FAFSA & Verification Updates

Transcription

1 FAFSA & Verification Updates FASFAA Annual Conference May 24-27, 2016 David Bartnicki U.S. Department of Education 2 College List Issue: FSA has received requests from public to stop sharing full list of colleges on student s FAFSA with every school listed. Resolution: ISIR sent to colleges will only include the Federal School Code and associated housing code for the school to whom the ISIR is sent. Applicants will continue to receive SARs that list all the Federal School Codes selected on each transaction in order State grant agencies will continue to receive the full list of the colleges but, beginning with the FAFSA that listing will be provided in a random order 3 1

2 Change to Marital Status Issue: When a student or parent changes his/her marital status on a renewal application or correction, the corresponding marital status date isn t always updated. Resolution: When a student or parent changes his/her marital status and does not change the corresponding date, an edit displays Messaging to Explain Rollovers Issue: Students and parents who report untaxed portions of IRA distributions or pensions on the FAFSA sometimes fail to subtract rollover amounts despite FAFSA and IRS help text. Resolution: When an amount greater than $0 is reported, a message will display Rollover Message

3 Guidance For Legal Guardianship Issue: Applicants sometimes answer the legal guardianship question incorrectly. Resolution: FAFSA question 55 has been reworded and help text has been modified. 7 Legal Guardianship Messaging 8 IRS DRT Messaging Issue: Applicants and parents don t understand the purpose of the IRS DRT filtering questions. Resolution: Text that precedes these questions has been enhanced

4 IRS DRT Messaging Other FAFSA Changes Income threshold for an Automatic Zero EFC increased to $25,000 Change tax line references in taxes paid questions Updated the question to read, Enter your (and spouse s) income tax for Income tax amount is on IRS Form 1040 line 56 minus line 46; 1040A line 28 minus line 36; or 1040EZ line 10. Excess Advance Premium Tax Credit Repayment and the Health Care Individual Responsibility line items should not be included as taxes paid for Title IV purposes Reorder text in FAFSA questions 26, 28, 29, and

5 Paper FAFSAs More than 99 percent of FAFSAs are filed electronically. Beginning with the FAFSA we will no longer print the FAFSA as a color packet. PDF FAFSA available on-line to be printed Call FEDAID to request a copy Application Processing Announcements Beginning with , the FAFSA cycle will begin October 1 instead of January FAFSA filing will begin October 1, 2016 Gives more time to review, submit & update FAFSA data Beginning with , FAFSA income information will come from the prior, prior year FAFSA will collect tax year 2015 income information Added an applicant s receipt of Medicaid as a qualification for the Simplified Needs Test (SNT) 14 Benefits of FAFSA Changes Benefit #1: Alignment Many college application deadlines occur in the fall Alignment of FAFSA availability = less confusion Benefit #2: Certainty No need to estimate tax information IRS Data Retrieval Tool available at launch Earlier receipt of Expected Family Contribution (helps with assessing net costs) Benefit #3: Less Pressure More time before (most) state and school financial aid deadlines More time to compare school offers before College Signing Day 15 5

6 FAFSA CHANGES FOR Questions? Important Dates August 2016 EFC Formula Guide SAR Comments Code and Text Guide ISIR Guide September 2016 CPS Web Applications Demo System availability October 2016 FAFSA on the Web available (10/1/16) FAA Access to CPS Online availability (10/1/16) IRS Data Retrieval Tool available (10/1/16) Student Aid Report distribution begins (10/3/16) May 6, 2016 Electronic Announcement 17 Early FAFSA/Prior-Prior Year: Issues We ve heard your concerns about. Outreach Early FAFSA Webpage (right-hand side of IFAP) Periodic EAs, DCLs, training, Resources on IFAP Q & As recently added Student websites, publications, communications will be updated appropriately and as timely as possible "Early FAFSA" mailbox for the community to contribute thoughts, ideas, and concerns on the implementation of the Early FAFSA "Early FAFSA" mailbox - EarlyFAFSAFeedback@ed.gov 18 6

7 Early FAFSA/Prior-Prior Year: Issues Materials and Resources for Outreach FAFSA: FinancialAidToolkit.ed.gov/fafsa Resources: FinancialAidToolkit.ed.gov/resources FAFSA Changes: FinancialAidToolkit.ed.gov/fafsachanges Talking points Table of FAFSA launch dates and tax years Fact sheets for counselors and parents & college students Outreach calendar PowerPoint presentations Information about upcoming webinars 19 Early FAFSA/Prior-Prior Year: Issues We ve heard your concerns about. Professional Judgement (GEN-16-03) Reminded schools of their ability to use PJ and encourages schools to use PJ when appropriate (and properly document) ED acknowledges likely increase in use of PJ ED will modify risk-based compliance models to account for PJ increase Reminded schools to set Professional Judgment Flag to 1 (EFC Adjustment Processed) to indicate that the CPS submission was the result of a PJ determination 20 Early FAFSA/Prior-Prior Year: Issues We ve heard your concerns about. Verification May be some changes but overall process will be the same In most cases financial data processed by IRS Conflicting information (16/17 vs. 17/18 data) ED working to determine how to handle conflicting information during transitional year (e.g financial data) 2/18/16 EA encourages use of IRS DRT in 16/17 and 17/18 to reduce likelihood of conflicting information Further conflicting information guidance with be shared though IFAP in the near future 21 7

8 Early FAFSA/Prior-Prior Year: Q & As G-Q8: Will institutions have to review all of their students and ISIRs to determine if there might be conflicting information since supposed to be completed using same 2015 income and tax information? G-A8: No.the Department has developed a process where CPS will review a FAFSA if filed for a applicant. CPS will flag only those ISIRs where any potential conflict, could have a significant impact on the student s EFC The most effective ways to prevent conflicting information from occurring is for the FAFSA applicant to use the IRS Data Retrieval Tool (IRS DRT) when completing both their and FAFSAs. [April 12, 2016] 22 Early FAFSA/Prior-Prior Year: Items Electronic Announcement #4 - March 18, 2016 Outlines income related items on FAFSA that will be based on 2015 data (prior-prior year) Tax filing status, tax return status, type of return, return eligibility, AGI, taxes paid, exemptions, income earned from work, income exclusions, untaxed income FAFSA items current at time FAFSA completed or for current award year (Not prior-prior year data) Dislocated worker, household size, number in college, assets, certain means-tested benefits FSA Webinar Series Online registration is available at:

9 Prior-Prior Year What ISN T changing When Pell amounts are finalized/announced When Pell charts are released Sec. 482 of the HEA When Pell origination/disbursement records can be sent to COD When Pell funds will be available in G5 Described in detailed in the Early FAFSA Q & As 25 Award Letters Are we expected to award financial aid earlier? Schools are encouraged to award earlier, but are not expected to change institutional deadlines and processes Electronic Announcement: April 12, Early FAFSA/Prior-Prior Year: Q & As G-Q1: Will FAFSA applicants have an option to use tax year 2016 income and tax information? G-A1: NO. Beginning with the FAFSA, students and parents will be required to use income and tax information from the 2015 tax year. However, a financial aid administrator (FAA) may use professional judgment to change any of the income or tax items by using the 2015 (or any other recent 12 month period) income and tax information, if the FAA determines that there are extenuating circumstances that justify the use of information other than the 2015 tax year information. The fact that the student might be eligible for more aid based upon the use of 2016 information is not, by itself, sufficient reason for an FAA to make a professional judgment decision to use 2016 income. [April 12, 2016] 27 9

10 Early FAFSA/Prior-Prior Year: Q & As G-Q4: Since the FAFSA will use information from 2015, will the expected family contribution (EFC) calculation use the same need analysis tables that are used for the EFC calculations? G-A4: No. The EFC calculation will use updated need analysis tables. [April 12, 2016] G-Q5: Will the EFC need analysis tables be available earlier? G-A5: Yes. The Department expects to publish in the Federal Register the EFC calculation tables by the end of May. [April 12, 2016] 28 Early FAFSA/Prior-Prior Year: Q & As G-Q9: Will the FAFSA (either initial or renewal) be prepopulated with information from the applicant s FAFSA since the information should be the same? G-A9: NO. There are too many instances where such pre-populating would result in incorrect information being included on the FAFSA e.g., changes in dependency status, changes in marital status, professional judgment. However, institutions are reminded that most FAFSA filers who have filed an IRS income tax return will be able to use the IRS Data Retrieval Tool (IRS DRT) to import their 2015 income and tax information directly from the IRS into their FAFSA. Using the IRS DRT is the fast and most accurate way to input income and tax information into the FAFSA. Use of the IRS DRT will dramatically reduce the likelihood that the applicant will be selected for verification. [April 12, 2016]

11 Verification Overview Same data elements as for award year Some modifications and clarifications to acceptable documentation Eliminated Child Support Paid (V3) as a separate verification group In limited circumstances, an applicant s Verification Tracking Group could change Verification - Changes Verification Tracking Group changes: Verification Tracking Group V3 (Child Support Paid) has been removed Applicants placed in V1, V4, V5, and V6 must still verify child support paid if reported on ISIR Verification - Changes Verification Tracking Group changes: Applicants may be moved from previously assigned Groups V1, V4, and V6 to Verification Tracking Group V5 Applicant is only required to verify the additional items in V5 that were not previously verified If the applicant is moved to Verification Tracking Group V5, no additional disbursements of any Title IV aid may be made until verification is satisfactorily completed 33 11

12 Verification - Changes Verification Tracking Group changes: Applicants moved to Verification Tracking Group V5 If Title IV aid had been disbursed prior to receiving an ISIR with the new V5, and the applicant does not complete verification, the applicant is liable for the full amount of TIV aid disbursed for (not FWS funds) The institution is not liable Except school must return any Title IV funds as required in any R2T4 calculations Verification - Changes Applicants moved to Verification Tracking Group V5 Verification can be set on the application or correction Verification Selection Change Flag Y: indicates verification was not set and now record is selected for verification C: indicates the verification tracking group has changed This C is transaction specific Verification Income Information for Non-IRS Tax Filers Tax filers who filed an income tax return with a taxing authority in a U.S. territory (Guam, American Samoa, the U.S. Virgin Islands) or commonwealth (Puerto Rico and the Northern Mariana Islands) or with a foreign central government, must submit a copy of a transcript of their tax information A signed copy of the applicable 2015 income tax return that was filed with the taxing authority is only acceptable if tax filers are unable to obtain a free copy of a transcript of their tax information 36 12

13 Verification Income Information for Non-IRS Nontax Filers Residents of the Freely Associated States (Republic of the Marshall Islands, the Republic of Palau, the Federated States of Micronesia), and a U.S. territory or commonwealth or a foreign central government who are not required to file an income tax return under that taxing authority s rules must submit: a copy of their Wage and Tax Statement (or equivalent documentation) for each source of employment income and a signed statement identifying all of the individual s income and taxes 37 High School Completion Status For V4 and V5, if institution successfully verified and documented applicant s high school completion status for a prior award year, verification of high school completion status is not required for subsequent years DD Form 214 Certificate of Release or Discharge From Active Duty may serve as alternative documentation to verify a student's high school completion if it indicates that the individual is a high school graduate or equivalent An institution may not accept as alternative documentation an applicant s self-certification 38 High School Completion Status In rare cases where it is impossible for a refugee, an asylee or a victim of human trafficking to obtain documentation of his or her completion of a secondary school education in a foreign country, an institution may accept self-certification from these applicants Q&A FHD-Q2/A2 (program integrity Q & A website under HSD) Required information included: Proof of attempt to obtain documentation of their completion of a secondary school education in a foreign country Signed/dated statement that indicates applicant completed secondary school education in a foreign country along with - name and address of foreign high school and date foreign HS diploma was awarded Copy of entry status documentation showing status as a refugee, asylee, or victim of human trafficking and who entered the US after the age of

14 IRS Tax Return Transcript Matrix 40 Electronic Announcement 3/23/16 Electronic Announcement March 23, 2016 Cross-walk of IRS tax financial information between: FAFSA questions IRS Tax Return Transcripts IRS Tax Returns Specifically states do NOT use amounts from any line items on transcripts for verification purposes that use the word RECOMPUTED 41 New Announcement - May 4, 2016 New Matrix effective May 4, 2016 Updated the Income Tax Paid line items for Tax Return Transcripts Taxes and credits related to the Affordable Care Act are not to be included in the amount of U.S. Income Tax that is used in the calculation of a student s EFC Also indicate for all transcripts, if taxes paid is negative, enter '0' (zero) Specifically states do NOT use amounts from any line items on transcripts for verification purposes that use the word RECOMPUTED OR VERIFIED 42 14

15 Verification 43 Electronic Announcement 11/18/15 Contains 4 appendices to assist with crafting school verification documents to gather verification data Appendix A Suggested Text Not required to use ED s suggested text and formats ONE EXCEPTION institutions must use the exact language provided in the Statement of Educational Purpose (Groups V4 & V5) Notary s Certificate of Acknowledgement section, does not require the use of the exact language provided, although it must include a copy or description of the identification presented by the applicant to the notary 44 Electronic Announcement 11/24/14 Appendix B Table of verification items Appendix C Verification tracking groups and FAFSA verifiable information Appendix D Timeline Availability of 2015 IRS Tax Information 45 15

16 V4/V5 Tracking Results: V4/V5 Tracking Results The V4 and V5 tracking process in FAA Access that began in the processing year WILL CONTINUE for Schools need to select the proper award year for which they are providing results , , etc V4/V5 Tracking Results Use the Identity Verification Results section on the FAA Access home page 48 16

17 V4/V5 Tracking Results Whom to report: student for whom school received an ISIR with a Verification Tracking Group of V4 or V5 AND for whom school requested verification documentation Do NOT include students the school selected for verification of identity or high school completion status When to report: 60 days following the institution's first request to the student to submit the required V4 or V5 identity and high school completion documentation Changes to previously submitted Identity Verification Results must be updated within 30 days 49 Resources Federal Register Notice April 1, 2016 GEN April 5, /1/16 Federal Register Updates DD Form 214 Certificate of Release or Discharge From Active Duty that indicates an individual is a high school graduate/equivalent can be used as alternative documentation to verify high school completion status Individual selected for verification required to file a 2015 IRS income tax return and granted a filing extension by the IRS or any nontax filer selected for verification (parent, student, etc.) regardless if they earned any income from work, MUST provide: Confirmation of non-filing from the IRS or other relevant taxing authority dated on or after October 1, 2016 If person never filed a tax return before, can get letter of nonfiling from the IRS through 4506-T document (box 7) 51 17

18 Verification GEN Verification Tracking Group V6 is eliminated Schools reminded they can still select items of their choosing for verification SNAP and Child Support Paid removed as individual verification items under V1, V4 or V5 Suggested Test for will be provided in a future electronic announcement Verification GEN School can use verification documents from for following items if meet requirements: Adjusted Gross Income (AGI); U.S. Income Tax Paid ; Untaxed Portions of IRA Distributions; Untaxed Portions of Pensions; IRA Deductions and Payments; Tax Exempt Interest Income; Education Credits; Income Earned from Work Documentation of high school completion obtained prior to the award year is acceptable Must obtain new documentation each award year for: Number of Household Members Number in College Identity/Statement of Educational Purpose 53 Verification Policy Reminders 54 18

19 October 2, 2015 Electronic Announcement Alternative documentation allowed when tax filer RECENTLY requested but unable to obtain an IRS Tax Return Transcript using the IRS paper or on-line request process No alternative documents for telephone requests Exception not permitted for transcripts unable to be obtained simply because the IRS has not had time to process the data due to a recent filing saying the "Get Transcript Online" tool is not available *For award year* Transcripts Unavailable Alternative documentation includes: Signed copy of relevant 2014 IRS tax return AND Statement from tax filer, on or attached to the return, certifying same data submitted to the IRS AND Communication from IRS stating request unsuccessful Letter from IRS (signed and dated by tax filer); or Screen shot print (signed and dated by tax filer) AND Completed and signed IRS Form 4506 T-EZ or 4506-T listing institution as third party only send to IRS if doubt accuracy 56 Tax Filers - Extensions Person is required to file, but obtained extension, must submit: Program Integrity Q & A Website (DOC-Q16) IRS form 4868 or IRS approval to extend beyond October 15 deadline W-2 for each source of employment income Signed statement by a self-employed individual certifying amount of AGI & US income tax paid When above documentation reviewed, verification is considered complete (disbursements are valid) School may request transcript/irs DRT when taxes are filed; must re-verify income information 57 19

20 Verification Policy Updates Individuals who filed an amended tax return must submit the following documents to the institution: an IRS Tax Return Transcript, or any other IRS tax transcript(s) that include all of the income and tax information required to be verified; and a signed copy of the IRS Form 1040X that was filed with the IRS Guidance effective 8/13/15 for 15/16 and subsequent years Posted on Program Integrity Q & A website 58 Verification Policy Updates Victims of IRS tax-related identity theft must submit: Statement signed and dated by tax filer indicating they were victims of IRS tax-related identity theft and the IRS has been made aware of the tax-related identity theft; and A Tax Return DataBase View (TRDBV) transcript obtained from the IRS Tax filers who cannot obtain a TRDBV transcript may instead submit another official IRS transcript or equivalent document provided by the IRS if it includes all of the income and tax information required to be verified Guidance applies to 15/16 and subsequent years Posted in 6/26/15 Federal Register Notice 59 Verification Q & A VI-Q9. Must an institution complete verification of all FAFSA information identified in Verification Tracking Groups V1, V5 or V6 even if the selected applicant is eligible for an Automatic Zero EFC (Auto Zero EFC) VI-A9. For dependent applicants, only the following FAFSA information must be verified: The parents' AGI if they were tax filers; The parents' income earned from work if they were nontax filers; and The receipt of SNAP benefits (food stamps) by any household member if the receipt of these benefits qualified the applicant for Auto Zero EFC

21 Verification Q & A cont. VI-A9. For independent applicants, only the following FAFSA/ISIR information must be verified: The applicant's and spouse's AGI if they were tax filers; The applicant's and spouse's income earned from work if they were nontax filers; The number of household members to determine if the independent applicant has one or more dependents other than a spouse; and The receipt of SNAP benefits (food stamps) by any household member if the receipt of these benefits qualified the applicant for Auto Zero EFC. Also dependent and independent applicants placed in Verification Tracking Group V5 must also verify their high school completion status and identity/statement of educational purpose. 61 Resources 62 Federal Register Notice - June 26, 2015 (16/17) DCL GEN June 29, 2015 (16/17) EA 11/18/15 Suggested Text and Appendices (16/17) EA 5/4/16 REVISED Tax Return Transcript Matrix (16/17) Federal Register Notice - April 1, 2016 (17/18) DCL GEN April 5, 2016 (17/18) Program Integrity Q & A Website ( verification ) /integrity-qa.html Federal Student Aid Handbook Application and Verification Guide Chapter 4 Federal Regulations 668 Subpart E ( ); (f) 63 21

22 Contacts Atlanta School Participation Division Main Number: Ask for your Point-of-Contact Arva Thomas (IIS) Cassandra Weems (IIS) Atlanta Training Officer David Bartnicki Training Feedback To ensure quality training we ask all participants to please fill out an online session evaluation Go to Evaluation form is specific to David Bartnicki This feedback tool will provide a means to educate and inform areas for improvement and support an effective process for listening to our customers Additional feedback about training can be directed to joann.borel@ed.gov 65 Questions David Bartnicki david.bartnicki@ed.gov 66 22