Feds to stop tipping off colleges on student choices

For years, the federal government has been delivering inside information to colleges about an applicant's school preferences that has harmed some students' chances for admission and awards.

The Free Application for Federal Student Aid (FAFSA) has been serving as a tip sheet to colleges by sharing with them the schools that a child was applying to, as well as the school order that a teenager listed on the aid application. Most students list their schools in order of preference, which some colleges have used to make admission and aid decisions.

Most teenagers and their parents had no idea that the federal government was tipping off schools, but those who learned about this practice have been alternatively livid and scared about how this information was being used. With pressure building for the U.S. Department of Education to stop sharing what should be confidential information, the department has announced that it will end the practice beginning with the 2016-17 FAFSA.

A Department of Education official provided the following explanation in an email for the policy change to CBS MoneyWatch:

We are making this change because of information we have received that some colleges were using the listing of the other schools in a manner that is not appropriate. For example, some colleges use that information in their admissions decision process -- looking to see if any of their competitors were listed. Similarly, some use the information to determine if and how much institutional aid to provide -- why spend money if the student would likely come to my school anyway? We also determined that there is no legitimate student aid need for such information.

Before making this decision, the official said the department conducted extensive research and consulted with various stakeholders including colleges, state agencies and others in the higher-ed industry.

FAFSA, which millions of students use, allows a financial aid applicant to list up to 10 schools on the aid application. Colleges need to know if students are applying for financial aid so they can create aid packages for their accepted applicants.

Colleges' reliance on FAFSA lists for more than their original use came to light in 2013 when Inside Higher Ed, a trade publication, suggested that some schools were denying admission based on list order and possibly reducing financial aid.

This is a murky area and no one knows for sure how common such FAFSA data-mining is. A 2015 study, however, suggested that some moderately selective schools did reduce aid based on students' list orders.

Although schools will no longer gain access to a student's school list via the FAFSA, state higher-ed agencies will continue to have access to students' college preferences. Several states, including Massachusetts, New Jersey and Connecticut, require that students put a state university first on the FAFSA list to be eligible for some state grants.