Why Invest in Increasing FAFSA Completion?

Millions of students who are eligible for aid fail to file the FAFSA each year, leaving “money on the table” that could be supporting their postsecondary education. For example, an analysis published in October 2017 by the financial media company NerdWallet found that of the U.S. high school graduating class of 2017, an average of 36 percent of students failed to complete the FAFSA. NerdWallet estimated that half of those FAFSA noncompleters would have been eligible for Pell Grants totaling $2.3 billion. A 2014 research paper analyzing national data about college students who did not complete the FAFSA found that they were missing out on $24 billion annually in Pell Grants, subsidized student loans, work-study, and state aid programs.

In addition, students who could benefit from financial aid the most are less likely to apply. A 2017 paper commissioned by NCAN found that, in most states, high school seniors in higher-poverty school districts are less likely to complete the FAFSA than students in wealthier districts. For every 10-percentage-point increase in the proportion of children living in poverty, a school district’s FAFSA completion rate declines by about 3 percentage points.

FAFSA noncompletion rates present an enormous opportunity because FAFSA completion is so strongly correlated with good postsecondary student outcomes. First, FAFSA completion is strongly associated with postsecondary enrollment: 90 percent of high school seniors who complete FAFSA attend college directly from high school, compared to just 55 percent of FAFSA noncompleters. Second, research has found that every additional $1,000 in grant aid per student increases postsecondary persistence rates by 4 percentage points. Finally, FAFSA completion is strongly associated with postsecondary completion: 52 percent of FAFSA filers complete a bachelor’s degree within six years of enrollment, compared to just 44 percent of FAFSA nonfilers.

The scale of the FAFSA noncompletion rate opportunity is also significant because of the number of students to be affected and the dollars available to be leveraged. Approximately 19.8 million U.S. students completed a FAFSA for 2015-16. An increase of 500,000 filers nationally, or just 2 percent, would yield:

  • $1.4 billion in additional Pell Grants annually
  • 172,500 additional postsecondary degrees per year

Cities are a natural place to concentrate FAFSA assistance because population density makes it relatively easier to reach large numbers of students with support, and cities are more likely than less populated areas to have an array of higher education institutions that serve local low-income students.

FAFSA completion is also a good investment because a number of cities have demonstrated that significant improvement is possible. In 2016-17, school districts and nonprofit organizations took advantage of an earlier start date for the FAFSA and an improvement to the filing process to raise the FAFSA completion rate for high school seniors nationally by 9 percent (from 56 percent of seniors to 61 percent of seniors). Surveys show that the primary reasons students fail to complete the FAFSA is that they believe it is too complicated, that they are not eligible for aid, or that they don’t even know that financial aid exists. By deploying information campaigns, collaborating across sectors, increasing training, tracking student data, and providing more strategic FAFSA reminders and assistance, communities provided the support more students needed to get the FAFSA done.

Contributing to this increase were 22 cities that took part in NCAN’s 2016-17 FAFSA Completion Challenge, funded by The Kresge Foundation. These cities committed to raise FAFSA completion rates by at least 5 percent for the high school senior class of 2017, compared to 2015. By year-end, the grantees had increased completion by an average of 10 percent. Eighteen of the 22 improved from the baseline year, and the cities logged an average increase of 4.45 percentage points. Greensboro, NC, came out on top with the highest completion rate (66.03 percent) and the biggest increase (13.76 percentage points).

These strong results argue for bringing the FAFSA Completion Challenge to more cities for the 2018-19 school year. Additional investment in FAFSA completion will leverage billions of federal, state, and institutional financial aid dollars and help thousands more students begin and complete a postsecondary credential. Such an investment will also support the institutionalization of FAFSA completion strategies within cities that will yield benefits year after year. Additionally, FAFSA is a concrete goal to mobilize, support, and strengthen the cross-sector higher education ecosystems developing in many communities, reinforcing a structure within which they can address other postsecondary attainment challenges.