The negligible marginal cost of serving each additional student on the web and the scalability of a web-based service exposed the cost structure of the old business model as an instability point. The internet helped shift the entire scholarship search industry to a more stable and beneficial state.

The new business model not only provided a valuable service to students for free, but also helped eliminate many fraudulent services and scholarship scams.

The internet also enabled a more efficient and effective application process for federal student aid. At the 1996 national financial aid conference, Leo Kornfeld, then-CIO of the U.S. Department of Education (ED), asked me how difficult it would be to implement an online version of the Free Application for Federal Student Aid (FAFSA). I had a prototype implemented within a few weeks, complete with edit-checks and primitive skip logic.

Edit checks yield a more accurate application by detecting potential errors in application data, such as conflicting responses and inconsistent relative magnitudes. For example, if the applicant specified a value for “taxes paid” equal to the value reported for “adjusted gross income,” it was almost always because of an error. Another useful tool for detecting errors involved having the applicant enter the same information in two different forms, such as date of birth and age, and identifying conflicts between the two values.

Skip logic eliminates sections of the application form when there is no need to ask the applicant those questions. For example, independent students are not required to submit parental information, so those questions can be skipped. Likewise, once an applicant has been found to be an independent student, there is no need to ask the remaining questions that determine independent student status, because they have been made redundant by the response to an earlier question. (The question about applicant marital status is retained, however, because it plays a role in some of the edit checks.)

The independent student status questions are organized according to the frequency of a positive response, to maximize the likelihood of skipping the remaining independent student status questions. Skip logic dynamically provides the applicant with a shorter form, saving applicants time and anxiety.

The National Association of Student Financial Aid Administrators facilitated a meeting with ED staff, including Betsy Hicks, deputy assistant secretary for Student Financial Assistance. After seeing a demo of my prototype, ED contracted with NCS for a full-scale implementation. FAFSA on the web went live on June 30, 1997 for the 1997-98 award year.

This has saved the federal government more than $10 million a year in printing, mailing, and processing costs.

FAFSA on the web not only has gained in market share, but also has contributed to a doubling in the total number of FAFSAs submitted. Last year alone, the number of FAFSAs submitted increased by more than 20 percent as compared with 2008.

More students can submit the FAFSA online, because the internet is not subject to the same resource constraints as a printed application form. The online FAFSA makes it easier and more convenient for students to apply for financial aid. Today FAFSA on the web has more sophisticated edit checks, more intelligent skip logic, real-time data matching with other government databases, electronic signatures, and optional pre-filling with IRS data. This saves applicants time and improves the accuracy of their application data.

Even so, more than two-fifths of undergraduate students do not apply for federal student aid—and more than a quarter of these students would qualify for federal grants.


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