Verification 101 Debbie Forrester-Elmhurst College 2018 ILASFAA Conference Saving the Day with Financial Aid April 16-18, 2018

The Basics 2018 ILASFAA Conference Saving the Day with Financial Aid April 16-18, 2018

Agenda

Agenda What is verification and Why do we do it? Exclusions to verification Tracking groups Items to be verified Acceptable Documentation Corrections, Updates, Adjustments Verification Deadlines

Acronyms

FAFSA-Free Application for Federal Student Aid ISIR-Institutional Student Information Record SAR- Student Aid Report EFC-Expected Family Contribution CPS-Central Processing System

IFAP-Information for Financial Aid Professionals NSLDS-National Student Loan Data System ListServ-FINAID-L@LISTS.PSU.EDU ILASFAA-Illinois Association of Financial Aid Administrators MASFAA-Midwestern Association of Financial Aid Administrators NASFAA-National Association of Financial Aid Administrators

IFAP & the Federal Register Each year items to be verified and acceptable documentation is published on the Federal Register. You can find a link to the Federal Register at: https://ifap.ed.gov If you want to geek out even more you can find the Dear Colleague Letters, Electronic Announcement, links to the Education Act, Handbooks, various policies, training, and more

Required Policies and Procedures

The institution must have written policies for: The time period for submission of verification documentation Consequences for failure to submit documents How you will notify the student about EFC and Title IV amount changes Procedures for how the school and student will correct FAFSA data The procedure the school will follow when reporting a student to the Inspector General Verification must be completed before exercising Professional Judgement

What is Verification?

Verification: The process of establishing the truth, accuracy, or validity of something

Verification is the process of gathering various documentation to ensure the information provided on the FAFSA is correct. Random Selection of about 35% Selection for those areas of the application that are error prone

Why?...

Verification applies to recipients of subsidized Title IV aid: …Do we do verificaton? The responsibility of FAA’s to ensure that taxpayer dollars are being used by those students who are eligible Verification applies to recipients of subsidized Title IV aid: Pell Grant FSEOG (Federal Supplemental Education Opportunity Grant) Federal Work Study Perkins Loans (Phased Out) Subsidized Loans

Conflicting Information Must be resolved for all award years, even retractivley, unless: Student dies during the award year; or Conflicting data is received after the student is no longer enrolled at the school and does not intend to re-enroll

Exclusions

We will not complete verification: For Parent and student data if: A student is only eligible for unsub loans If the verification was completed at a different institution and we have proof Student dies during the award year For the parent data if: Both or the only parent on the FAFSA is mentally incapacitated Both or the only parent on the FAFSA whereabouts is unknown Both or the only parent on the FAFSA lives outside of U.S. and out of normal communication

We will not complete verification: For Independent Student: Spouse data Is deceased or mentally incapacitated Cannot be located because the contact information is unknown and cannot be obtained by the applicant Is residing in a country other than the US and cannot be contacted by normal means of communication

We will not complete verification: Exclude some data elements: The number in the household of a dependent student, if the parents are married and the household size equals 3 The number in the household of an independent student, if the student is married and the household size equals 2

Tracking Groups:

three tracking groups V1- Standard Verification Group V4- Custom Verification Group V5-Aggregate Verification Group

V1 Standard group Items to be verified: Tax Filer: Adjusted Gross Income AGI US income taxes paid Untaxed portion of pensions Tax exempt interest income

V1 Items to be verified (Cont.): Tax Filer: Education tax credit Household size Number in College

V1 Items to be verified: Non-Tax Filer: Income from work Household size Number in college

V4 custom Group items to verify: High School completion Identity and Statement of Educational Purpose

V5 Aggregate group items to verify: All items based on tax filer or non-tax filer status for V1 Standard Verification Group And… High School completion Identity and Statement of Educational Purpose

Reassignment of tracking groups: Applicants can be moved from a previously assigned tracking group to the V5 group. This occurs when the applicant’s FAFSA is updated or when other information becomes available to ED FAA’s will verify only those items not already verified in the previous group.

Items to be verified:

Payments to tax deferred pensions and savings plans Adjusted gross income (AGI) Income earned from work for nontax filers U.S. income taxes paid Untaxed Income and benefits for tax filers Other untaxed income reported on the FAFSA Payments to tax deferred pensions and savings plans Child support received Living allowance paid to military or clergy Veterans non educational benefits Other untaxed income Money received or paid on the student’s behalf

Number of Household members If an institution determines that the amount of income stated and verified still does not appear to provide sufficient financial support for the number of people in the household, the institution may request additional information to explain how the family was financially supported during the calendar year Number of Household members enrolled at least half time in a Title IV college High School completion status Identity and statement of educational purpose

Automatic Zero EFC

Auto zero Efc: Minimum Verification Requirements All Data included in the IRS DRT are considered verified if the IRS Request Flag is 02. None of the remaining data elements need to be verified for student/parents who qualifies for Auto-Zero EFC

Auto zero Efc: Minimum Verification Requirements Regardless of the tracking group assignment, applicants who qualify for the Auto-Zero EFC are required to verify only certain data elements within the tracking group: Dependents- The parents AGI (if tax filers) V1-V5 Parent’s income earned from work (if non-tax filer) V1-V5 High School Completion V4-V5 Identity and Statement of Educational Purpose V4-V5

Auto zero Efc: Minimum Verification Requirements Independent students- The applicant and spouse AGI (if tax filers) V1-V5 Income earned from work for student and spouse (if non-tax filers) V1-V5 Household members if there are dependents other than the spouse V1-V5 High School completion V4-V5 Identity and Statement of Educational Purpose V4-V5

Acceptable Documentation

Number of exemptions claimed AGI U.S. Income taxes paid Tax Data IRS Data Retrieval Tool (DRT) unaltered “02” Flag Tax filing status Tax return type Number of exemptions claimed AGI U.S. Income taxes paid Untaxed portions of IRA Distributions

IRA Deductions and payments Untaxed portions of pensions Tax Data IRA Deductions and payments Untaxed portions of pensions Tax-exempt interest Education tax credits

IRS DRT Cannot be Used Tax return not filed Amended tax return filed Puerto Rican or Non US return filed Taxes electronically filed within 3 weeks or paper filed within last 11 weeks Parents are unmarried but living together Change in marital status after end of tax year and before filing FAFSA

IRS DRT Cannot be Used Married Independent student and spouse filed separate tax returns Married parents filed separate returns, or a married person filed as Head of Household First 3 digits of SSN is “666” for Pacific Islanders Neither married parent has a valid SSN Both parents entered all zeroes for SSN

Tax Return Transcript Alternative to the DRT Use the “Get Transcript by Mail” option on the IRS.gov website Call 1-800-908-9946 Mail IRS form 4506T

Tax Return Transcript online pdf PDF copy online: the IRS has developed a 2 step-multifactor authentication process that requires registration on the website User must have: 1. Access to a valid email address 2. A text enabled mobile phone 3. Specific finanical account numbers (such as a credit card or home mortgage or auto loan)

Acceptable Documentation Alternative Tax Transcripts: IRS Record of Account Transcript Return Transcript of Taxpayer (RTFTP) Tax Return DataBase View (TRDBV) All of these tax transcript format contain all the required information for verification IRS Tax Account Transcript does not include many of the income and tax data required to be verified and is not acceptable for verification

Acceptable Documentation You might also use for verification of tax data: Tax return filing extension IRS form 4868 (extension filed beyond 6 months) Amended tax return form 1040X Foreign and US territory tax returns W2’s from each source of employment Written Statement of earnings

Acceptable Documentation Verification Worksheets ED provides suggested text to be used in verification worksheets to assist in gathering additional information. Each instituition can develop and use their own texts, forms, documents, statements, and certifications. An exception is that schools must use the exact language provided in the “Statement of Educational Purpose” for students placed in the V4 and V5 Verification Groups

Corrections Updates Adjustment

Corrections Corrections are changes to data elements that were incorrect at the time the FAFSA was filed Required corrections: - Positive or negative changes in a single dollar item of $25 or more -Errors to non-dollar items such as address, household size, or number in college If a correction results in an adjusted EFC, the award must be changed to reflect the new eligibility

Updates Changes to data correct when FAFSA was filed but later changed. Required anytime: Household size Number in College Required due to verification: Household size Number in college Student marital status change Optional anytime to address inequality or ability to pay: Dependency/Marital status

Adjustment Change made by a financial aid administrator when using professional judgement (PJ)

Verification Deadlines

Deadlines Institutional deadline: set by the school and there is flexibility Pell grant deadline: all required documents must be received with a valid ISIR before the earlier of 120 days from the student’s last day of attendance or the deadline as published in the Federal Register Campus based/Direct loans: by the deadline as published in the Federal Register

Questions?

Resources NASFAA University Self Study Guide: Verification award year 2017-18 IFAP Application and Verification Guide 2017-18 GEN-01-06

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