You’ve Got That Right! Verification 2016-2017

It is that time when millions of students are finalizing plans and preparations to attend the postsecondary institution of their choice during 2016-2017.

Each year the majority of those students submit the Free Application for Federal Student Aid (FAFSA).  With more frequency, the FAFSA is typically completed as the FAFSA on the Web (FOTW).  This expedites the opportunity for their FAFSA results to be processed more quickly.  That is, unless they are selected for the process called “verification.”

Verification is not anything new.  It is the process of making sure that the applicant for Federal Student Aid “got it right” on their FAFSA, so to speak.  The whole verification concept began with its predecessor back in the 1980s. The, at the time, recently created U.S. Department of Education (ED), promulgated the idea of “validation.”  That validation method had a primary concentration on the accuracy of data in applications for Federal Pell Grants.  But, we must remember that correctness of data has always been a preeminent focus of the Higher Education Act (HEA) related to students’ applications.  Even before validation and verification, the HEA required resolution of “conflicting information.”  But, there was little specificity as to what “conflicting information” meant and the expectations of schools regarding the degree to which they should affirm which data was correct, and which was not.  Interestingly, after all these years, resolution of conflicting information is still a separate and distinct process from verification (although some people seem to want to talk of them as one process).

A Quiet Anniversary with No Fanfare

A Notice of Proposed Rulemaking (NPRM) was published in the Federal Register on July 26, 1985, that recommended the process called verification.  But, it was not until the first regulations applicable to “verification” were published in the March 14, 1986, Federal Register, that the process we now call verification became a requirement.  There was not much preparation time allowed for implementing these new regulations as they became effective beginning with the 1986-1987 award year.  Back then, there was not a legislated “Master Calendar” that would require more advance notice of such regulatory changes.  And, actually, without any fanfare, verification now celebrates its 30^th anniversary!  Who brought the cake??

With the new regulations to guide them, schools began implementing this latest process to “reduce error in the information reported by applicants on their applications for assistance….”[1]  Although much of the basic regulations pertaining to verification are applicable yet today, there are changes to the requirements each year.  For the 30^th year of verification—the 2016-2017 award year—we have the annual updates of which it is important to be aware.

Key Resources for Verification 2016-2017

The primary regulatory guidance specific to the 2016-2017 award year is the Notice provided in the June 26, 2015, Federal Register.[2]  Immediately following the publication of that Notice, ED released Dear Colleague Letter (DCL) GEN-15-11.[3]  It highlights the changes related to acceptable documentation for affirming income information and high school completion status.  Additionally, changes to the Verification Tracking Groups for 2016-2017 are detailed, along with the information that must be verified for each tracking group.  Overall, the changes for 2016-2017 were not major.

Documentation of Data

Some of the changes made to the acceptable documentation for 2016-2017 include the clarification that non-IRS Tax Filers (e.g., tax filers in a US Territory such as Guam, American Samoa, or the U.S. Virgin Islands) must submit a tax transcript of their tax return if it is available at no charge from the taxing authority.  If it is not available without paying a charge to obtain it, a signed copy of the tax filer’s applicable 2015 tax return may be accepted for purposes of verification.  But, it must be noted that it is only in the scenario of when the tax transcript cannot be obtained without paying a charge to the taxing authority to obtain it that a signed copy of the tax return is acceptable for completing verification.

For other non-IRS (i.e., another taxing authority other than the IRS) non-tax filers (whether from the Federated States of Micronesia, a U.S. territory or commonwealth, or a foreign central government), applicants must submit a copy of their Wage and Tax Statement (or equivalent) for each source of employment income in 2015, along with a signed statement detailing all of the individual’s income and taxes for 2015.

If an individual did not keep a copy of his/her 2015 tax account information—whether a tax filer, or non-tax filer—the individual must provide to the school all copies of their W2s, a wage and income transcript (or, its equivalent), and documentation from the IRS (or applicable taxing authority) that verifies that the individual’s 2015 tax account information cannot be located, along with a signed statement that the individual did not keep a copy of his or her 2015 tax account information.

If the institution believes that the income earner/producer should have filed taxes, but the individual states that they did not and were not required to, the financial aid administrator may require the individual to obtain a “Verification of Non-filing Letter” from the IRS (or, the equivalent documentation from the applicable taxing authority).  See pages AVG-83 and AVG-123 of the 2016-2017 Application and Verification Guide of the 2016-2017 Federal Student Aid Handbook.

Individuals who were victims of tax-related identity theft will need to obtain the Tax Return DataBase View (TRDBV) transcript directly from the IRS.  The identity theft victim will have to contact the IRS’ Identity Protection Specialized Unit (IPSU) at 1-800-908-4490 in order to validate identity and request a copy of the TRDBV.

With the 2016-2017 award year, those individuals selected for verification who filed an amended tax return will need to submit a copy of the original 2015 tax return that was submitted to IRS, a 2015 Tax Return Transcript from the IRS, as well as a signed copy of the 2015 IRS Form 1040X (amended return) filed with the IRS.

It is recommended that schools review the most recent Program Integrity Regulations Questions and Answers related to verification on ED’s Web site at Program Integrity Questions and Answers – Verification.  ED posts its most current guidance, and changes in guidance, on this site.

For individuals in Verification Tracking Groups V4 and V5, if the school has successfully documented and verified the student’s high school completion status in a previous award year, the school does not have to verify the high school completion status again in subsequent award years.

Alternative documentation of high school completion status for those where documentation of their high school completion status is unavailable has been authorized in limited cases.  For those students who have been in the military, ED, in consultation with the Department of Defense, has determined that a 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.  NOTE:  This is updated guidance after the publication of the DCL GEN-15-11, which had originally stated that the DD214 could not be used.

Again, It is recommended that schools review the most recent Program Integrity Regulations Questions and Answers on ED’s Web site at Program Integrity Questions and Answers – High School Diploma for the latest guidance on this topic, including when a refugee, asylee, or victim of human trafficking are not able to obtain documentation of high school completion in another country.

Separation agreements and divorce decrees have been removed from the list of acceptable documentation of the amounts of child support paid since these documents only show what is supposed to have been paid, and not what was actually paid.

As has been the case for the last several years, ED does not provide sample “Verification Worksheets.”  However, as has become the standard, ED did provide “suggested” verification text that an institution may use for developing its own verification forms or worksheets.  (NOTE:  For FAME clients, we have developed sample verification worksheets and forms that may be used.  You may access these by logging in to FAME Connect and selecting the Financial Aid Services Procedures Manual option, followed by selecting item “A. 2016-2017 Award Year.”  Next, select the option “2. Appendix” and all of the available sample forms will be listed.)

As a quick reference to the Verification Tracking Groups and the required/acceptable documentation for each requirement, we are copying in the “Table of 2016-2017 Verification Tracking Groups” below, excerpted from the DCL GEN-15-11.  You will notice that Verification Tracking Groups V2 and V3 are not in use in 2016-2017.

2016-2017 Verification Tracking Groups
FAFSA Information Required to be Verified

Chart Source:  Excerpted from ED’s DCL GEN-15-11.

Additional Verification Resources for 2016-2017

After one becomes familiar with the regulatory and sub-regulatory guidance described above, it is important to keep in mind the general detailed direction offered in two other ED publications.  First, as an aid administrator, it is always a good idea to become acquainted enough with the current award year’s Application and Verification Guide (AVG)[4] to be at ease with it.  The AVG has, for a number of years, been merged into the Federal Student Aid Handbook as a standalone volume each year.  It contains many answers to general questions on the FAFSA.

Likewise, in recent years, ED has been so kind as to provide a “FAFSA Verification-IRS Tax Return Transcript Matrix”.  The most recent and current version was updated and released in an Electronic Announcement on May 4, 2016.[5]  This useful tool will help ensure you are checking the correct line information on tax returns and tax transcripts when performing verification.  It is well worth becoming comfortable with this tool and having ready access to it.

So, “Verification,” at age 30!  How that youngster has grown!  Thankfully, there were no major changes (i.e., “growth”) to the verification process for 2016-2017.  But, we do want to make sure that all of the youngsters—and the not so young—who complete the FAFSA this award year do so accurately.  We, as financial aid administrators, have the privilege and responsibility of helping ensure that, for each question, they got it right!

(DCL GEN1511 FR06262015 EA 05042016)

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[1] Federal Register, Volume 51, No. 50, March 14, 1986; page 8946.
[2] Federal Register, Volume 80, No. 123, June 26, 2015; page 36,783 cf.
[3] Dear Colleague Letter GEN-15-11
[4] 2016-2017 Application and Verification Guide of the Federal Student Aid Handbook
[5] Electronic Announcement on May 4, 2016