Students Should Be Able to Authorize Use of Their Financial Aid Data


Over many years, colleges, federal and state agencies, and scholarship providers have worked together to simplify and streamline the process of applying for and receiving financial aid. But this year, students and colleges are facing new hurdles as they scramble to comply with shifting U.S. Department of Education guidance on what student-authorized data can be shared and with whom.

Last September, the department upended long-standing guidance and practice by reinterpreting the existing law to prohibit schools from sharing students’ financial aid application information with other financial aid awarding entities, even with student authorization, creating another unnecessary hoop for students to jump through in order to receive their financial aid information.

The financial aid process doesn’t stop when a student hits submit on their Free Application for Federal Student Aid, known as FAFSA. Many students supplement the student aid they receive from the federal government with additional loans and grants and scholarships from state grant programs, local and community organizations, private sector companies and philanthropic organizations. To qualify for these funds, students must actively seek out scholarship opportunities, which can be a job in and of itself.

Once they’ve done all the hard work to find, apply and qualify for funds, the last step is typically to have their college’s financial aid office provide the scholarship or grant provider with private information about their cost of attendance, calculated expected family contribution and other aid they have been awarded.

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Many schools have had a long-standing practice of collecting written permission from a student before providing any data to entities outside the university that request this sort of information in order to process private scholarships, loans or other public benefits. But the department’s new guidance prohibits schools from coordinating with these outside financial aid providers, bringing this efficient process to a halt.

Now, students must obtain their own financial aid data from the school and send it individually to any outside entity that would use it to award them additional financial aid.

Students are understandably confused as to why they can no longer authorize the financial aid office to coordinate with all outside scholarship providers. In an attempt to help students, some schools are going as far as to give students a printout of their own financial aid information, an envelope in which to place it, and pointing them towards the nearest post office box – an absurd workaround that would solicit laughs if it wasn’t the poster child for the type of inefficient, nonsensical bureaucracy that Washington is best known for.

The National Association of Student Financial Aid Administrators has called on the Department of Education to reconsider its position on FAFSA data sharing and issue its new guidance in written form. And while the department has promised written guidance on this topic, citing bureaucratic processes, to date none has been issued. All the while students potentially miss out on scarce financial aid dollars.

We live in a time where data security is a real concern. Implementing measures to protect student data is paramount, but doing so must be balanced against the real costs of added complexity that gets in the way of students getting all of the financial aid to which they are entitled. With so much congressional attention on simplicity, and with efforts made by the department over several years to make the application process simpler, this latest policy is a decisive step in the wrong direction.



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