Should FAFSA Ask About Household Wealth?
The FAFSA (Free Application for Federal Student Aid) is an important form that students fill out to determine how much financial aid they can get for college.
Why Household Wealth Matters
Currently, the FAFSA primarily focuses on the income of students and their families. But some researchers believe that it should also consider household wealth.
To explain, income is the money the household gets regularly, like from salaries or investments. Wealth, on the other hand, is the total value of what a household owns, like houses, cars, savings, and investments.
For example, think about two families:
- Family A earns $50,000 per year and rents a house.
- Family B also earns $50,000 per year but owns a house worth $300,000.
According to Phillip Levine, an economics professor at Wellesley, the current FAFSA doesn't include information about home ownership or retirement savings, which are big parts of household wealth. As a result, both families may receive the same amount of financial aid, even though Family B has more resources.
Easier to Measure Income
One reason the FAFSA focuses on income is that it's easier to measure than wealth. Income information is straightforward because it comes from salaries and investments, which are already documented.
Targeting Aid More Effectively
Mamie Voight, who leads the Institute for Higher Education Policy, suggests that knowing more about student wealth could help the government better aim financial aid at those who need it the most.
No Need for More Questions
Voight adds that this doesn't mean we need to make the FAFSA longer and more complicated. Instead of adding questions, the government could use already available data to gather this information.
Key Deadlines
If you haven’t completed the FAFSA for the current school year, be aware that the federal deadline is fast approaching on Sunday, June 30.
By considering household wealth, the FAFSA could more fairly distribute financial aid to students, ensuring those who need the most help get it.
Terminology Explained:
- FAFSA: The form students fill out to get financial aid for college.
- Income: Money a household earns regularly (e.g., salaries, investments).
- Wealth: Total value of what a household owns (e.g., houses, savings).
Feel free to reach out for more information or help with your FAFSA application before the deadline.
