What role should household wealth play in determining a student’s financial aid package?
For college students who have yet to complete the FAFSA for this past school year, there’s still time, but not a lot of it; the federal deadline is coming up on Sunday, June 30. The FAFSA is what college-bound students fill out to determine how much financial aid they qualify for.
A lot of the questions in both the old – and revised – FAFSA are focused on the income of students and their families. But some researchers say the education system should be taking a closer look at a student’s household wealth too.
Income is money a household gets through things like salary or investments, whereas wealth is the total value of a household’s assets.
Two of the most valuable assets for American families are retirement savings and their home itself, if they own it.
“Those items are not included in the FAFSA,” said Phillip Levine, an economics professor at Wellesley.
One reason the FAFSA’s more income-focused is that it’s a lot easier to measure than wealth, he said.
What it means though is if two students have the same income and one student’s family owns their home, both of them get the same amount of financial aid.
“But one of them has greater resources than the other,” said Levine.
If the government gathers more information about wealth, that could be useful in targeting aid to students who need it most, per Mamie Voight, who leads the Institute for Higher Education Policy.
That doesn’t mean the FAFSA has to be longer. “We should be looking for creative ways to get that information through administrative means – for example, data that government already has,” said Voight.
As opposed to overwhelming students with more questions.