When June Fomby was in high school, she knew so little about how to apply for financial aid for college that she almost missed the application deadline.
She "didn't even know the name" of the form she was supposed to fill out that determined whether she was qualified for any of the biggest government grants and loans, Fomby said.
"High schools should be educating us about it," said Fomby, who was surprised by the number of additional hoops she's had to jump through since enrolling at Foothill College, a community college south of San Francisco where she is now a 19-year-old freshman. "They're educating us so much about graduating, but what are we going to do once we get to college?"
Even as financial aid becomes increasingly essential, it's so complicated to obtain that millions of eligible students don't apply for it, or they take out the wrong kind of loans, incurring more debt than they need to.
Nearly half the nation's low-income students don't know about Pell Grants, the principal federal government financial-aid program, which is designed specifically to help them pay for college, according to the New America Foundation.
At the very least, "Students should really be aware of the Pell Grant," said Rachel Fishman, a senior policy analyst at the nonpartisan foundation, which advocates for ways to improve education and other government programs.
Even for families that do know to take advantage of it, college financial aid can be a challenging labyrinth of paperwork. These challenges multiply when students don't know about the requirements until the last minute, making it more likely they will miss out on scholarships and rely on expensive loans that can take decades to repay.
This confusion has continued despite years of political promises followed by a few incremental marketing and procedural improvements, such as slightly simplifying paperwork or letting students submit income tax information from an earlier year instead of the same year—correcting the dumbfounding problem that the FAFSA form is due before parents' income tax returns are.
Advocates of a simpler system are urging more dramatic solutions, and they're doing so as Congress deliberates the reauthorization of the Higher Education Act, which encompasses all federal government oversight of universities, colleges, and financial aid for students.
Long delayed and unlikely to come up for a vote until after the presidential election, the reauthorization could include a proposal to streamline the many existing federal loan programs into three — one each for undergraduates, graduate students, and parents.
So many shortcomings are there in the current financial-aid system that New America, for one, has urged a complete overhaul of it.
Part of the problem is with the overwhelming number of programs available: Many have long names that baffle students, and their varying advantages and disadvantages are difficult to compare.
The federal government alone offers Pell Grants, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Iraq and Afghanistan Service Grants, four types of Direct Loans, Perkins Loans, and the work-study program.
Some of the many different types of federally subsidized student loans have also now been layered with the option of repayment based on income. While this is meant to help students avoid shouldering unrealistic monthly payments and avert default, there are four different plans to pick from, some with different variations, and each with different conditions; even the proportion of income that has to be repaid is different, often depending on the date on which a borrower took out a loan. And in many cases choosing income-based repayment can end up costing a borrower more, not less, over the term of that loan.
This hodgepodge is complicated further by a slew of state and private programs, which can create enough confusion to thwart a student's college-going plans at the very last minute. This so-called "summer melt" is partly due to the fact that many financial-aid decisions need to be made the summer before school starts, said Ben Castleman, an assistant professor of education and public policy at the University of Virginia who studies financial aid. Up to 30 percent of students admitted to colleges and universities each spring don't show up in the fall, he said.
Meanwhile, letters sent by colleges and universities offering financial aid to admitted students can be difficult to understand — sometimes on purpose, according to critics. They use obscure jargon and abbreviations, often fail to note the full cost of attendance, describe loans as "awards," and list "expected family contributions" of zero — when, in fact, families are expected to take out substantial loans. Yet calls to simplify them have been largely rebuffed.
The aid system should be streamlined so it's a help and not a barrier, Castleman said.
"Anything we can do reduce the time people need to spend [deciphering and applying for financial aid] is beneficial," he said.
Sophomore Keith Sims said he spent a lot of time cobbling together a mishmash of aid — Pell Grants, merit scholarships, state grants, loans and work-study — to help him pay for his education at the University of Michigan. Among other things, that process required that his parents tell him their income, which in many families they don't want to do.
"I'm sure it's a difficult conversation for some people," said Sims, 19.
Even when parents are willing to hand over their financial information, the confusion starts at the ground floor: with the FAFSA, the free federal aid application that dictates most of the scholarships and loans a student will receive.
At least two million students who would be eligible for financial aid fail to complete the FAFSA, federal figures show, forgoing a share of billions of dollars' worth of grants and loans. And in spite of improvements to FAFSA this year, the proportion of high school seniors completing the form is down, not up — by 7 percent — according to an analysis of federal data by the advocacy group the National College Access Network.
Students who complete their financial-aid paperwork, meanwhile, often don't renew their eligibility in subsequent years, as is required for them to keep receiving help, researchers have found. That failure, Castleman said, leads some to drop out of college for lack of money: Freshmen who don't renew their FAFSA are 42 percent less likely than their peers to earn a bachelor's degree within six years.
Simplifying financial aid has been a longstanding challenge for policymakers. Sen. Lamar Alexander, R-Tenn., likes to unfurl a printed-out copy of the FAFSA, which is longer than he is tall. The form has been revised this year, and the deadlines changed to make it easier for families to sync it up with the figures on their income-tax returns; Alexander has suggested shortening it still further, to just two questions, about family size and household income.
But while a shorter FAFSA may make things easier, some say colleges and universities themselves should take responsibility for cutting through the confusion — and avoid complicating an already bewildering process.
"Some schools have a lot of extra paperwork, and I think that's often why we end up with incomplete applications," said Kevin Harral, Foothill College's financial-aid director. His college has tried to simplify the process as much as possible, he said. "If the feds don't require us to do something, why are we creating more obstacles?"
These extra obstacles are particularly daunting to low-income students, who are more likely to attend high schools with few college counselors and whose parents are less likely to have attended college, leaving 17- and 18-year-olds with no financial experience to navigate this complex process for themselves. Unlike wealthier students, they also can't afford to hire consultants who can help them unearth public and private scholarships.
Research has shown that even the slightest amount of extra help makes low-income students more likely to apply for financial aid.
A University of Virginia study, for example, showed that needy students from Dallas who were sent text message reminders to complete the FAFSA were more likely to attend college. Other researchers found that families who received free help completing the FAFSA during tax preparation were also more likely to send their children to college.
The University of Michigan sends a team of financial-aid advisors to schools, churches and elsewhere year-round, said Pamela Fowler, the university's financial aid director. Their message: It's really not that confusing.
"If we can change the dialogue that it's so difficult, it won't take very long," Fowler said. "Isn't 20 to 30 minutes of your time worth thousands of dollars?"
Michigan especially focuses on helping students whose parents didn't go to college themselves, calling them with reminders about missing information.
"We're doing all we can to help them through this process," she said.
But critics say there simply isn't enough help to go around. Federal and state financial aid timetables are badly out of whack with college decision-making deadlines, said Fishman, of the New America foundation. Combined with the shortage of useful information and counselors in K-12 schools, she said, it's clear something needs to change.
"Is it possible that by eighth grade we can start letting students know about this stuff?" Fishman said. "The cycle needs to start sooner than the junior or senior year of high school."
Or even earlier, said Jean Rash, financial aid director at New Jersey's Rutgers University.
"It should start when students are in first grade," she said. "Paying for college is going to be difficult and will require planning."
With two million eligible students failing to apply for aid at all, it's clear that something is broken, said Kim Cook, executive director of the National College Access Network, which aims to improve college-going and graduation rates.
"That's money that's being left on the table," she said. "It's really stunning to think how these students must be cobbling it together. There has to be some messaging that could raise awareness."