The Office of Federal Student Aid: The Federal Government’s First Performance-Based Organization

The Office of Federal Student Aid: The Federal Government’s First Performance-Based Organization

Order Code RL32098
CRS Report for Congress
Received through the CRS Web
The Office of Federal Student Aid:
The Federal Government’s First
Performance-Based Organization
October 2, 2003
Charmaine Jackson
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

The Office of Federal Student Aid: The Federal
Government’s First Performance-Based Organization
Summary
The Office of Federal Student Aid (FSA) manages and administers all federally
funded student financial assistance programs authorized under Title IV of the Higher
Education Act of 1965 (HEA). The Title IV programs have grown significantly since
the enactment of the title in 1965. Currently, an estimated $55 billion in grants and
loans is provided to students annually. There are approximately 5,300 schools, 4,100
lenders, and 36 guaranty agencies that participate in the Title IV programs.
Furthermore, 13 separate computer systems, operated by multiple contractors, are
used to administer the programs.
In the 1998 Amendments to the HEA of 1965 (P.L. 105-244), Congress
authorized the establishment of the federal government’s first performance-based
organization (PBO), the Office of Federal Student Aid, as a way to improve the
efficacy and efficiency of student aid delivery, and make it less expensive. As a
PBO, FSA receives wider discretion in areas such as hiring of personnel and
equipment acquisition, in exchange for establishing more easily measured
performance goals and objectives.
Since its inception as a PBO, FSA has used three broad measures to gauge its
success: customer satisfaction, employee satisfaction and a reduction in the cost of
administering the student financial assistance programs. It has been 5 years since
Congress designated FSA as a PBO and the office has experienced varying degrees
of success in each area.
This report provides an overview of the authorizing legislation for the PBO,
including the organization’s purpose, structure and goals. The report concludes with
a discussion of program and policy matters related to FSA’s status as a PBO over the
last 5 years. It will be revised to reflect any substantive changes in the office’s
structure or goals.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Transforming Student Financial Assistance: FSA Becomes a PBO . . . . . . . . . . . 1
Performance-Based Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Improving Student Aid Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Measuring Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Customer Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Employee Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reducing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Rewarding Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FSA as a PBO: 5 Years Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Policymaking and Promulgation Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FAFSA on the Web . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
List of Figures
Figure 1. Student Financial Assistance Organization Chart . . . . . . . . . . . . . . . . . 5
List of Tables
Table 1. Student Aid Administration Appropriations: Selected Years . . . . . . . . . 7

The Office of Federal Student Aid:
The Federal Government’s First
Performance-Based Organization
Introduction
In the 1998 Amendments to the Higher Education Act of 1965 (HEA, P.L. 105-
244) Congress authorized the establishment of the federal governments’s first
performance-based organization (PBO), the Office of Federal Student Aid (FSA).1
The legislation to create the PBO responded to a widespread belief that the U.S.
Department of Education (ED), and FSA specifically, needed significant
restructuring. Congress designated FSA as a PBO to release it from many of the
traditional constraints associated with a government agency, and to enable FSA to
focus on programs and customer service. As a PBO, FSA receives wider discretion
in areas such as hiring of personnel and equipment acquisition, in exchange for
establishing measurable performance goals and objectives, reducing the costs of
administering the student financial assistance programs and improving customer
satisfaction.
This report provides an overview of PBOs in general and FSA specifically,
including FSA’s purpose, structure and goals.
The report concludes with a
discussion of selected program and policy matters related to FSA’s status as a PBO
over the last 5 years.
Transforming Student Financial Assistance:
FSA Becomes a PBO
Performance-Based Organizations
PBOs in the United States federal government are modeled after the British
public service reform efforts of the late 1980s. PBOs are results-driven organizations
that attempt to deliver the best possible services to their customers. PBOs are to have
clear objectives and measurable goals that are intended to increase the agency’s
accountability and improve performance. In exchange, PBOs are granted discretion
to operate more like private sector corporations, having more control over their
budget, personnel decisions and procurement.2 The establishment of PBOs in the
1 HEA, Title I, Sections 141-143.
2
For additional reading on performance based organizations see Alasdair Roberts,
(continued...)

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United States government was a part of the government reform efforts during the
Clinton Administration. Under the auspices of the National Performance Review
(NPR, also known as the National Partnership for Reinventing Government), Vice-
President Gore proposed the establishment of PBOs as a means of saving money and
providing more efficient and improved services to customers. NPR literature on the
implementation of PBOs quotes the Vice-President endorsing PBOs, “For these
PBOs, we’re going to toss out the restrictive rules that keep them from doing
business like a business. All the red tape, personnel rules that keep managers from
using people effectively, the budget restrictions that make planning or allocating
resources almost impossible.”3 Although the Executive Branch did not initially
consider FSA a candidate for conversion to a PBO Congress designated FSA as a
PBO in the 1998 Amendments to the HEA, making it the federal government’s first
performance-based organization.
Improving Student Aid Delivery
FSA manages and administers all federally funded student financial assistance
programs authorized under Title IV of the Higher Education Act. When Congress
enacted the HEA in 1965, two new financial aid programs were also created-
Guaranteed Student Loans and Education Opportunity Grants-and administration of
the Federal Work-Study program was assigned to the Office of Education. Over the
years, Congress established additional federal financial aid programs, which
produced an operation that annually provides an estimated $55 billion in grants and
loans to students, and interacts with approximately 5,300 schools, 4,100 lenders and
36 guaranty agencies.4 Furthermore, this operation uses 13 separate computer
systems and several contractors.
In addition, FSA’s programs continue to be
included in the General Accounting Office’s (GAO) list of high risk programs.5
During the 1998 reauthorization, Congress acted to improve ED’s management
of the federal financial aid programs.6 The 1998 Amendments to the HEA created
the PBO as a way to more effectively administer the programs. As noted in the
House Committee on Education and the Workforce’s Report on H.R. 6 (Higher
Education Act Amendments of 1998), “The need for this provision [creating a PBO]
2 (...continued)
“Performance-Based Organizations: Assessing the Gore Plan,” Public Administration
Review, vol. 57, 1997, pp. 465-478.
3 Ibid.
4 General Accounting Office, Federal Student Aid: Additional Management Improvements
Would Clarify Strategic Direction and Enhance Accountability, GAO-02-255. (Hereafter
cited as GAO, Federal Student Aid.)
5 In 1990, GAO began reviewing and reporting on federal programs that were considered
high risk because they were especially vulnerable to fraud, waste, and abuse.
6 For additional reading see the Advisory Committee on Student Financial Assistance’s
reports: The PBO and Modernization: Progress to Date (Nov. 1999) and The Advisory
Committee’s PBO Recommendations to the Congress and the Secretary of Education (Nov.
30, 1999). For copies of these documents contact the Advisory Committee on Student
Financial Assistance at [http://www.ADV_COMSFA@ED.GOV].

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arises from the inability of the Department of Education to adequately manage over
$40 billion in student financial aid .... Also, the Department’s budget for student aid
information systems has tripled over the last 5 years and instead of consolidating its
existing data systems, the Department has increased the number of system contracts
that cannot share data with each other.” The Committee maintained that converting
FSA to a PBO, managed by a Chief Operating Officer (COO), would significantly
improve the efficacy and efficiency of student aid delivery, and make it less
expensive.
As noted in the HEA, Section 141(a)(2), FSA’s purposes as a PBO are to:
! improve service to students and other participants in the student
financial assistance programs authorized under Title IV, including
making those programs more understandable to students and their
parents;
! reduce the costs of administering Title IV programs;
! increase accountability of the persons responsible for administering
the operations of these programs;
! provide greater flexibility in the management of the student aid
programs;
! integrate the information systems supporting the student aid
programs;
! implement an open, common, integrated system for student aid
delivery; and
! develop and maintain a student aid system that contains complete,
accurate, and timely data to ensure program integrity.
FSA operates as a “discrete management” unit within ED, but the Secretary of
Education maintains responsibility for the development and promulgation of policy
and regulations relating to these programs. However, the Secretary is directed to
consult with the Chief Operating Officer of FSA in developing policies and
regulations that pertain to these programs (discussed later in this report). FSA
maintains independent control of its budget allocations and expenditures, personnel
decisions and processes, procurement and other administrative and management
functions.
Organization
Upon receiving PBO designation, all of the operations and employees from the
Office of Postsecondary Education (OPE) that pertained to student financial
assistance were relocated to the newly created PBO. Congress specified that FSA
should be headed by a non-partisan, independent, chief operating officer. Each COO
is to be appointed by the Secretary of Education, and serve for a term of not less than
3 years and no more than 5 years; however, he/she can be reappointed for subsequent
terms with the same time restrictions. The COO is expected to have demonstrated
management experience and ability in information technology and financial systems.
The COO serves under the terms of a pre-specified performance agreement that
identifies measurable goals and expected results.

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As mentioned earlier, as a PBO, FSA has sole discretion over its personnel
decisions. The COO is authorized to determine the number of senior mangers that
he/she needs, as well as make appointments. The selected senior managers are
appointed without regard for the provisions of the federal government’s competitive
service rules. Under the first COO, Greg Woods, FSA was organized into channels
that focus on types of customers as opposed to programs. The channels are: schools,
students, and financial partners. By organizing the offices and services by customer
types as opposed to program areas, customers receive a single point of contact for all
financial aid matters, which is expected to improve customer satisfaction. For
example, the “schools channel” is responsible for all aspects of the financial aid
process that pertain to schools, such as financial aid origination and disbursement.
Each of the channels is headed by a general manager, who is responsible for
overseeing all of the activities in his/her respective channel.
Congress also required that the newly appointed COO select a Student Loan
Ombudsman who is responsible for providing assistance to student loan borrowers.
The Ombudsman is charged with informally resolving complaints regarding student
loans and compiling and analyzing data and making policy recommendations as
necessary.
To support the efforts of all of the newly established divisions, an Enterprise
Service division was created. This division consists of offices, such as Human
Resources, that are responsible for hiring new personnel, training and developing
current personnel and acquiring technology equipment. Similar to private sector
corporations, FSA also has a chief financial officer (CFO), who is responsible for
management of FSA’s finances, and a chief information officer (CIO) who handles
the acquisition and management of the information systems within FSA.
As
illustrated by Figure 1 (prepared by ED), the offices shown at the bottom of the chart
constitute the Enterprise Services. They provide support and assistance to all of the
offices within FSA. Further, ED places the channel managers at the top of the
organizational chart to highlight the importance of their work — serving FSA’s
customers.

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Figure 1. Student Financial Assistance Organization Chart
Students Channel
Schools Channel
Financial Partners Channel
Chief Information Of icer Chief Operating Of icer
ChiefFinancial Of icer
Ombudsman
SFA Intern Program
Accquisitions & Contracts
Human Resources
Analysis
Communications
SFA University
Source: Office of Federal Student Aid, 2002.
Measuring Performance
Since its inception FSA has had three broad measures to gauge its success:
customer satisfaction, employee satisfaction and reduction of the administration costs
for the student financial assistance programs. In consultation with the Secretary, each
year the COO prepares an annual performance plan that outlines the tasks that FSA
expects to accomplish in the upcoming year. Currently in its fifth year, FSA
continues to work towards achieving these objectives, with varying degrees of
success in each.
Customer Satisfaction. As noted earlier, FSA’s customers are students,
financial institutions and schools. Although each of these groups has a common
interest — financial assistance — the organization of OPE, poor communication
between programs and poor customer service were general complaints from all
groups of customers prior to 1998. Because the interests of customers varied,
different systems were required to cater to each channel’s respective customers. In
addition to aligning the offices and therefore the programs within each office to
address the needs of its customers, a general manager was appointed to each channel
and given specific and measurable objectives to improve service. For example, in
the 2003 Annual Plan, the CFO was charged with addressing the existing weaknesses
and conditions that were reported from previous audits. Specifically, the CFO is
charged with improving the conditions that have contributed to the federal aid
programs being included on GAO’s list of high risk programs.7 This task is intended
to improve customer satisfaction, reduce costs, and improve program integrity.
7 According to ED’s FY2002 Performance and Accountability Report, although FSA has
made and continues to make considerable progress, the federal aid programs remain on
GAO’s list of high risk programs.

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To measure customer satisfaction FSA utilizes the American Customer
Satisfaction Index (ACSI), a survey developed by the University of Michigan. ACSI
provides organizations with a score (0 to 100) that is based on customer satisfaction
with the company’s services. To ascertain its performance FSA surveyed 250
customers from each channel about specific practices and procedures. According to
ED’s Annual Program Performance report, FSA’s last reported score was 72.9 for
2001; the average annual score for federal agencies is 68.9.8
Employee Satisfaction. The initial COO, Greg Woods, believed that
employees had become mechanical in dealing with the work they were performing.
He felt that many employees viewed their jobs as simply processing loan and grant
papers, rather than helping their customers “realize their dreams.”
After he
developed a mission statement “We help put America through school,” he sought to
ensure that all employees understood how their job contributed to the overall mission
and became more dedicated to their work. Woods utilized FSA’s score from a survey
conducted by the National Performance Review (FSA ranked 33 out of the 49
participating federal agencies, in terms of how employees viewed the agency), as a
benchmark to gauge the state of employee satisfaction when he arrived (Woods was
the Director of NPR at the time the survey was conducted). The NPR survey also
indicated that: only 60% of FSA employees were satisfied with their jobs, one out of
four could not identify any of the organization’s goals that related to satisfying
customers, and half of the respondents indicated that they needed more training.9
One of the solutions FSA implemented to deal with the disconnect between
employee’s understanding of his/her position and the agency’s overall mission was
the use of balanced scorecards. Balanced scorecards enable the agency to retain
traditional measures of success such as reduction of costs, and supplement them with
non-traditional measures such as employee satisfaction. FSA’s model consists of
the original three measures of success — customer satisfaction, employee satisfaction
and reduced unit costs — added together; the output is the performance score. It is
expected that by placing equal emphasis upon each measure, all employees, including
senior managers, will work to ensure success is achieved in all three areas. In
addition to emphasizing balance, the scorecard also includes a roster of the names of
all persons working on a particular project, the scores they received in previous years
on each of the measures, and a delineated list of all projects that the team is working
on. The scorecards are intended to provide a concise and unambiguous measure of
how the group is performing and how each employee’s work relates to the agency’s
mission. In 2000, FSA began utilizing the Gallup Survey of Workplace management
instead of the previously used NPR survey. The last reported Gallup survey score for
2001 was 3.74 out of a possible 5 (the private sector average is 3.6).
Reducing Costs. Reducing costs is a measure of performance that did not
exist at FSA prior to the agency being designated as a PBO. As previously noted, the
financial aid programs have been listed on GAO’s list of high risk programs since
1990. One of the main reasons the programs have been included is due to the high
8 U.S. Department of Education, Strategic and Annual Reports at [http://www.ed.gov/about/
reports/annual/index.html?src=ln].
9 Brian Friel, “Great Expectations,” GovExec.com, Mar. 1, 2000.

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costs of administering the financial aid programs.
As noted by Table 1, the
administration costs have risen from $43.8 million in FY1992 to the current
administration’s FY2004 request for $947 million (for further discussion see
following section). FSA has implemented several programs and procedures to assist
with reducing costs, and two in particular have received significant attention:
implementing a web-based version of the Free Application for Federal Student Aid
(FAFSA), and reducing the multiple technology information systems used to
administer the financial aid programs.
Table 1. Student Aid Administration Appropriations:
Selected Years
(dollars in 000s)
FY1992
FY1995
FY1998
FY2001
FY2004**
Student Aid
$43,870
$345,660
$578,482
$875,634
$947,000
Administration
** Denotes President’s requested amount, not the amount appropriated.
Free Application for Federal Student Aid on the Web. Students who
are interested in applying for federal financial assistance and for many state forms of
assistance must complete and submit the Free Application for Federal Student Aid
(FAFSA). The FAFSA can be submitted via a web-based application, a paper form,
or electronically with the assistance of a school financial aid administrator. The
information that students and parents provide on the FAFSA is utilized to determine
their eligibility for financial assistance.10
In an effort to reduce the costs associated with administering federal financial
aid programs, a web-based financial aid application was introduced. The web-based
application allows applicants to complete and submit their financial aid application
online. In addition, the web-based application has internal end-of-entry data edits
built into the application that eliminate many of the mistakes associated with the
paper version. The internal edit system prevents applicants from omitting essential
information that is used in calculating the expected family contribution and reduces
the possibility of entering illogical information. For example, if a family has an
adjusted gross income of $25,000, it is not possible to have paid the same amount in
taxes; the internal edits force the applicant to resolve these inconsistencies prior to
submitting the application. As a result, ED spends less money processing multiple
applications and returning applications due to errors. In a draft Performance Plan for
FSA, it was noted that electronic applications are as much as 25 times less likely to
contain errors than paper applications.11
10 For more information on the need analysis system used to calculate eligibility see CRS
Report RL32083, Federal Student Aid Need Analysis:
Background and Selected
Simplification Issues, by Adam Stoll and James B. Stedman.
11 U.S. Department of Education, Office of Federal Student Aid, The Performance Plan for
Student Financial Assistance, at [http://www.ed.gov/PDFDocs/5yrbody.pdf].

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But the conversion to the web-based FAFSA has not gone smoothly. At the
2001 National Association of Student Financial Aid Administrators annual
conference, the COO urged administrators to stop ordering so many paper
applications and to instead direct their students to the Internet. Greg Woods stated
that because colleges and universities continue to request the same quantities of paper
applications as they had in previous years, students are not being encouraged to use
the web-based application; this, in turn, prevents FSA from reducing the number of
applications produced.12 As a result of this and other contributing factors, such as
increased student participation, the costs of administering the financial aid programs
have actually increased. In a 2002 report by GAO,13 FSA’s unit costs14 for FY1999
were $18.72 per aid recipient and in FY2001 (the most recent data available) the unit
cost increased to $19.57.
Technology Systems. The addition of federal financial aid programs at
different times produced multiple nonintegrated technology systems to operate the
programs as well as multiple contractors to manage the systems. Because the
systems are nonintegrated they cannot communicate with each other, which requires
FSA to access multiple systems to retrieve accurate information for each applicant,
and in many instances there is information redundancy. This is also true for the
institutions utilizing these systems. Institutions are often required to access multiple
systems to enter and retrieve student financial aid data for one student. In 1993, the
National Student Loan Data System (NSLDS) was developed as a way to integrate
these data and simplify the process. However, NSLDS functions as a repository for
each of the separate databases as opposed to one integrated database. Because the
systems cannot communicate with each other, each database must first be updated
and then transferred to NSLDS, and with different contractors and different
scheduled database updates, conflicting data are still a possibility.
Maintaining multiple systems with several contractors also significantly
contributes to the costs of administering the financial aid programs. Rather than
purchase one system that could manage all Title IV programs — an expensive
alternative — FSA opted to utilize middleware. Middleware is a system that serves
as a conduit between multiple technology systems, and enables them to communicate
with each other. If used in conjunction with a web-based interface, middleware
presents the user with an integrated view. One of the most important features of
middleware is that data can be retrieved from multiple sources in a timely manner.
FSA’s technology modernization effort has taken several steps to achieve full
integration and interoperability of existing systems. Thus far the actual savings of
these efforts has not been fully realized or reported.15
12 Stephen Burd, “Education Department Official Prods Colleges to Have Students Apply
for Aid Online,” The Chronicle of Higher Education, Aug. 3, 2001.
13 GAO, Federal Student Aid.
14 FSA calculates unit costs as the amount of money spent on administering the financial
aid programs divided by the number of recipients.
15 For additional reading on middleware usage at FSA, see General Accounting Office
report, Student Financial Aid: Use of Middleware for Systems Integration Holds Promise,
GAO-02-7.

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Rewarding Results
The Chief Operating Officer and the senior managers of FSA are authorized to
receive bonuses for the achievement of the pre-specified goals and objectives
discussed earlier. The COO’s bonus is based on the Secretary’s evaluation of his/her
performance, and cannot exceed 50% of the base salary for the position. In addition,
the COO’s total annual compensation, including the bonus, cannot exceed the
President’s salary (currently $400,000). Senior level managers are also authorized
to receive performance bonuses. Their total compensation, including locality pay,
cannot exceed 125% of the maximum basic pay for members of the Senior Executive
Service (currently base pay for ES-6 is $134,000). The bonuses serve as an incentive
for the COO and all senior managers to insure adequate progress for their respective
goals and those of the PBO.
FSA as a PBO: 5 Years Later
The Office of Federal Student Aid has functioned as a PBO for 5 years. During
this period several issues have arisen regarding FSA’s PBO status. This section
presents a brief discussion of selected program and policy matters.
Policymaking and Promulgation Authority
Title I, Part D, Section 141(b) of the HEA states that the Secretary “shall
maintain responsibility for the development and promulgation of policy and
regulations relating to the programs of student financial assistance under Title IV.”
This language has been interpreted to define FSA’s responsibilities as programmatic
or operational, and ED’s, or more specifically OPE’s, as policy oriented. In the early
development stages of the PBO, some concern was expressed that the delineated
roles for the PBO and OPE were being blurred.16 Offices, such as Guarantor and
Lender Oversight Service, were moved to the PBO, although these offices clearly
dealt with policy and promulgation. Subsequently, many of the offices were moved
back to OPE; however, a few offices with policymaking and promulgation functions,
such as institutional eligibility, remain in the PBO.
The Advisory Committee for Student Financial Assistance (ACSFA) contends
that all policymaking functions should reside with OPE. In a letter to Senator
Kennedy (January 10, 2002), ACSFA recommended that all policy functions should
be returned to OPE, but that the Assistant Secretary of OPE should consult with FSA
to ensure that proposed policy decisions support the operations of the financial aid
programs. Alternatively, former Secretary Riley maintained that having the COO
oversee interrelated tasks of student aid delivery such as program management and
oversight enabled FSA to achieve “aggressive performance standards.”17
16 Letter from Representatives Goodling, Hoekstra and McKeon, House Education and the
Workforce Committee, to Secretary of Education Riley, Dec. 16, 1998.
17 Letter from Secretary Riley to Chairman Goodling, Jan. 12, 1999.

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Independence
In 2001, the change in administration, and the appointment of a new Secretary
of Education introduced the question of how much independence FSA possesses. An
article in the Chronicle of Higher Education,18 describes a memorandum from
Education Secretary Paige to the COO of FSA that prohibits the office from awarding
contracts in excess of $100,000 or hiring senior-level employees and consultants
without prior Department approval. Section 141(b)(4) grants the PBO independent
control over its budget allocations and expenditures, personnel decisions and
processes, procurement and other administrative functions; however, the PBO is also
“subject to the direction of the Secretary.”
To address the issue of independence, former Secretary Riley drafted a
memorandum of understanding (MOU) that articulated the specific functions the
PBO would oversee. In addition, the MOU details how the PBO interacts with other
offices in ED. For example, because the COO has sole discretion over its personnel
decisions, subject to the direction of the Secretary, a MOU between the COO and
Secretary Riley specified that FSA could hire needed personnel, but must consult
with the Department about changes that impact ED’s collective bargaining agreement
(See footnote 13). According to the aforementioned GAO report, employees of both
FSA and ED admitted that the absence of a MOU between the two under the current
administration has presented a struggle over the PBO’s independence and how it fits
into the agency’s structure.
FAFSA on the Web
FSA promotes the usage of FAFSA on the web as a means of reducing the costs
of administering the financial aid programs. In addition, because the web-based
application provides an efficient and reliable way to complete and submit the
financial aid application, institutions and applicants are strongly encouraged to utilize
the online application. While the number of online filers continues to increase
yearly, there are still numerous families that do not have access to the Internet. In a
recent Pew Internet and American Life Survey (April 2003) it was found that
individuals with lower incomes and less education are still significantly less likely
to use the Internet. Students from families with lower incomes and less education are
also more likely to need financial assistance to attend college. The Advisory
Committee on Student Financial Assistance recommended that ED continue to make
the paper FAFSA available.
ED must continue to make the paper FAFSA available in a timely and efficient
manner.
First-generation college students and their families may be
uncomfortable completing the web-based form and prefer to complete the paper
form.19
The tension that the PBO confronts is between cost reduction and ensuring that
the financial needs of low-income students are addressed.
18 “Rift Emerges Over Independence of Federal Financial-Aid Office,” Oct. 19, 2001.
19 Letter from Advisory Committee Chairperson, Dr. Juliet V. Garcia, to Senator Edward
Kennedy, Jan. 10, 2002.