As the initial roll-out of Healthcare.gov illustrated, complicated application processes can prevent individuals from accessing programs from which they would likely benefit. Cumbersome forms and an overly-complex array of choices can lead people to pass up on employer-funded retirement contributions, miss out on sending their child to a higher-quality school, or qualify for financial aid for college (Hastings & Weinstein, 2008; Dynarski & Scott-Clayton, 2006; Madrian & Shea, 2001). Researchers have developed innovative solutions to improve take-up of these programs, from changing defaults so that people have to opt out of rather than opt into retirement programs, to providing simplified information and personalized assistance with the application process (Beshears et al., 2012; Bettinger et al., 2012; Hastings & Weinstein, 2008; Madrian & Shea, 2001). 

In education, there has been substantial policy investment to help high school seniors and their families complete the Free Application for Federal Student Aid, such as the USDOE FAFSA Completion Project. Yet there are many fewer efforts to help college students renew their financial aid each year, despite the fact that students need to re-file their FAFSA on an annual basis to maintain their eligibility for financial aid. Nor do we know of any study that has documented the rate at which freshman year financial aid recipients successfully re-file the FAFSA, particularly students who are in good academic standing and who plan to return to college the following year.

The goal of our paper is to address this gap in the literature by documenting the extent of and patterns of FAFSA renewal. We will address the following research questions: (1) At what rate do freshmen financial aid recipients successfully re-file their FAFSA?  (2) Does the probability that students re-file their FAFSA vary based on student characteristics?  (1) Is failure to re-file the FAFSA associated with diminished degree attainment or labor market outcomes?

To answer these research questions, we use data from the Beginning Postsecondary Students Longitudinal Study (BPS), which follows students who attended a postsecondary education institution for the first time in 2003-04 longitudinally through 2009. We fit multinomial logistic regression models to investigate the probability that college freshman who received financial aid successfully re-file and/or persist into sophomore year. We focus in particular on Pell Grant recipients in good academic standing, who arguably stand to benefit the most from re-filing the FAFSA in terms of continued grant assistance.

We find that nearly a quarter of freshmen Pell Grant recipients in good academic standing do not re-file a FAFSA for sophomore year.  Even among Pell Grant recipients in good academic standing who return for sophomore year, nearly 15 percent do not re-file a FAFSA. Re-filing rates are particularly low among community college students. Using propensity score matching, we find that failure to re-file a FAFSA is strongly associated with students dropping out later in college and not earning a bachelor’s degree within six years.  These results suggest interventions designed to increase FAFSA re-filing may be an effective way to improve college persistence for low-income students.