grant, regardless of student characteristics? Either way, a 22 percentage-point difference between receipt rates of students selected and not selected for verification is large, meaningful, and seems to point to verification having an impact on Pell Grant receipt, even after accounting for the “life happens” effect.

The bottom line is that further examination of verification’s effect on Pell Grant receipt is warranted and necessary.

We need more and better data.

Although this report provides many valuable data points, disaggregating the number of FAFSA applications submitted, students selected for verification, and Pell Grants received by independent and dependent students would offer a clearer picture given that there are differences in these students’ experiences and contexts.

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The Annual Data Report is a valuable resource produced by the U.S. Department of Education. Given taxpayers’ investment in the Pell Grant and the important of the Pell Grant as a tool promoting college access, the data contained in these tables is extremely important. The report spurred NCAN staff to dig into the data to produce the insights above. We look forward to hearing what insights the data piqued in our members and partner organizations and to continuing the work around increasing FAFSA completion, strengthening the Pell Grant, and promoting college access and success for underrepresented students.

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