Financial aid confusion begs discussion about government’s role in higher education

Families who have sent young people to college have experienced what I am about to explain. As part of this, most families will complete a process known as FAFSA, which is a government acronym for Free Application for Federal Student Aid.

The FAFSA is completed online and I have written about this ordeal many times. I’m not going to address this task today except to say that it’s a huge pain in the ass and usually takes two to five hours to complete. The net result of the FAFSA is a hard-to-understand number called EFC, which is another acronym for Expected Family Contribution, which colleges and universities use to write their mandatory “cost of attendance” letter for each student.

This letter, written in simple, pleasant language, details the expected costs the family will incur for tuition, materials, meals, and housing and also details any financial aid the university, or the government, is providing in the form of scholarships or grants. . In my experience, the letter is also accompanied by information about resources available to help the family finance the costs of attendance, which will involve federal student loan programs.

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In my own home, receiving a cost-of-attendance letter for my son Sam from the out-of-state University of Tennessee resulted in a conversation that, depending on who is telling the story, is described as a “ridiculous speech.” , or from my more “rational” perspective, a reasonable discussion about the purpose and “investment in the future” that is college, I admit, at some point in the conversation, going to the Marine Corps recruiting office was mentioned. In the end, though, everything went well, as Sam now attends IU with good in-state tuition.

It goes without saying that the cost of the attendance letter is very important for most families and universities because it often guides the final decision about where the future college student is going and puts both students and schools in the same place. page.

That is why this year confusion of incomparable scope is unfolding. The source of the mess lies with who else, but once again, the government. The Department of Education, likely responding to previous complaints about the FAFSA process, has strived to simplify the process by making the FAFSA shorter. It sounds reasonable, of course, but as President Reagan wisely opined, the most terrifying words in the English language are “I’m from the government and I’m here to help.”

It turns out that the new FAFSA process is actually easier and many families are navigating the system in less time. The real problem, however, was in the backend of the FAFSA system itself. Apparently, the system was not prepared for the shorter form, which ended up resulting in some critical calculation errors in the information provided to universities and families. This caused many incorrect letters to be rescinded and many unissued letters to be delayed. Although I don’t have a freshman at home right now, the stress I hear from clients and family is quite unbearable, with some high school seniors in my life still not knowing where they will go in the fall.

I think there is a lesson to be learned here. The lesson is that I think the federal government is too involved in discussing and implementing higher education for our young people.

From the confusion that the Biden administration continues to cause with its loan forgiveness programs, to the fact that the FAFSA is practically mandatory to enroll your child in college, it seems to me that there is too much government, and government money, in around this. subject.

I certainly understand and appreciate the need for public investment in higher education, especially through supporting those in our communities who truly need financial help to improve the lives of the next generation, but in my opinion, whenever government money flows into an industry — and make no mistake, secondary education is an industry — the results tend to be inefficiency, cost inflation and even corruption. It is impossible to deny that all three of these factors are impacting the college and university system in our country today.

Perhaps this confusion over the new FAFSA will lead to a conversation about the federal government’s involvement with college itself. I think the conversation should have happened a long time ago.

The opinions expressed in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing in stocks includes risks, including price fluctuation and loss of principal. No investment strategy can guarantee profit or protect against loss. Past performance is no guarantee of future results. This material may contain forward-looking statements; there are no guarantees that these results will materialize.

Marc Ruiz is a wealth advisor and partner at Oak Partners and a registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.

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