Dan Robinson Campus Director of Financial Aid Pace University Verification 101 Dan Robinson Campus Director of Financial Aid Pace University

Overview What is verification? Who to verify? What to verify? What is acceptable documentation? What’s new this year?

What Is Verification? A review of certain data elements on the FAFSA For 2019-20, there are 3 Verification tracking groups Confirms eligibility for Pell Grant and need-based financial aid

Who to verify: All applicants selected by the Feds and those the school selects Verification Is Not Required - if the student is only eligible to receive non-need-based aid: Direct PLUS loan Grad PLUS loan Direct Unsubsidized Stafford loan TEACH Grant LEAP/SLEAP Iraq and Afghanistan Service Grant

Selected for Verification Indicators The ISIR/SAR shows EFC – 1234* The * indicates the student is selected for Verification by CPS

2019-20 Verification Groups V1: Standard Verification V2: (Reserved for future use) V3: (Reserved for future use) V4: Custom Verification High School completion; Identity/Statement of Educational Purpose V5: V1+V4 V6: (Reserved for future use)

What To Verify – V1 Standard Verification All Applicants Selected Household Size Number in college Non-Tax Filers Income Earned From Work Tax Filers Adjusted Gross Income (AGI) Federal Income Taxes Paid Education credits Untaxed IRA & Pension Distributions (exclude rollovers) IRA/SEP Deductions Tax Exempt Interest Income

V4 – Custom Verification High School Completion – collect one of these High school diploma Final high school transcript stating date the diploma was awarded; Recognized equivalent i.e. GED, Home School, state certificate; already completed 2 years of college Identity (in person or if can’t be in-person then notarized) Driver’s license (non-expired) Passport – cannot be expired Government or State ID with photo Statement of Educational Purpose (exact text is provided)

V5 – Aggregate Verification Group V1 + V4 = V5 High School Completion Identity and Statement of Educational Purpose All Items in the Standard Verification Group (V1)

Verification Documentation Verification Worksheet Household size, relationship to student, age, number in college and income earned from work for non-tax filers IRS Data Retrieval Tool (DRT) AGI, Taxes Paid, and Untaxed Income (This information will NOT be visible to the student/parent on the Student Aid Report (SAR) or FAFSA online). IRS request field on the ISIR has a value of: 02 – No data changed 03 – No data changed except rollover amount corrected/changed 07- Data pulled from IRS, not changed but tax return was amended Tax Return Transcript (TRT) – certain info will be redacted IRS Letter of Non-Filer status Foreign Income – foreign tax returns – converted to US dollars W-2’s or Wage & Income Transcript

Use of IRS Data Retrieval Tool Demographic data must match tax return filed EXACTLY! Ex “St.” versus “street” Cases when IRS Data Retrieval cannot be used: Shut down of system by IRS/DOE Married filing separately Married and one parent is filing head of household – RED FLAG Change in marital status after 2017 Puerto Rican or Foreign Returns Delay if IRS determines victim of identity theft (form 14039) Delay if filed recently (less than 2 weeks if electronic filing, 6 weeks for paper application) – very unlikely due to PPY

Tax Return Transcripts Use the IRS Get Transcript Online service Register and download a PDF Get Transcript by mail Use IRS form 4506-T (various transcript may be requested) New “Customer File Number” line 5b added to help identify student (enter ID #) As of Sept 23, 2018 the IRS has redacted sensitive information on all transcripts

Reporting Results for Verification Tracking Flags V4 and V5 Beginning 2014-2015, institutions must report all results for students with a flag of V4 and V5 no later than 60 days following the first request for documentation Report Identity Verification results on FAA Access to CPS online Results should be reported as: Verification completed in person – no issue found Verification completed using notary – no issues found Verification attempted, issues found with identity Verification attempted, issues found with HS completion Verification attempted, issues found with both identity & HS completion No response from applicant or unable to locate For further information see 11/13/13 Electronic Announcement

Who is the parent? “Parent” includes biological, adoptive, and stepparent (if married to biological parent) regardless of gender “Parent” does not include foster parents, legal guardians, and grandparent or other relatives If both parents are deceased, a student in foster care or a ward of the court at any time after the age of 13 or was an orphan who was adopted any time since the age of 13 is considered independent for the purpose of completing the FAFSA Parent’s who are unmarried but living together are both counted on the FAFSA regardless of gender

Who is the custodial parent? Custodial Parent (Divorced or Separated Parents): Three Question Test Which parent did student live with more during the 12 months preceding FAFSA completion date? If live with both equally, which parent provided more financial support during the 12 months preceding FAFSA completion date? If financial support is equal, which parent has the greater income and benefits?

Who is the parent? Visit studentaid.ed.gov

Household Size Dependent student Independent student Student and parent(s) Student’s siblings (including unborn children that will born during academic year) Others receiving more than 50% support for the entire award year who live with parents Independent student Student and spouse Student’s children (including unborn children that will born during academic year) Others receiving more than 50% support for the entire award year who live with student

Important Note Rules for determining household size for FSA purposes are different from IRS rules for determining dependents or household members Household size must be updated at the time of verification unless the change was the result of the student’s marital status, for which updating is not permitted In the event of a student marital status change institutions may use their discretion to more accurately reflect the applicant’s ability to pay Must be evaluated on a case by case basis Decision reason must be documented In cases where parent remarried after FAFSA application but before Verification Must include stepparent in HH size Institution can use PJ with regard to inclusion of stepparent income

Number in College Dependent student Independent student Student Other dependents in household who will be enrolled at least ½ time during academic year in an eligible degree or certificate program at an eligible FSA school NOT PARENTS! Not US military academy students Independent student Student Others in household – including spouse - who will be at least ½ time during academic year in an eligible degree or certificate program at an eligible FSA school

Untaxed Income & Benefits Other untaxed income not on tax return Child support received for all children in household Pre-tax contribution to tax-deferred pension Housing/food/living allowances (excluding rent subsidies for low-income housing and in-kind support) Cash support (not cash from parents for dependent student) Untaxed worker’s compensation, disability, foreign income (Do not include Social Security disability) VA non-education benefits

Conflicting Information Must resolve even if not part of verification Institutional responsibility 1040 shows parent single or head of household and on the FAFSA/ISIR shows the same person as married FAFSA shows parents are married and one or both file as head of household or single Parent or student report on their FAFSA and signed a verification worksheet that they will not file an IRS 1040. The amount of reported income is greater than or equal to the minimum amount required to file as indicated by the IRS (publication 17)

Do we verify… Dependency Status? Not required unless there is conflicting information School may require documentation if a student is independent based on orphan, ward of the court, etc. questions Assets? These are not verification items What is reported on the FAFSA is a snapshot of the assets as of the date the FAFSA is filed May require more information if question is left blank and verification results determine an amount is required

Required Policies & Disbursements Must have written policies and procedures Outline deadlines, required documents, student responsibilities, school’s method of notification, required correction procedures, procedures for referring overpayment cases to Dept. of Ed. May initially disburse federal funds prior to verification or receipt of corrected SAR or ISIR if you believe the application to be accurate. Pell, SEOG, Perkins: one disbursement in the first payment period Federal Work Study: can be employed for up to 60 days Direct Stafford Loans: can originate, but may not disburse If selected after initial disbursement, must verify before making further disbursements.

New for 2018-19, but still around Comment Codes 400 & 401 IRS Request Flags 06 & 07

Code 400/401 (Because 399 just wasn’t enough) Two new comment codes starting with 2018–2019, also due to the IRS data masking, that schools must respond to: Code 400 for parents Code 401 for students When an ISIR indicates either of these codes, the school must check the FAFSA to see if any of the following conditions exist and make necessary corrections:

Codes 400/401 1. The student or parent is a tax filer and the AGI transferred from the IRS is zero, but the total income earned from work is greater than zero 2. The total of the taxable income offsets for the student or parents is greater than the AGI transferred from the IRS 3. Any of the untaxed income items for the student or parent is greater than or equal to the AGI transferred from the IRS

400/401 Information Although you are not required to verify FAFSA’s with these codes, you are still required to review for possible discrepancies Documentation might include: Signed statements W-2/Wage & Income transcript IRS Tax Return Transcript Documentation of child support, child support paid, etc. Code 402 – maybe next year…..

IRS Request Flag 06 A value of 06 indicates that after the DRT was used and the FAFSA was submitted, the student or parent changed an item on the FAFSA (e.g., the date of marriage) that would have made the person ineligible to use the DRT The school must contact the student or parent to determine if all of the transferred data was correct or if it needs to be corrected

IRS Request Flags 06/07 A value of 07 is an indication from the IRS that the student or parent used the DRT but also has filed an amended tax return for the relevant year Because the data that was transferred will be from the original return and not the amended one The school must contact the student or parent and make any applicable corrections to FAFSA items, regardless of whether the application was selected for verification

Verification Guidance Student Aid Handbook Verification Guide http://ifap.ed.gov/fsahandbook/attachments/1819AVG.pdf DCL GEN-14-11 – Guidance on Verifiable Information http://ifap.ed.gov/dpcletters/GEN1411.html Publication 17 – Your Federal Income Tax – the IRS Bible Tax Guide for Individuals http://www.irs.gov/pub/irs-pdf/p17.pdf IRS Forms and Publications http://www.irs.gov/formspubs\ Tax Transcripts http://www.irs.gov/faqs/faq/0,,id=199557,00.html USCIS – US Citizenship and Immigration Service http://www.uscis.gov/portal/site/uscis NSLDS https://www.nsldsfap.ed.gov/nslds_FAP/ Selective Service Registration Confirmation https://www.sss.gov/RegVer/wfVerification.aspx Social Security Administration http://www.ssa.gov/ssnumber/

Questions??? For more in-depth verification information, register for the November 1, 2018 webinar