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Changes in Law On Student Aid Spur Confusion

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A cloud of uncertainty is settling over the nation's student financial-aid system, as college and university officials, high school guidance counselors, and parents and students scramble to determine how recent changes in federal-aid laws will affect their stake in the process.

In particular, two elements of the new law, signed by President Bush in July, are causing considerable consternation: the requirement that federal aid eligibility be determined through the use of a free federal form that requests a minimum amount of financial data, and the elimination of home equity as one of the factors used to determine a student's need.

"In one year, we're having a collision of [an application] process that has changed significantly and an evaluation of equity that is going to have a significant impact on our financial-aid budget,'' said Bill Conley, the director of admissions at Case Western Reserve University in Cleveland.

"Colleges are going to be very inconsistent in notifying students about admissions and aid, and there will be big inconsistencies in how schools will deal with the change in student earnings and the use of home equity,'' Mr. Conley said.

Confusion over the changes is so widespread that some observers are wondering if the aid process--which usually begins in December, when applications become available--will be delayed this year.

Moreover, college officials and guidance counselors say, little information has yet to filter down to students--sometimes because it simply is not yet available--about when the new form will be available, how the changes will affect their eligibility and need determination, and whether the institutions to which they will be applying will ask for more financial data than are requested on the federal form.

"I see a lot more kids doing scholarship research,'' said Sally LaGoy, the director of college advisement at University High School in Orlando, Fla.

Congressional Intent

Congress began its deliberations on the reauthorization of the Higher Education Act determined to simplify the sometimes baffling student-aid process.

As a result, for the academic year 1993-94, lawmakers are requiring applicants to use a free federal form, known as the Free Application for Student Aid, to determine their eligibility for federal aid. In requiring such a form, Congress sought to insure that families, particularly low- and middle-income ones, would not continue to pay unnecessary aid-processing fees.

While a free federal form has always been available, most students in the past used a form developed by the College Scholarship Service of the College Board or a similar form developed by the American College Testing Program. Students paid a processing fee to the two agencies that was determined by the number of schools they applied to, and student eligibility for state and institutional aid was calculated along with eligibility for federal aid.

At issue now is how many institutions will need to use both the new federal form and a supplemental form that requests additional financial data to determine the awarding of institutional aid.

Both the College Board and the áŸãŸôŸ are developing such forms, but the latter's form will have a flexible format that institutions will be able to adapt to their particular needs.

Necessity of Supplemental Form

However, certain higher-education institutions, some national education associations, and the U.S. Education Department have questions about the universal form being developed by the College Board's ãŸóŸóŸ, especially since the firm has been awarded a contract to process the federal form.

They are seeking to insure that the organization is as direct as possible in telling students that they may not need to fill out anything other than the free federal form.

"Congress and the Education Department have clearly stated, without equivocation, that the practices of the past, in which almost all students filled out the [testing services'] forms and paid the full fee, are not the way to go,'' said Barmak Nassirian, the assistant director for federal relations at the American Association of State Colleges and Universities.

Because the College Board intends to send schools and colleges aid materials that include the free federal form and the supplemental form in a single package, Mr. Nassirian and others are concerned that some students who do not need to fill out a second form will feel compelled to do so, and will end up paying for it.

The issue is of no small financial importance to the College Board, which in 1990-91 earned 31 percent of its $185.6 million in revenues from the C.S.S.'s financial-aid services.

The Education Department, which is reviewing the ãŸóŸóŸ form to make sure it complies with the new law, is requiring the organization to obtain documentation from colleges that will need the service to collect additional financial data and to include a list of those colleges in its packages. How much students will have to pay for that information to be processed is undecided.

The College Board says that it has received requests from numerous institutions to collect and process the additional financial information, which is crucial in making institutional aid awards.

"There's a pretty good range of public and private [institutions] that have indicated they need additional information,'' said Kathleen Brouder, the director of information services for the C.S.S.

James Scannell, the vice president for enrollments, placement, and alumni affairs at the University of Rochester, said the institutional aid his university doles out reached $28 million this academic year, and that he needs to ask students more questions than the handful that will be on the federal form.

"We will not be able to use the federal methodology,'' said Mr. Scannell, who chairs the C.S.S. assembly, its governance body.

Home Equity Concerns

If institutions use only the free federal form, Mr. Scannell pointed out, they will be unable to ask aid applicants about any equity their parents might have in their homes. In the past, home equity was factored in and could reduce the amount of aid awarded. Congress deleted that factor from its formula for allocating federal aid in order to make more people eligible.

Mr. Scannell estimates that the University of Rochester is liable for $9 million more in institutional aid because of the expanded eligibility, and the institution's commitment to fully meet a student's need. Getting information on home equity will help colleges determine which students' need are greater, he said.

"Parents are going to think, 'These schools aren't interested in supporting my child's need.' But that's not it at all,'' he said. "Higher education will find a solution, but there are going to be casualties along the way.''

While some institutions have determined that they will use only the federal form in making institutional awards and others say they will require additional data, numerous other colleges and universities have not yet resolved the issue.

For example, Case Western, whose officials estimate that the new needs analysis will lead to more than $2,000 in extra aid per applicant, has not.

"It's really hard to fully anticipate the implications,'' said Mr. Conley, the admissions director. "We're trying to make a decision, and our philosophy is to try to meet 100 percent of need, and I don't see a change in that policy.''

A Timely Process?

That kind of uncertainty, along with the fact that institutions are unsure if the Education Department is on track for developing and distributing the free form, has lead to speculation that the aid process this year will get off to a slow start.

"We are very concerned about whether the timetable on financial-aid delivery is realistic or not,'' Mr. Conley said. "What helps is we know everyone is dealing with the same thing.''

School officials, too, are at a loss.

"We don't have anything concrete,'' said Laurice Sommers, a college counselor at the Hamilton High Schools Complex in Los Angeles. "Everybody's feeling anxious about the process.''

William Moran, the department's acting deputy assistant secretary for student financial aid, said that the free form should be distributed later this month, which is earlier than usual. Because there still are issues to be resolved over the C.S.S. form, it is unclear when it will be approved and distributed.

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