Verification 101 The Basics Presented by: Debbie Forrester

Verification 101 The Basics Presented by: Debbie Forrester
Verification Specialist Elmhurst College Introduce self-3 years of verification so I’m also new Ask for verification experience from the attendees-less than 3 yrs-3-5 yrs. more than 5 years-10 years or more (you need to come up here to help me!!) I was fortunate enough to be able to attend the MASFAA summer institute where the NASFAA core materials were taught and the credential tests were made available. So what I will be sharing with you today is the basic information from the NASFAA core material on verification. Champions of Financial Aid ILASFAA Conference

Champions of Financial Aid - 2017 ILASFAA Conference
Agenda What is verification and Why do we do it? Exclusions to verification and Items to be verified Tracking groups Acceptable Documentation Corrections Verification Deadlines Champions of Financial Aid ILASFAA Conference

Acronyms FAFSA-Free Application for Federal Student Aid ISIR-Institutional Student Information Record SAR- Student Aid Report CPS-Central Processing System IFAP-Information for Financial Aid Professionals NASFAA-National Association of Financial Aid Administrators NSLDS-National Student Loan Data System EFC-Expected Family Contribution Champions of Financial Aid ILASFAA Conference

What? Verification is a process whereby data submitted by a student/parent on the Free Application for Federal Student Aid (FAFSA) is confirmed by reviewing various documents The CPS will flag the ISIR with an asterisk (*) An institution can also select a FAFSA for verification based on its own verification policy About 35% of all FAFSA’s are selected for verification by CPS. Some are truly random but others might be selected because the student/parent has entered data that the has historically led to erroneous EFC’s. Not all but a lot of FAFSA’s are selected for those who might be Pell Grant eligible. What are some reasons that your school might select an ISIR for further review? Zero income, zero EFC, large # in household or college, etc. Champions of Financial Aid ILASFAA Conference

Why? We are responsible to ensure that taxpayer dollars are being used by those students who are eligible Federal programs subject to verification: Pell Grant FSEOG Federal Work Study Perkins Loans Subsidized loans What we are really looking at is the eligibility for need based aid so those students who are potential recipients of the Pell grant, FSEOG (Federal supplemental education opportunity grant), FWS, Perkins Loans, and Direct Sub loans. Champions of Financial Aid ILASFAA Conference

Exclusions We will not complete verification: For the student if: is only eligible for unsub loans the verification was completed at a different institution and we have proof dies during the award year For the parent data if: Parents are mentally incapacitated Parents whereabouts is unknown Parents live outside of U.S. and out of normal means of communication Other exclusions include some spousal data, certain data elements. Foreign schools might be exempt from verification and institutions that participate in the Quality Assurance Program might not have to complete verification Champions of Financial Aid ILASFAA Conference

Items to Be Verified Adjusted Gross Income (Income from work for a non filer) Income earned from work 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 This is all the data that we review as part of the verification process. If an earner is not required to file a tax return, then we would verify income from work instead of AGI Untaxed income can include distributions of IRA funds, Payments to self employed SEP plans, Savings incentive match plans for employees, Keogh or other qualifying plans. Untaxed portions of pensions and annuities, tax exempt interest and education credits. Other untaxed income can include payments to tax deferred pensions that are reported on the W2 under codes D,E,F,G,H,and S in box 12. Child support does not include foster care or adoption payments. Living allowances for military or clergy includes housing, food, and other living allowances-not to include base housing. Other untaxed income might include items such as workers comp and disability, untaxed portions of health savings accounts, but does not include items like earned income credit, additional child tax credit, combat pay, welfare payments, TANF, foster care benefits, untaxed portions of social security, SSI, military housing, flex spending arrangements, foreign income exclusions or credits for special fuels Money paid on behalf of the student would be anything not already reported on the FAFSA. It can be monetary support from a non custodial parent whose tax data is not on the FAFSA and is not part of a child support agreement. This can also include 529 plans owned by someone other than the student or parents. If a parent owns the 529 plan it should be listed on the FAFSA as a parent asset. Champions of Financial Aid ILASFAA Conference

More Items to Be Verified
Number of household members Number of household members enrolled in college High school completion status Identity and statement of educational purpose If an institution determines that the amounts provided and verified still do 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 financial supported during the calendar year. Household members are verified for both dependent and independent students. People to include in the household for dependent students is the applicant, parents except those who do not live in the household due to death, separation or divorce; parents other children if they rec ½ of their support from the parents between 7/1/17 and 6/30/18. The student’s children if they rec more than ½ support from applicants parents and unborn child if to be born before 6/30/17. And other persons if they will receive more than ½ support from the applicant’s parents For independent students: the applicant, the spouse unless they don’t live together, dependent children, unborn child if born before 6/30/17, and other persons supported more than ½ by student Don’t count foster children Enrolled in College: at least ½ time, degree seeking, at a Title IV institution Must determine HS completion because this is an eligibility item. HS diploma, Home schooled, GED, passed a state certified test, completed a 2 year course toward a baccalaureate degree, or excelled academically in HS Identity and statement of educational purpose: this is the only document that must contain the exact wording as noted by ED. Must have a wet signature or notarized copy to be acceptable documentation. Champions of Financial Aid ILASFAA Conference

Tracking Groups There are now 4 tracking groups as follows: V1-Standard Verification group V4-Custom Verification group V5-Aggregate Verification group V6-Household Resources group Champions of Financial Aid ILASFAA Conference

V1-Standard Verification Group
Items to be verified Tax filers AGI US income taxes paid Untaxed portions of pensions IRA deductions and payments Tax exempt interest income Education tax credits Household size Number in college SNAP benefits-if indicated on the ISIR Child support paid, if indicated on the ISIR Champions of Financial Aid ILASFAA Conference

V1-Standard Verification Group
Non Tax Filers Income from work Household size Number in college Snap benefits, if indicated on the ISIR Child support paid, if indicated on the ISIR Financial aid professionals are not expected to have special knowledge or expertise regarding the U.S. tax code. If someone whose data are required on the FAFSA submits a signed statement claiming non-filer status and you have reason to believe that person would have been required to file a U.S. tax return, you must require her to submit a “Verification of Nonfiling Letter” from the IRS (filers of foreign returns would submit a comparable document) that she did not file a 2015 IRS income tax return. She can obtain this by submitting IRS Form 4506-T and checking box 7 AVG-Pg 83 Champions of Financial Aid ILASFAA Conference

V4-Custom Verification Group
Tax filers and Nontax filers SNAP benefits, if indicated on the ISIR Child support paid, if indicated on the ISIR High School completion Identity and Statement of Educational Purpose The custom group has only these items to verify. We won’t ask for the V1 group items Champions of Financial Aid ILASFAA Conference

V5-Aggregate Verification Group
All applicants in this group High School completion Identity and Statement of Educational Purpose All items based on tax filer or nontax filer status for V1 Standard Verification Group We are looking for all the V1 items, AGI,, taxes paid, untaxed IRA, untaxed pensions, tax exempt interest, education credits. We will ask for income from work for a non-filer Champions of Financial Aid ILASFAA Conference

V6-Household Resources Verification Group
Applicants in this group must verify: Certain other untaxed income from FAFSA Payments to tax deferred pension and retirement savings plans Child support received Housing and food allowances for military and clergy Veteran’s non-education benefits Other untaxed income Money received or paid on the applicant’s behalf. Resources or benefits not appearing on the FAFSA The Standard Verification group items for tax filer or nontax filer status We are asking for other sources of income whether its Disability, Social Security, or any other source of income not already reported on the FAFSA. This tracking group has been discontinued effective Champions of Financial Aid ILASFAA Conference

Acceptable Documentation
Tax Data: IRS-Data Retrieval Tool (DRT)-Unaltered “02” Flag Tax filing status Tax return type Number of exemptions claimed AGI U.S. Income tax paid Untaxed portions of IRA distributions IRA deductions and payments Untaxed portions of pensions Tax-exempt interest Education tax credits ISIR DRT codes are: 00-Ineligible, 01-did not transfer data; 02-DRT unaltered; 03-DRT used but data changed prior to submission; 04-data transferred then change on another transaction; 05- Declined IRS Data Request; 06-transferred but a changed was made making the student ineligible to use the DRT. Champions of Financial Aid ILASFAA Conference

Tax Return Transcript Alternative to the DRT Use the “Get Transcript by Mail” option on the IRS.gov website Call Mail or fax IRS form 4506T To get a PDF copy online, the IRS has developed a 2 step-multifactor authentication process that requires registration on the IRS website. User must have: 1. access to a valid address 2. a text-enabled mobile phone 3. specific financial account numbers (such as a credit card or home mortgage or auto loan) Champions of Financial Aid ILASFAA Conference

Alternative Tax Transcripts IRS Record of Account Transcript Return Transcript for 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 Champions of Financial Aid ILASFAA Conference

Verification worksheets are used to gather other information Department of Education has developed suggested texts for worksheets but the school has the discretion to develop their own worksheets The one exception is the Identity and Statement of Educational Purpose which must have the exact, unaltered wording developed by the Department of Education Champions of Financial Aid ILASFAA Conference

Other documents that can be used are: W2’s Wage and Tax Statement from each employer Amended tax return 1040X Birth certificates Marriage license Passports, Certificate of Naturalization Signed statements of earning Only in very rare circumstances a 1040 Champions of Financial Aid ILASFAA Conference

Signatures: “Wet”-a handwritten, original signature Photocopied Faxed Electronic-that uses a Personal Identification Number (PIN) which identifies and authenticates a particular person-see GEN-01-06 Champions of Financial Aid ILASFAA Conference

Conflicting Information
If your school has conflicting information concerning a student’s eligibility or you have any reason to believe a student’s application information is incorrect, you must resolve the discrepancies before disbursing FSA funds. AVG pg. 123 Requirement to verify questionable data: “If an institution has reason to believe that an applicant’s FAFSA information is inaccurate, it must verify the accuracy of that information.” HEA (34 CFR (a)92) Conflicting information can be anything including verifiable information for a student not selected for verification. Resolution of conflicting information You may not disburse aid until you have resolved conflicting information, which you must do for any student as long as he is at your school. Even if the conflict concerns a previous award year, you must still investigate it. You have resolved the matter when you have determined which data are correct; this might simply be confirming that an earlier determination was the right one. Of course, you must document your findings and explain why, not simply assert that, your decision is justified. Champions of Financial Aid ILASFAA Conference

Corrections Corrections are changes to data elements that were incorrect at the time for 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 household size, or number in college If a correction results in an adjusted EFC, the award must be changed to reflect the new eligibility The institution must recalculate the applicant’s financial aid eligibility using the EFC on a corrected or valid ISIR. For Federal Pell grant program, if the institution elected to make an interim disbursement and the recalculation reduced eligibility, the resulting over award must be resolved in total. For Campus based programs, there must also be a correction for over awarding, but there is an over awarding tolerance of $300 but any over award more than $300 must be resolved Champions of Financial Aid ILASFAA Conference

Verification Deadlines
Institutional deadline is set by the school and there is flexibility in this regard. 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 In the Verification Handbook on page AVG-93, the expected verification deadline for would be 9/22/18 for Pell Grant programs Champions of Financial Aid ILASFAA Conference

Questions? Champions of Financial Aid ILASFAA Conference

Resources NASFAA University Self Study Guide: Verification award year Application and Verification Guide GEN-01-06 Champions of Financial Aid ILASFAA Conference

Volunteer Opportunities
ILASFAA is a perfect opportunity for members to network with other financial aid administrators and to grow and learn in this career. Consider volunteering with ILASFAA. Champions of Financial Aid ILASFAA Conference

Verification 101 The Basics Presented by: Debbie Forrester

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Verification 101 The Basics Presented by: Debbie Forrester

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