Snag in financial aid data sharing cripples scholarship providers

In late July, 2017, the Scholarship team at the Denver Scholarship Foundation (DSF) was poised to begin the process of sending fall scholarship awards to more than 1,600 first-time and returning college students at our 31 College Partners around Colorado. To accomplish this, we had developed long-standing systems to exchange information with our college partners securely and efficiently, so that resources needed to administer the scholarship were minimized and  dollars awarded to Scholars were maximized.

Operations were disrupted when we learned of new guidance from the U.S. Department of Education that changed what had been common practice — colleges sharing Federal Application for Free Student Aid (FAFSA) data with outside scholarship providers and other organizations (with students’ permission). As a result, the inability to get FAFSA information directly from colleges became a problem for providers, like DSF, that award scholarships based on financial need. The change from the Privacy Technical Assistance Center (PTAC) upended longstanding scholarship practices around the country.

For context, the National Scholarship Providers Association notes that private scholarship providers awarded over 380,000 college scholarships in 2015-16, totaling approximately $2 billion in much-needed financial support. In early 2018, U.S. News published an article, which highlighted the challenges of the PTAC guidance.

When a student completes the FAFSA, their Expected Family Contribution (EFC) for the upcoming year is calculated and sent to the colleges they’ve selected so that financial aid can be awarded.  One of the financial aid data points that DSF’s College Partners provide to us annually is the final EFC for each Scholarship finalist, so that DSF can confirm our finalists demonstrate financial need.

Annually, as a part of the DSF Scholarship application and renewal process, all students sign a written consent authorizing their college or university to share their educational and financial aid records with DSF. We take confidentiality seriously. The EFC information is used solely to determine scholarship eligibility and is never shared for purposes outside of that use. All information is exchanged and stored in a secure environment. Our longstanding relationships with our college partners have enabled DSF to award over $36 million in scholarships to more than 6,300 Scholars since our founding in 2006.

Because of the PTAC prohibition, one College Partner determined that they would not continue to provide EFC information using our secure process.  Instead, that institution’s financial aid office sent individual emails to each of the 130+ DSF finalists at their institution, with instructions to provide the email to DSF to be eligible for their fall scholarship award.  This sudden change made a significant impact on our scholarship administration. In total, it took nearly 40 hours time to receive, review and process the EFC information from this college alone, which represents less than 10% of our total finalists each term.

Faced with the threat posed by the imposition of this data-sharing restriction across all of our College Partners, we began to search for a solution. DSF estimated that, without an alternative, the imposition of this data-sharing restriction across all of our 31 college partners would mean that a staff member would spend approximately 400 hours each fall just managing the manual collection and tracking of EFCs.

We collaborated with financial aid and legal staff at our College Partners to explore alternatives that would still allow DSF to confirm financial need, but would not cripple all of us with manual processing.  We shared our ideas and experiences with other scholarship providers in the hopes that together we could minimize the burdens on students. We reached out to PTAC staff to better understand the guidance, share our concerns, and urge prompt development of solutions. We connected with fellow members of national associations, including the National Scholarship Providers Association and National College Access Network, to strategize about advocacy efforts, which initially included signing on to letters to the Department of Education urging reconsideration of its guidance.

As the 2018-19 academic year was beginning to draw closer without a solution in sight, we reached out to U.S. Senator Michael Bennet to ask for his help. Senator Bennet is a longtime champion of DSF, ever since he, as Denver Public Schools Superintendent, joined then-Mayor John Hickenlooper and philanthropists Tim and Bernadette Marquez to found DSF in 2006 and make access to higher education possible for all DPS students.

Thanks to the tireless efforts of Senator Bennet and his education staffer Margo Tercek, who worked with the National Association of Student Financial Aid Administrators and scholarship providers to strategize about how best to highlight the urgency of this issue, the Senator successfully supported statutory language for inclusion in the 2018 omnibus spending bill (otherwise known as the Consolidated Appropriations Act of 2018).

As approved in the final version of the bill, the language allows students to consent to sharing their FAFSA data with designated scholarship providers.  While it may have escaped the notice of most news coverage due to the bill’s massive length (over 2,000 pages), this legislation means DSF and its College Partners can now plan for the start of the 2018-19 school year knowing that precious resources can be rededicated to supporting students, not directed towards manually processing EFC information.

As Inside Higher Ed noted, this legislative fix addresses only some of the restrictions imposed by PTAC’s guidance, leaving more work for Congress to do as members consider reauthorization of the Higher Education Act in upcoming terms. However, DSF’s experience in using advocacy and collaboration strategies to find a resolution to this potentially crippling agency action highlights the collective power of individual voices in the democratic process.