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, a study released in January by the financial media company NerdWallet found that of the U.S. high school graduating class of 2014, an average of 45 percent of students failed to complete the FAFSA. NerdWallet estimated that half of those FAFSA noncompleters would have been eligible for Pell Grants totaling an astounding $2.7 billion.

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 20.6 million U.S. students completed a FAFSA for 2014-15. 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

FAFSA completion is also a good investment because a number of cities have demonstrated that significant improvement is possible. Surveys show that the primary reasons students fail to complete the FAFSA is that they believe it is too complicated or that they are not eligible for aid. By designing information campaigns, collaborating across sectors, increasing training, and providing more strategic FAFSA completion assistance, these cities have substantially raised FAFSA completion by high school seniors in relatively short periods of time:

  • Detroit: 54 percent to 70 percent (2012 to 2013)
  • Memphis: 60 percent to 83 percent (2014 to 2015)
  • Chicago: 58 percent to 86 percent (2007 to 2012)

Additionally, two significant changes to the FAFSA in the fall of 2016 will make applying for aid easier and better timed than ever for low-income students. First, FAFSA will change to accept tax data most families have already filed with the IRS, which can be used to pre-populate many FAFSA questions and reduce the difficulty of completing the application. Second, the start date for FAFSA completion will move up from January 1 to October 1. High school seniors will be able to complete FAFSA and receive their federal financial aid eligibility before, rather than after, deadlines to submit college admissions applications. This shift will encourage more low-income students to complete college applications because they will know that a Pell Grant is available to them. The Obama Administration estimates that in the first year alone, these changes could help 50,000 additional students apply for and receive Pell Grants. Thus, 2016 is a strategic moment to increase FAFSA completion initiatives, take advantage of these beneficial FAFSA changes, and dispel old beliefs that FAFSA is too complicated or that “I’m not eligible.”