When lawmakers first created the FAFSA, in 1992, no state recognized civil unions or domestic partnerships between same-sex couples, let alone the freedom to marry. Ten states and the District of Columbia currently confer the rights and responsibilities to same-sex couples—and that number increasing.

Recognizing this changing landscape, the U.S. Department of Education announced a small but significant change to the FAFSA that will make the application a more fair, efficient tool for students seeking financial aid to help pay for their college education. Starting in 2014 the Department of Education will begin collecting demographic and financial information about families headed by same-sex parents to determine eligibility for and amounts of Pell Grants and federal student loans.

Each year more than 20 million families complete the FAFSA, and these families do not necessarily all have the same family structures that the FAFSA—with its roots in the 1950s—presumes. The announced change from the Department of Education simply brings the FAFSA up to date to reflect the changing nature of the American family. What’s more, because many states, colleges, universities, and other providers of financial aid build out from the information already collected on the FAFSA or are modeled after the FAFSA, the proposed changes will likely have a trickle-down effect such that the entire process will become more fair, efficient, and effective for all families.
Below we take a look at the changes to the FAFSA, what they mean for families with same-sex parents, and remaining issues for lesbian, gay, bisexual, and transgender, or LGBT, applicants.

The FAFSA will include language allowing applicants with same-sex parents to accurately fill out the form
The FAFSA currently uses the terms “mother/stepmother” and “father/stepfather” when requesting information about an applicant’s parents. Applicants with same-sex parents must then either arbitrarily designate one parent as “mother” and the other as “father,” or omit one parent from the form entirely. In other words, the current FAFSA puts these applicants in a lose-lose scenario, forcing them to complete and submit an application that does not accurately reflect their family structure and that is therefore inaccurate.

The department’s proposal will change that. For the 2014-15 FAFSA, the department plans to replace “mother/stepmother” and “father/stepfather” with “parent 1” and “parent 2.” This change means that for the first time the department will collect same-sex parents’ financial information in the same way that it does today for married different-sex spouses. These changes not only accurately reflect—for the first time in the FAFSA’s history—the existence of LGBT families; they also capture the economic situation of these families so that students applying for aid can get the support based on financial need without any bearing on their parents’ sexual orientation.

This change mirrors similar changes made by other federal agencies. In 2011, for example, the U.S. Department of State initiated reforms to give passport application forms a more gender neutral parental designation. Doing so required minimal changes to federal forms while significantly enhancing the accuracy, fairness, effectiveness, and efficiency of government operations. More importantly, this change effectively protects LGBT families by requiring both parents to ascend to a child’s passport application, ensuring that one parent cannot take the child and leave the country without the other’s permission.

The FAFSA will be a more efficient, effective, and accurate application
At its core, this much-needed change to the FAFSA achieves two important policy objectives.

1. It guarantees that all families are treated fairly and equally in the higher-education financial-aid process. Without accurate language to describe their families, students with same-sex parents are likely to see their application delayed due to often-unavoidable inconsistencies. More concerning is the fact that some children of same-sex couples may not apply for aid at all due to the complexity and confusion caused by the FAFSA’s use of gendered language. What results is inequitable access to financial aid for students with same-sex parents. This change, however, significantly levels the playing field for these applicants. As Secretary of Education Arne Duncan said in announcing the proposed change: “All students should be able to apply for federal student aid within a system that incorporates their unique family dynamics.”
2. This change advances the efficiency and effectiveness of delivering aid based on need by not allowing irrelevant characteristics such as sexual orientation factor into the application process. Financial aid should be allocated based solely on financial need. Allowing other factors—such as sexual orientation—to enter the process results in the imprudent use of taxpayer dollars. In this way, the proposed change from the department would be a significant step toward enhancing the efficient use of federal funds.

But that is not to say this is the overarching goal of this change. Importantly, the change was made not to save the federal government money, but instead to ensure greater equity among aid applicants. Without accurate data on the LGBT community, we simply do not know how many families will be impacted by this change. We therefore do not know how this change will impact the budget in aggregate, since some families are likely to see larger financial-aid packages while others may see smaller ones with this change.

In announcing the change, Secretary Duncan said, “These changes will allow us to more precisely calculate federal student aid eligibility based on what a student’s whole family is able to contribute and ensure taxpayer dollars are better targeted toward those students who have the most need, as well as provide an inclusive form that reflects the diversity of American families.” With this change, if both parents are living together, both of their incomes will be considered when determining eligibility for federal aid. This will be true whether the parents are married or not and whether they are the same sex or opposite sex.

Remaining LGBT issues with the FAFSA
While the department’s proposed change is welcome news for students with same-sex parents, problems still exist for LGBT applicants.

1. Even with this proposed change, antigay laws will continue to prevent the Department of Education from recognizing same-sex spouses or partners. Passed in 1996 the Defense of Marriage, or DOMA defines marriage for the purposes of federal law as the union between one man and one woman. This law effectively denies more than 1,000 federal benefits and protections to legally married same-sex couples. That includes the ability to name a same-sex partner or spouse—and often their dependents—on the FAFSA. By excluding certain family members, the FAFSA calculates an “expected family contribution” that ultimately distorts the amount of aid these applicants should receive.
2. Transgender applicants face unique obstacles in obtaining financial aid. Transgender applicants often encounter problems when data mismatches occur, particularly with regards to a changed name or the gender markers on government-issued identification. If financial-aid institutions encounter data mismatches on applicants’ identification markers, this could delay the process of transgender students’ applications for financial aid. These data-mismatch issues can significantly impair these students’ ability to access aid. This is particularly problematic for transgender individuals that were identified at birth as male, as these students are required to register with the Selective Service upon turning 18 years old.
3. Accessing federal financial aid poses unique problems for LGBT youth coming from unsupportive or hostile families. The FAFSA requires most young applicants to submit their parents’ or legal guardians’ financial information, as well as provide their signatures to successfully submit an application for aid. This requirement may prove difficult for LGBT applicants who come from homes where they are unloved, neglected, abused, or even kicked out because of their sexual orientation or gender identity.

Luckily, the federal financial-aid system recognizes the difficulties facing youth with uncooperative parents by allowing them to bypass many requirements to submit their application, while asking the aid officer on campus to override the dependency determination. Still, that option is not foolproof. Some aid officers on college campuses are reluctant to do a dependency override in any circumstance and more must be done to ensure all children—estranged or not—receive the aid to which they are entitled.

Conclusion
Federal financial aid represents the gateway to a college education for many students in the United States. Individuals with a college education have higher earnings than those who do not, experience lower rates of unemployment and poverty, and have fewer health issues than those who do not or cannot attain a postsecondary education. Built into the system, however, are inherent biases against families with LGBT members, resulting in the discriminatory misallocation of federal dollars based on sexual orientation or gender identity—and not on an applicant’s financial need. With the upcoming changes to the FAFSA, one of those biases will be removed, which is good news for families headed by same-sex parents.

Because of the Defense of Marriage Act, nearly all government forms fail to recognize the diversity of today’s families. Forms such as the FAFSA continue to use gender-specific language when collecting information about parents and spouses that preclude same-sex couples from being fully recognized.

The U.S. Department of Education’s leadership on this issue, however, shows that even with DOMA, federal agencies can take steps to help families with same-sex parents when the executive branch has the flexibility to modify government forms. It’s an authority that should be leveraged wherever possible.