New data from Federal Student Aid (FSA) provide clearer insight into the effect of being selected for FAFSA verification on receiving financial
aid. The data estimate that 7.2% of students selected for verification do not receive subsidized aid as a result of that process.
NCAN has been talking about “verification melt,” the decreased likelihood of receiving financial aid as a result of being selected for FAFSA verification, since we coined the phrase in 2017. FSA’s 7.2% estimate is a significant decrease from NCAN’s previous estimate of about 25%. NCAN will adopt FSA’s estimate moving forward.
The large disparity between NCAN’s estimate and FSA's largely comes from data sourcing. NCAN created its estimate using the best available (but still very limited) public data, specifically the Pell Grant Program End-of-Year Report.
This method makes some assumptions, like that students selected and not selected for verification are similar except for being selected for verification.
FSA, of course, has access to actual student-level data. In the new data released to NCAN, FSA was able to hold a comparison group of verification-eligible students out of the process. These are students who would have been selected for verification had
they not been pulled out as a comparison group. Comparing the aid receipt rates of students from the same group who did and did not actually go through the verification process creates a much more accurate estimate of verification’s effects.
In the 2019-20 academic year, about 4.1 million students were selected for income verification. After excluding about 225,000 for various reasons, FSA was left with about 3.8 million students for their analysis. About 66.3% of those students selected
for income verification complete that process, based on their receipt of subsidized aid (a Pell Grant and/or Subsidized Direct Loan). Students in the aforementioned comparison group, who did not go through the verification process, received subsidized
aid about 73.5% of the time.
The difference between 73.5% and 66.3% is FSA’s verification melt estimate: 7.2%.
That the verification melt rate is much lower than previously estimated is good news for students and advocates, but about 7% of students missing out on subsidized aid as a part of the process is still worrisome. Keep in mind that some of that 7.2% could
be students who the verification process determined were ineligible to receive subsidized aid; verification, after all, is intended to reduce improper payments. NCAN’s research last year showed that more than 70% of students selected for verification saw their Pell Grant amount stay the same.
Others in that 7.2% may have encountered the attrition due to frustration or uncertainty about the process that NCAN members see every day across the country.
Worth noting is that 26.5% of students in the comparison group who didn’t go through verification melt didn’t receive subsidized aid either. This is likely what NCAN considers “life-happens melt,” to include what we typically think of as summer melt,
changes in plans or circumstances, etc. That 26.5% is a worryingly large number with which to contend.
The field got some good news in December when FSA announced at its annual conference that the verification selection rate has
dropped to 18% for 2021-22 filers. The rate represents a 4% decrease from the last cycle. This is the selection rate for all FAFSA filers, and the data released by FSA confirm that the selection rate for Pell Grant-eligible applicants was higher.
Keeping in mind that the 18% target above is for filers in the 2021-22 cycle, the data released by FSA for the 2019-20 cycle show that 40.1% of Pell Grant-eligible applicants were selected for verification. While 26.3% of all high school senior applicants
were selected for verification, for Pell Grant-eligible high school seniors, that figure was 44.3%.
Given that many NCAN members disproportionately serve high-school-aged students, that 44.3% figure will be in line with their experiences, in which verification looms as a major obstacle each year.
Recent research from the Washington Post examines how the verification process disproportionately affects Black and Hispanic
students. The reporters use data received through a Freedom of Information Act (FOIA) request of verifications by ZIP code. Students from Black-majority communities were 1.8 times more likely to be selected for verification than those from White-majority
communities. For Latino-majority communities, that rate was 1.4 times. These data give even more credence to the equity issues inherently involved in verification.
NCAN is grateful to our partners at Federal Student Aid for providing these additional data on a topic of significant interest to us and our members. The insights these data provide are valuable and continue to refine our understanding of how the FAFSA
verification process impacts students. NCAN’s policy and advocacy efforts will continue to work toward this process best balancing meeting its goals of preventing improper payments with not being overly burdensome for students and families.
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