Whether the result of fraud or “honest mistakes,” knowing that $6 billion in improper or inaccurate payments were made within the Title IV financial aid programs is disturbing—to say the least. A former director of financial aid, recipient of Title IV aid, and advocate of higher education, I am specifically disheartened by the $2.2 billion in improper payments made through the Pell grant program during fiscal year 2016. All of this was discussed May 25, 2017 and you can find the details here.
A growing issue for the Department of Education and the institutions that administer the Federal Pell Grant program, improper payments have increased steadily from 1.5% in FY 15 to 7.8% in FY 16. That’s a 6.3% jump in one year, based on Chief Financial Officer for the U.S Department of Education Jay Hurt’s written testimony.
Inaccurate and/or unverified self-reported financial information on a student’s Free Application for Federal Student Aid (FAFSA) is a major culprit of improper payments. As we all know, the Department of Education identifies students most at-risk for reporting information in error, resulting in the subsequent selection for FAFSA verification. During verification, it is the institution’s responsibility to ensure that students and parents have accurately reported their financial information on the FAFSA.
Even with all of these checks and balances, something’s going wrong. Either the algorithm for selecting students for verification is flawed, or institutions are committing errors when completing the verification of student information.
The 6.3% increase shouldn’t have happened. We can and should verify 100% of Pell recipients—with fewer errors.
Think about the potential of eliminating the verification algorithm altogether, and requiring all Pell-eligible students to verify self-reported financial information. Many institutions may scoff at the idea, noting they are already stretched thin in a highly regulated industry. I spent five years working in or directing aid offices that verified 100% of Pell applicants—never incurring an audit finding for verification errors.
When a comprehensive approach is taken by an institution the increased volume actually allows financial aid professionals to specialize and perfect the verification process, reducing human error. Technology exists that reduces the administrative burden increasing the volume of verifications would include. This technology:
- Automates areas of the verification process that technology can perform faster: identification of confliction information, generation of ISIR correction files, file indexing and imaging, text follow-up
- Employs Optical Character Recognition, technology used by banking institutions, on tax transcripts to pre-populate self-reported income data during the verification and document review process.
- Ensures the IRS Data Retrieval Tool that allows students to transfer financial information from the IRS into the FAFSA relieving the need to verify financial data is functioning and secure.
We are at a precipice, both within higher education and in terms of the educational funding available to students. I completed college thanks to both the Pell and Stafford Loan programs, and the experience caused me to dedicate myself to making college accessible to all students. The Title IV funding programs are key to ensuring continued access to low income students. We must take action to ensure that improper payments within these programs are brought under control, and quickly.