How simplifying college funding applications for low-income students increased financial aid by 33%

Sludge: friction built into a process or task that makes it more difficult to complete and discourages the subject from finishing — or even starting. A sludge is the opposite of a nudge: a subtle manipulation that can promote beneficial behaviors. 

Default: A pre-set option that doesn’t require the participant to take any action or make a decision, but allows them to benefit from a presumed preference. 

Anchoring: The tendency for people to rely on information that comes to mind most readily when making decisions.

Low visibility of funding

For students and young adults from lower-income families, college can appear out of reach. In 2002, a Harris Poll found almost two-thirds of soon-to-be college students and their families failed to name grants as a possible source of financial aid. It’s estimated that in 2000, 850,000 college students who would have been eligible for some type of financial aid didn’t complete the necessary forms. Over 10% of people eligible for a Pell Grant didn’t apply. That same year in California, as many as 19,000 students who would have qualified for a Cal Grant did not apply. That’s a lot of money left on the table, and a lot of opportunities missed.

FAFSA is difficult

The FAFSA form is a strong example of sludge. At eight pages long and over 100 questions, the 2008 FAFSA was four times longer than the simplest tax return. Three of these questions required applicants to fill in additional worksheets with nearly 40 questions each. More than half of students who submitted FAFSAs in 1999-2000 turned it in late, missing out on financial aid.

Enrollments before funding

FAFSAs must be submitted in January of the year of college attendance, which often means students need to apply to colleges without knowing whether they can afford to attend. Even after completing the FAFSA, the expected amount of aid isn’t clear to the applicant. Students who are already in college have to resubmit their FAFSA application each year to renew their financial aid, which can result in aid being lost. 

The misconception of college costs 

Due to news coverage of college costs reaching record levels at selective universities, many students and their families believe the cost of going to college to be a lot higher than it actually is. These reports created an anchor that led participants to overestimate college costs by 300%. 

Determining FAFSA eligibility 

After completing their taxes at an H&R Block office, people were screened for FAFSA eligibility via proprietary software. The two samples of interest were high school students and recent graduates dependent on their parents, and independent adults. Eligible participants were then randomly assigned to one of three groups: 

• The FAFSA treatment group, which received support filling in the FAFSA form. 
• The information group of eligible participants, encouraged to file the FAFSA by themselves. 
• The control group, who were not given any instruction on the FAFSA.  

FAFSA simplification and assistance

For the FAFSA treatment group, the application was pre-populated with information from the family’s recent tax return. The group was then given a high level of support to complete the FAFSA. An H&R Block professional interviewed the participants to gather necessary information and offered to electronically submit their application to the Department of Education. The intervention cut through the sludge and reduced the FAFSA process to a few steps that could be completed in about 10 minutes. This support successfully increased need-based financial aid awarded and college enrollment.

The Information-Only group was told of their eligibility to apply. Both groups were also given additional information on several nearby public colleges. The control group did not learn of their financial aid eligibility or about the actual costs of tuition at nearby colleges, receiving only a basic brochure about the importance of going to college, and general information on costs and financial aid.

More funding leads to more college enrollments

Ensuring need-based funding reaches the people who benefit most makes college more equitable. With the FAFSA submitted, college enrollments were up 29% among dependent participants in the treatment group. The FAFSA treatment had the biggest impact on families with an income under $22,000. College enrollment rates among this subset of the treatment group were 4% compared to 2.9% of the control group. Individuals who were told their families were not expected to contribute to their college expenses were most influenced to go to college by this intervention. 

• Increased college enrollment and financial aid for low-income families.
• A limited number of racial minorities mentioned. 
• Unclear whether participants who successfully secured funding and enrolled in college would receive support completing FAFSA for subsequent years.

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