October 2017 marked the anniversary of the implementation of what has been called “the early FAFSA,” and the use of prior-prior year (PPY) income when submitting the Free Application for Federal Student Aid (FAFSA). Two years earlier, on September 14, 2015, President Obama announced major changes in the historic application process for Federal Student Aid. Those changes included the earlier application processing start-up for subsequent financial aid award years (July 1 through June 30), beginning with the 2017-2018 award year. This allowed students’ early submission of FAFSAs—for the first time—for the 2017-2018 award year, beginning October 1, 2016. Likewise, this year students across the country began submitting their FAFSA as of October 1, 2017, for the 2018-2019 award year, even as they are finalizing plans and preparations to attend the postsecondary institution of their choice in the upcoming academic 2018-2019 year.
Each year the bulk of those students seeking to enroll in postsecondary education submit the Free Application for Federal Student Aid (FAFSA). Today, the vast majority of FAFSAs are typically completed via the FAFSA-on-the-Web (FOTW). This expedites processing of students’ FAFSAs. That is, unless they are selected for the process called “verification.”
Even with the major changes announced two years ago, the process called “verification” continues as a regulatory requirement. Verification was implemented three decades ago to “reduce error in the information reported by applicants on their applications for assistance….”[1] But, there are annual updates to the requirements of which it is essential to be aware. Verification is important to ensure an appropriate level of accountability is maintained in the use of funds provided through the Title IV Federal Student Aid programs administered by the U.S. Department of Education (ED).
Since the FAFSA processing for the 2018-2019 award year just began on October 1, 2017, it is time for a second look at many federal financial aid applicants’ data. Although we have passed the season of year when we yet hear the song that warns about “checking it twice,” as financial aid administrators, it is time to begin that process as it relates to verification! It is time to check (sometimes twice!) the data students submit.
Correctness of data has always been a key focus of the Higher Education Act (HEA) related to students’ applications. Even before verification was part of the Title IV regulations, the HEA required resolution of “conflicting information.” But, since many conflate the concepts of verification and “conflicting information,” we must point out that—although some people seem to want to talk of them as one process—resolution of conflicting information is still a separate and distinct process from verification.
Key Resources for Verification 2018-2019
The primary regulatory guidance specific to the 2018-2019 award year is the Notice provided in the May 5, 2017, Federal Register.[2] Immediately following the publication of that Notice, ED released Dear Colleague Letter (DCL) GEN-17-05.[3] It highlights the changes for the 2018-2019 award year related to acceptable documentation for affirming income information and clarifies what is considered a valid “government-issued photo identification.” Note: the Internal Revenue Service’s (IRS) Data Retrieval Tool (DRT) has been reinstated for the 2018-2019 FAFSA processing cycle that began October 1, 2017. The DCL further emphasizes that due to the use of prior-prior year (PPY) income—in this case, 2016—there should be few instances in which an applicant will need to use estimated income and taxes paid due to not having already submitted his or her 2016 federal income tax return. Additionally, changes to the Verification Tracking Groups for 2018-2019 are detailed, along with the information that must be verified for each tracking group.
Documentation of Income and Tax Returns
IRS Tax Filers
Taxpayers who filed their income tax returns with the IRS are required to submit:
- 2016 tax account information of the tax filer that has been obtained from the Internal Revenue Service (IRS) through the IRS Data Retrieval Tool and that has not been changed after the information was obtained from the IRS; or
- a tax return transcript obtained from the IRS that lists 2016 tax account information of the tax filer.
Non-IRS Tax Filers
Non-IRS Tax Filers (e.g., tax filers in a U.S. Territory such as Guam, American Samoa, or the U.S. Virgin Islands) are required to 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 tax return could be accepted for purposes of verification. It must be noted that it is only in such 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
Non-tax Filers
For non-tax filers who have not filed their income tax return with the IRS (whether from the Federated States of Micronesia, a U.S. territory or commonwealth, or a foreign central government), applicants must submit:
- a signed statement from the individual that he/she has not filed and is not required to file a 2016 income tax return;
- a detailed signed statement of the sources of his/her 2016 income earned from work and the amount of income from each source;
- a copy of his/her IRS Form W–2 Wage and Tax Statement (or equivalent) for each source of 2016 employment income, and
- a confirmation of non-filing from the IRS or other relevant tax authority dated on or after October 1, 2017.
The bottom line is that if an individual did not keep a copy of his/her 2016 tax account information—whether a tax filer, or non-tax filer—and the IRS (or, other applicable taxing authority) is not able to locate such information in their records for the individual, the individual must provide to the school all copies of their W2s (or, equivalent), a wage and income transcript (or, its equivalent), and documentation from the IRS (or applicable taxing authority) that verifies that the individual’s 2016 tax account information cannot be located, along with a signed statement that the individual did not keep a copy of his or her 2016 tax account information.
New exception: The general requirement to obtain documentation about an individual’s non-filing status from the IRS, which began in 2016-2017, continues in 2018-2019 as it relates to the individual’s 2016 income (the PPY income for 2018-2019). However, there is a new exception beginning in 2018-2019. Dependent students who are non-tax filers are excluded from the verification requirement to provide confirmation of the dependent student’s non-filing status from the IRS or other relevant tax authority. Note that completion of other verification requirements for dependent students is still required.
Identity Theft
Individuals who were victims of tax-related identity theft will need to:
- provide a statement signed and dated by the tax filer indicating that he or she was a victim of IRS tax-related identity theft and that the IRS has been made aware of the tax-related identity theft, and
- 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. The TRDBV should be submitted to the Financial Aid Office to assist in completing the applicant’s verification.
Amended Returns
For the 2018-2019 award year (which continues a similar process begun in the 2016-2017 award year), those individuals selected for verification who filed an amended tax return will need to present:
- a transcript obtained from the IRS that lists 2016 tax account information of the tax filer(s); and
- a signed copy of the IRS Form 1040X (amended return) filed with the IRS.
It is important to note ED’s implementation and use of the IRS Request Flag with a value of “07” to indicate that an applicant or parent filed an amended tax return.[4] (See the Electronic Announcement dated December 12, 2017.)
Verification for Individuals Eligible for Auto Zero Expected Family Contribution (EFC)
There are some slight differences in the verification requirements for Auto Zero EFC-eligible applicants who are placed in Verification Tracking Groups V1 or V5, depending upon whether the applicant is dependent or independent. As stipulated in the DCL the following information is required for verification:
For dependent students—
- the parents’ adjusted gross income (AGI) if the parents were tax filers;
- the parents’ income earned from work if the parents were nontax filers; and
- the student’s high school completion status and identity/statement of educational purpose, if placed in Verification Tracking Group V5.
For independent students—
- the student’s and spouse’s AGI if they were tax filers;
- the student’s and spouse’s income earned from work if they were nontax filers;
- the student’s high school completion status and identity/statement of educational purpose, if placed in Verification Tracking Group V5; and
- the number of household members (in order to determine if the independent student has one or more dependents other than a spouse).
For all Auto Zero EFC-eligible applicants placed in Verification Tracking Group V4, the student’s high school completion status and identity/statement of educational purpose information must be verified.
Documentation of High School Completion & Identity/Statement of Educational Purpose
High School Completion Status
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.
Documentation of high school completion status may include:
- a copy of the applicant’s high school diploma;
- a copy of the applicant’s final official high school transcript that shows the date when the diploma was awarded; or
- a copy of the ‘‘secondary school leaving certificate’’ (or other similar document) for students who completed secondary education in a foreign country and are unable to obtain a copy of their high school diploma or transcript. Note: Institutions that have the expertise may evaluate foreign secondary school credentials to determine their equivalence to U.S. high school diplomas. Institutions may also use a foreign diploma evaluation service for this purpose. (FAME does not provide transcript evaluation services.)
- a recognized equivalent of a high school diploma, such as:
- a General Educational Development (GED) Certificate or GED transcript;
- a State certificate or transcript received by a student after the student has passed a State-authorized examination (HiSET, TASC, or other State-authorized examination) that the State recognizes as the equivalent of a high school diploma;
- an academic transcript that indicates the student successfully completed at least a two-year program that is acceptable for full credit toward a bachelor’s degree at any participating institution; or
- for a person who is seeking enrollment in an educational program that leads to at least an associate degree or its equivalent and who excelled academically in high school but did not complete high school, documentation from the high school that the student excelled academically and documentation from the postsecondary institution that the student has met its written policies for admitting such students.
- documentation of homeschool completion
- a copy of the credential the State approves in states where law requires homeschool secondary school completion credentials be issued to homeschool students; or
- if State law does not require a secondary school completion credential, a transcript or the equivalent signed by the student’s parent or guardian that lists the secondary school courses the student completed and that documents the successful completion of a secondary school education in a homeschool setting.
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. Such cases may include scenarios where the secondary school is closed and information is not available from another source, such as the local school district or a State Department of Education, or in the case of homeschooling, the parent/guardian who provided the homeschooling is deceased. For those students who have been in the military, schools may accept a copy of the student’s DD Form 214 “Certificate of Release or Discharge from Active Duty” as alternative documentation to verify a student’s high school completion if it indicates that the individual is a high school graduate or equivalent.
It is recommended that schools review the most recent Program Integrity Regulations Questions and Answers on ED’s Web site related to high school diplomas 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.
Disseminating the Request for Verification Documentation
As has been the case for the last several years, ED does not provide sample “Verification Worksheets.” However, ED’s standard now is to provide “suggested” verification text that an institution may use for developing its own verification forms or worksheets. The “suggested” text that may be used was distributed as part of ED’s August 16, 2017, Electronic Announcement as Attachment A. It is important to recognize that the sample text provided is simply that, “suggested” text. An institution may modify the wording as long as the institution words it in such a way as to collect the necessary, accurate information required for verification. One exception to the concept of “suggested” text is when it comes to the “Statement of Educational Purpose.” ED clearly directs institutions that they must use the exact wording as provided for the Statement of Educational Purpose that is required to be signed at the institution (or, in limited situations when a student is unable to appear at the institution, by submitting the statement after it was signed and notarized in the presence of a Notary Public).
ED released the “Application and Verification Guide” volume of the 2018-2019 Federal Student Aid Handbook on January 3, 2018. The suggested text is included as approximately the last 14 pages of Chapter 4 of the volume, beginning on page AVG-96. (NOTE: For FAME clients, we develop sample verification worksheets and forms that may be used. Once these are available for 2018-2019, they may be accessed by logging in to FAME Connect and selecting the Financial Aid Services Procedures Manual option, followed by selecting item “A. 2018-2019 Award Year.” Next, select the option “2. Appendix” for the list of all available sample forms.)
As a quick reference to the Verification Tracking Groups and the required/acceptable documentation applicable to each, the table of “2018-2019 Verification Tracking Groups” is provided below, excerpted from the DCL GEN-17-05. You will notice that Verification Tracking Groups V2, V3, and V6 are not in use in 2018-2019. Those tracking groups are reserved for potential future use (and, as placeholders for the prior years when they were used).
Additional Verification Resources for 2018-2019
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 be acquainted enough with the current award year’s Application and Verification Guide (AVG)[5] to be at ease with it. The AVG has, for a number of years, been merged into the Federal Student Aid Handbook as one of its volumes that are updated and published each year. It contains many answers to general questions on the FAFSA. ED released the “Application and Verification Guide” volume of the 2018-2019 Federal Student Aid Handbook on January 3, 2018. (The suggested verification text is included as approximately the last 14 pages of Chapter 4 of the volume, beginning on page AVG-96.)
Likewise, since 2012 (for the 2012-2013 award year), ED has assisted the financial aid community by providing a “FAFSA Verification-IRS Tax Return Transcript Matrix”. This useful tool helps ensure you are checking the correct line information on tax returns and tax transcripts when performing verification. If ED makes this tool available again for 2018-2019, it will be communicated via an Electronic Announcement on IFAP (and we will include it as an appendix to our procedures manual on FAME Connect for our clients).
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.
So, yes, “Verification” gives us a chance to check things on students’ FAFSAs. But, the goal is to make sure that all Federal Student Aid applicants apply for aid, and do so accurately, as part of our fiduciary role. We, as financial aid administrators, have the privilege and responsibility of helping ensure that, for each question, the applicants get it right, even if it means checking it
[1] Federal Register, Volume 51, No. 50, March 14, 1986; page 8946.
[2] Federal Register, Volume 82, No. 86, May 5, 2017; page 21,204 cf. Note that technical corrections were made to the Statement of Education Purpose contained in this Federal Register in the August 22, 2017, Federal Register.
[3] Dear Colleague Letter GEN-17-05
[4] Program Integrity Questions and Answers – Verification, Question VI-Q10, posted 12/08/2017.
[5] 2018-2019 Application and Verification Guide of the Federal Student Aid Handbook.
