Overview of 2018–19 Verification A NASFAA Authorized Event

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Presentation transcript:

Overview of 2018–19 Verification A NASFAA Authorized Event Overview of 2018–19 Verification A NASFAA Authorized Event* Shannon Crossland, SWASFAA President LASFAA Conference, October 18th New Orleans, LA 2018–19 Welcome Introductions Resources – Slides, Study Guide, Workbook Encourage Other Resources – FSA Handbook, iFAP, Code of Federal Regulations Housekeeping – Restrooms, cell phones, break Around the room – introduce – Name, school, and role

Verification of FAFSA Data Selection Tracking Groups Agenda Verification of FAFSA Data Selection Tracking Groups Documentation Requirements Corrections, Updates, and Adjustments Disbursements and Deadlines Policies and Procedures Review agenda items. Verification is the process used by the institution to check the accuracy of the information provided on the FAFSA.

Verification of FAFSA Data Accuracy Validity Equity As stated previously, verification is the process used to check accuracy Verification ensures the accuracy of data used to establish eligibility for need-based Federal aid.

Verification of FAFSA Data Regulations define which applications, data elements, and documentation Verification applies to recipients of subsidized Title IV aid Federal Pell Grant Federal Supplemental Educational Opportunity Grant (FSEOG) Federal Work-Study (FWS) Direct Subsidized Loans Verification regulations define: Whose applications are subject to verification; what FAFSA information to verify and acceptable documentation Applicants who receive funds from Pell, SEOG, FWS or SUB loans are subject to verification Verification selection by CPS is indicated on student’s Institutional Student Information Record (ISIR) and Student Aid Report (SAR)

Conflicting Information Must be resolved for all award years, even retroactively, unless: Student dies during the award year; or Conflicting data are received after the student is no longer enrolled at the school and does not intend to re-enroll at the school in the future School decides what documentation it deems appropriate to resolve any conflicts Not set by U.S. Department of Education (ED) Verification often identifies conflicting information between FAFSA data and other information the school has available. **** Conflicting information requirements apply to ALL applicants; verification requirements apply only to those who are selected. ALL conflicting information must be resolved for all award years Exceptions are listed in the slide - REMINDER *** As part of administrative capability, schools are required to resolve any conflicting data for all award years.

Verification Exclusions Verification is not required under certain circumstances Entire application Spousal data Parental data Certain data elements Institutional exemption Applicants, parents, spouses, etc. are excluded under certain circumstances AS LONG AS there is no conflicting information. The reason for exclusion MUST be documented. We will discuss in detail these exclusions in the next slides.

Verification Selection Student SAR Selection by: CPS, which applies to all schools Individual school ED uses a customized approach May be information not used in EFC ED uses a customized approach to select applications for verification. Criteria are determined annually and published in the Federal Register Application data is run through verification selection algorithm initially, and each time corrections are made.

Verification Tracking Groups Tax filer income (AGI, taxes paid, untaxed IRA and pension distributions, IRA deductions and payments, tax-exempt interest, education tax credits) Nontax filer income (income earned from work) Household size Number in college V1 Standard Verification Group Assigned to 1 of 3 for 1819 Each applicant is assigned a Verification Tracking Flag V1 – Standard V4 – Custom V5 - Aggregate

Verification Tracking Groups High school completion Identity and Statement of Educational Purpose V4 Custom Verification Group

Verification Tracking Groups Tax filer income from V1 Nontax filer income (income earned from work) Household size Number in college High school completion Identity and Statement of Educational Purpose V5 Aggregate Verification Group

Required Data Items for CPS-Selected Applicants Federal Register Dear Colleague Letter Requirements are announced annually. Data required to be verified is posted in the Federal Register Additional information in DCL Note: 2018-19 requirements – DCL17-05 Best practice – review these annually.

General Documentation Requirements May file FAFSA using estimated income Must complete verification using actual income according to the filed tax return Specified year is the prior-prior year (PPY) For 2018–19, the specified year is 2016 2018-19 Be aware of which year’s income and tax data is reported on the FAFSA. 2016 2017

IRS Data Retrieval Tool Tax return type Tax filing status Exemptions claimed AGI Income from work (single, not filing jointly) U.S. taxes paid Untaxed IRA distributions IRA deductions Untaxed pensions Tax-exempt interest Education tax credits The IRS DRT is the principal source of verification documents, as long as the data remains unaltered. Equivalent to obtaining a tax return transcript

IRS DRT Cannot Be Used When… X Tax return not yet filed Puerto Rican or foreign (non-U.S.) tax return filed Taxes filed electronically within last 3 weeks Taxes filed by mail within last 11 weeks Parents are unmarried and living together Change in marital status after end of tax year and before filing FAFSA Conflict between marital and tax filing status X Married independent student and spouse filed separate tax returns Married parents filed separate tax returns Married and filed taxes as head of household First 3 digits of Social Security Number (SSN) are “666” Neither married parent has a valid SSN Both parents entered all zeros for SSN X X X X X X X X X X X

Data Element Considered Verified? IRS Request Flag IRS Data Field Flag* Data Element Considered Verified? Blank, 00, 01, 05 Blank or 0 No; need Tax Return Transcript 02 1 Yes; no additional documentation 03 or 04 06 Yes, but only if correct person is on FAFSA/ISIR 07 Yes, unless 1040X indicates data element was amended This table illustrates conditions when an a “1” data field flag can and cannot be used in conjunction with the request flag to complete verification. * IRS Data Field Flags “2” through “4” mean transferred data changed, so additional documentation is needed to complete verification.

Tax Return Transcript Can be requested: IRS Get Transcript Online IRS Get Transcript by Mail 1.800.908.9946 Mail or fax IRS Form 4506-T or 4506T-EZ Income Verification Express Service Point out sample page on slide – says Tax Return Transcript www.irs.gov/individuals/get-transcript

Tax Return Transcript Alternatives Record of Account Transcript Tax Return Database View (TRDBV) Transcript Return Transcript for Taxpayer (RTFTP) Any IRS tax transcript with all required data An institution may accept as documentation any IRS tax transcript that includes all of the income and tax information required to be verified. Certain transcripts are not acceptable alone: Information returns processing transcript request – wages Tax account transcript – acceptable ONLy for use with Form 1040 X to verify amended tax files

AGI—Tax Filers: Additional Documentation Required Tax return filing extensions Amended tax returns Government cannot locate tax account information Special circumstances published by ED Separating income on joint tax returns Note on amended tax returns – IRS request flag 07 must be resolved whether or not the student is selected for verification.

Verification Worksheets ED provides suggested text annually School may: Use ED’s suggested text or create its own Create a comprehensive worksheet or customize it according to selected data School must use ED’s identity and Statement of Educational Purpose text as is EDs suggested text start on page 79 of your study guide and NASFAA has provided samples which are available on page 93. Note – Schools must used EDs Identity and Statement of Educational Purpose text as is.

Acceptable Signature Formats “Wet” Photo-copied Faxed Electronic Electronic – PIN to sign for identification and authentication – explain TTUs electronic signature Must comply with Eds standards for electronic signatures in electronic student loan transactions – these standards apply to all areas wherein institutions choose to use electronic records and signatures.

AGI and Income Tax Paid—Tax Filers Acceptable Alternatives Unaltered IRS DRT data Tax Return Transcript Other tax transcript listing tax account information Foreign tax returns U.S. Territory tax returns Point out tax related identity theft on page 65

Income Earned from Work—Nontax Filers U.S. Individuals Statement or verification worksheet; Form W-2 from each employer; and IRS Verification of Nonfiling Letter* Foreign Residents Wage and Tax Statement or equivalent; Statement or verification worksheet; and Verification of Nonfiling from tax authority* Reminder to resolve any conflicting information. See page 71 of study guide *Except dependent student

Verification of Nonfiling IRS Verification of Nonfiling Letter dated after October 1, 2017 is required from: Dependent parent who did not and was not required to file a tax return Independent student (or spouse, if applicable) who did not and was not required to file For 2018–19, not required from dependent student Groups V1 and V5, even if income is zero

Untaxed Income and Benefits—Tax Filers Verify specific types of untaxed income: Untaxed portions of IRA distributions Untaxed portions of pension and annuity distributions IRA deductions and payments Tax-exempt interest income Education tax credits Signature not required when data is validated via IRS DRT Refer to page 73 of study guide – see next slides for where to find this information

IRA, Pension, and Annuity Rollovers Rollovers are excluded from EFC IRS DRT: If distribution received, tax filer is asked to enter amount of any rollover IRS Request Flag = “3” and IRS Data Field Flag = “2” Not using IRS DRT: Tax filer subtracts amount of rollover before reporting Untaxed Income Document amount of rollover Rollover amount excluded when filing paper FAFSA and not using DRT DRT – asked to enter amount flag changes to 3 and data field changes to 2

Household Size and Number in College Signed verification worksheet or statement listing: Names and ages of all household members Relationship of each to student Name of postsecondary institution in which household member is enrolled at least half time in Title IV-eligible program and institution Review slide

High School Completion High school diploma always preferred Several types of documents can be used School may accept alternative documentation only when: Secondary school documentation is unavailable (e.g., closed school, deceased parent who provided home schooling) Foreign refugees, asylees, and victims of human trafficking cannot obtain diploma or secondary school leaving certificate Review slides Note – graduate students are still required to verify high school completion – exception – not required if admission to the graduate program requires completion of at least two years of UG coursework acceptable for full credit toward a bachelor’s degree VERY unusual circumstances when alternative documents are acceptable.

Identity and Statement of Educational Purpose *signature requirement Must used exact ED language See pg 78 for IDs that cannot be used to verify identity *photocopies of military IDs cannot be used to verify identity

Optional Institutionally Selected Data Cannot include resources specifically excluded from need analysis, such as: Federal veteran’s educational benefits Military housing/housing allowance State foster care or adoption assistance payments Means-tested welfare benefits Combat pay Foreign income exclusions In-kind support Care must be taken not to include the following – more examples on page 41 of your guide. These forms of income are prohibited by law from inclusion in the EFC calculation for Title IV purposes.

Optional Institutionally Selected Data Exceptionally low income may be validated School may ask the applicant to explain how the family was supported School decides what constitutes acceptable documentation for anything other than federally required verification data Can be same as current or past ED requirements

Changes to Applicant Data Correction Changes to data that were incorrect when FAFSA was filed Update Changes to data correct when FAFSA was filed but later changed Adjustment Change made by aid administrator using professional judgment (PJ) Read definitions

PJ Adjustments Optional Discretion granted to financial aid administrators under section 479A(a) of Higher Education Act of 1965 (HEA), as amended Verification of specified-year data and resolution of conflicting information required before PJ (except dependency override or if adjusting those data elements using PJ) Verification must be exercised prior to the PJ.

Disbursements If not making interim disbursements, and selected for verification or changes tracking groups: No further Title IV disbursements/FWS earnings can be paid until verification is completed Do not return previously disbursed funds while waiting to complete verification If verification is never completed certain aid must be returned by student per 10/31/16 Electronic Announcement Review slide

Verification and the Award Cycle Upon receipt of ISIR Before making tentative award After making tentative award, but before award confirmation After student accepts award, but before disbursement After interim disbursement, but before second disbursement Verification may occur at any of the points shown in the slide.

Verification Deadlines Federal Pell Grant deadline Institutional deadline Campus-Based and Direct Loan deadlines Schools have the ability to establish a verification deadline and may exercise flexibility in how deadline is applied. Publish Document Pell deadline is determined by ED Camp and DL are based on the earlier of school or ED

Verification Policies and Procedures Selection Procedures How are students selected Information Shared Document requirements Student responsibilities Document Submission Deadlines Consequences for noncompliance Post-Verification Process to correct data Outcome notification to student Reporting My favorite!! Policy is a statement of how and institution will administer process procedure is the step See flow chart on page 175 of study guide – show chart REQUIRED by regulations Audit experience

1. Does your institution select applications for verification in addition to those selected by the CPS? What triggers your selection? 2. Does your institution verify data elements beyond the minimum federal requirements? What are they? 3. Based on your own experience, do you think the U.S. Department of Education (ED) is selecting the most error-prone applications for verification?

Verification of FAFSA Data Selection Tracking Groups Agenda Verification of FAFSA Data Selection Tracking Groups Documentation Requirements Corrections, Updates, and Adjustments Disbursements and Deadlines Policies and Procedures I think we have covered everything. Sign-in sheet – I will Email you the study guide. Thank you all sooo very much!!!