Poster #33 - Early Impacts of California’s Universal FAFSA Policy: Can a Soft FAFSA Policy Increase Financial Aid Awards/Enrollment?

• In Event: Friday Poster Reception

Abstract

The Free Application for Federal Student Aid (FAFSA) is the gateway to federal, state, and institutional financial aid, unlocking information about how much college will actually cost. Due to the complexity of aid programs and eligibility requirements, prospective students do not learn the detailed financial aid offers that clarify the cost of particular colleges, given their specific financial situation, until they complete the FAFSA. Without the information received from filling out the FAFSA, students must rely on incomplete information about affordability. When students lack clarity or are misinformed about their ability to pay for college, they may decide not to pursue college.

 Despite the importance of FAFSA, many students fail to complete the form. For example, in the 2011-2012 school year, an estimated 30 percent of students failed to file a FAFSA, one-third of whom would have qualified for a Pell Grant (Page & Scott-Clayton, 2016). State policymakers in several states have attempted to increase FAFSA completion by passing universal FAFSA policies that aim for every high school senior to complete the FAFSA, a similar form for state financial aid only, or an opt-out form.  Fifteen states have passed such laws, and eight states – including California- have implemented their policies. Researchers have found such laws positively affect state financial aid (Denault, 2023), FAFSA completion, and college enrollment (Denault, 2023 & Kim, 2025). 

This paper aims to analyze the effect of California's universal FAFSA policy. California's FAFSA policy is interesting to examine because, unlike in other states, there is no mandate for high schoolers to complete the FAFSA to graduate. If the policy is effective even without the mandate, it will elucidate how other states can increase their FAFSA submission rates without including a mandate, which parents have criticized heavily. To examine the policy’s effect, I construct a panel dataset of most California high schools from the 2017-2018 to the 2023-2024 school years from various sources. Using this dataset, I estimate the new law's effect on FAFSA submission rates, CalGrant awards, and the college-going rate using several difference-in-difference empirical strategies. I also estimate the impact of FAFSA submission rates on the college-going rate using the new law as an instrumental variable.
My preliminary analysis suggests that the mandate increases the FAFSA completion rate between 5 and 10 percentage points, depending on the school's prior FAFSA submission rate (a source of exogenous variation). I anticipate that as a result of the increase in FAFSA submissions, there will be an increase in state financial aid and college enrollment. However, I am waiting on the data to be released (expected- June 2025) in order to examine the effect of these latter two outcomes.

Author

• Ellyn Terry, University of Washington
  Presenting Author