1. FAFSA ON THE WEB, IRS DATA RETRIEVAL, & VERIFICATION MSFAA Lansing, MI February 1, 2012

2. FAFSA ON THE WEB 2

3. FAFSA P ROCESSING  Increase in applications completed by independent students is nearly double the increase of applications completed by dependent students.  Applications by independent students in 2011-2012 have increased nearly 70% when compared to 2010- 2011 rates  Applications by dependent students are up 37% this year over last.  Nationally, applications have increased by 12% for families whose income level is greater than $41K, compared to an increase of 7% for families whose income level is less than $41K. 3 2

4. FOTW C OMPLETION T IME 38% 4 3

5. 2012-13 W EB D EMONSTRATION S ITE 4 FAFSA on the Web and FAA Access demonstration sites available  To access sites, go to http://fafsademo.test.ed.govhttp://fafsademo.test.ed.gov  Enter:  User Name: eddemo  Password: fafsatest Click on FOTW or FAA Access to CPS Online Demo System button Available through December 2012

6.  An Alerts and Message text provides the status of the search  Search results display name, city, state, and school code for each matching school  Scrollable results display as many as 100 schools per page 5

7. 7  Students select schools from those that display and then select the “ADD” button between the two tables.  The student can also select the Remove hyperlink to remove any school from the listing.

8. 2012-2013 H OUSING P LAN E RROR M ESSAGING 8 7

9. 2012-2013 H IGH S CHOOL Q UESTION 9 High school question (Question 27) will display using the following logic:  High school completion status = 1 (high school diploma) and Grade level = 0 or 1 Any student who was presented the high school question in 2011-2012 will be presented the question again in 2012-2013 as a renewal student. The student will have the opportunity to search the database with the “best match” search functionality to verify the response that was provided in 2011-2012. 8

10.  Results for this high school search include any school name in the database which contains “Bishop”, may be located in Baltimore or in the state of Maryland.  This is an example of relevance as those names containing Bishop appear before those containing city or state.  Students may narrow their search by changing the search criteria.

11. FAFSA G ENDER Q UESTION E DIT 2012-13  While the gender question is not required, it is used to determine which applicants need to be matched with the Selective Service  To provide an extra reminder to applicants, a warning edit will display in FOTW if the question is not answered 11 10

12. A SSET T HRESHOLD Q UESTION 2011-2012 Comment codes are used to notify schools when the asset threshold question was displayed to the applicant and the response is “No” 2012-2013 Comment codes deleted Response to asset threshold question provided on ISIR record layout, Student Inquiry, and ISIR Compare 12

13. W HO S EES A SSET T HRESHOLD Q UESTION ? Independent students and parents of dependent students that Are not eligible for automatic zero or Simplified Needs Test AND Report state of legal residence that allows skip logic for income and assets MI – does allow OH – does not allow MN – does not allow WI – does not allow IL – does not allow IN – does allow 13 12

14. H OMELESS Y OUTH D ETERMINATION Financial Aid office may determine that student meets homeless youth definition Students who meet this criteria can use FOTW to set the Special Circumstances Flag to ‘3’ 14 13

15. H OMELESS Y OUTH D ETERMINATION 15 14

16. IRS DATA RETRIEVAL 16

17. IRS D ATA R ETRIEVAL 17 IRS Data Transferred between January 30, 2011 & July 2011 Initial FAFSA -- 2,617,428 FAFSA Corrections -- 334,306 17

18. IRS D ATA R ETRIEVAL  2011-2012 FOTW relies on the applicant’s determination of whether the IRS DRT should be used  2012-2013 FOTW will include logic to make the determination for the applicant 18

19. FOTW C ONFIRMATION P AGE  Upon submission, reminds students that the IRS data retrieval option is the preferred method of providing tax information and is available through Corrections on the Web  Customized messaging displays –  When student and/or parent was eligible to use the IRS data retrieval and did not OR  When student and/or parent indicated “Will file taxes” 19

20. 2012-2013 IRS DRT F ILTERING Q UESTIONS 20 The student and parents, when applicable, are required to respond to the following filtering question. Check all that apply or check None of the Above.  My tax filing status is Married Filing Separately  My tax filing status is Head of Household  I filed an amended tax return  I filed a Puerto Rican or foreign tax return  I recently filed my taxes  None of the above 20

21. 2012 – 2013 IRS DRT L OGIC 21  The “ My tax filing status is Married Filing Separately ” and “ My tax filing status is Head of Household ” options are displayed only when the students or parents, when applicable, are married. 21

22. D YNAMICALLY D ISPLAYED IRS DRT M ESSAGING 22 If an applicant selects recently filed my taxes, he/she will still have the option to use the IRS DRT, although it is discouraged if it has been fewer than two weeks. Message: “If you filed your taxes electronically within the last 2 weeks or if you filed your taxes by mail within the last 8 weeks, your tax information may not be available yet from the IRS. You can determine if you should attempt to access your tax information from the IRS at this time.” 22

23. D YNAMICALLY D ISPLAYED IRS DRT M ESSAGING 23  An applicant will receive the message, “Based on your response, you are not eligible to transfer your information from the IRS into this FAFSA.” Those who select “None of the Above”, would be encouraged to use the tool.  Message: “Based on your response, we recommend that you transfer your information from the IRS into this FAFSA. “ 23

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32. T WO N EW IRS D ATA F LAGS FOR 2012-2013 32

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34. Eligible Filer Notifications Students and parents who were eligible to use the IRS data retrieval and did not will receive e- mail notification E-mails will be sent beginning on 04/01/12 Subsequent messages sent every 45 days until mid-September, and then every 60 days until the end of cycle IRS Data Retrieval 34

35. N EW IRS DRT N OTIFICATIONS 35 Two types of IRS DRT email notifications to encourage certain applicants, and their parents, to use the Tool.  Estimated Tax Filer – Sent to an applicant/parent who responded that he/she “Will File” taxes. Encourages use of the Tool after filing taxes.  Actual Tax Filer – Sent to applicant/parent who indicated that the tax return was “Completed” and the individual was eligible to use the IRS DRT but (1) chose not to use it or (2) used it but chose not to transfer data. 35

36. VERIFICATION 36

37. W HAT IS VERIFICATION ? Process whereby certain information provided on the FAFSA is reviewed for accuracy and completeness Selected Title IV recipients Only specific ISIR data elements  668.51 thru 668.61 – Subpart E 36

38. T AX I NFO Y OU M UST K NOW Married couple files separate tax returns and both filed as “head of household” IRS allows if spouses lived apart for the last 6 months of calendar year Not including separation due to business, military service, medical care, school Student and parent both claimed student as tax exemption 38

39. T AX I NFO Y OU M UST K NOW ISIR says “I’m not going to file.” and gross income meets IRS minimums  That’s conflicting information! http://www.irs.gov/pub/irs-pdf/i1040.pdf  scroll to page 8 ISIR will have reject 20 with comment 126 or 131 39

40. E FFECTIVE D ATE OF V ERIFICATION R EGULATIONS Effective July 1, 2012 for 2012-13 award year  Remember 12/13 FAFSA processing has already begun! 39

41. V ERIFICATION - D EFINITIONS  Subsidized student financial assistance programs  Eligibility uses EFC  Verification applies  Pell, FSEOG, FWS, Perkins, Direct Subsidized Loan  Unsubsidized student financial assistance programs  Eligibility does not use EFC  Verification does not apply  Direct Unsubsidized Loan & PLUS Loan  TEACH Grant 41

42. V ERIFICATION - D EFINITIONS  Use “ FAFSA information ” instead of “application”  Specified year  The calendar year preceding the first calendar year of an award year, i.e. the base year, or the year preceding the base year  Applicant responsibility  Applicant must provide specified documents or information if requested by Secretary or institution 42

43. V ERIFICATION S ELECTION  CPS applies risk model to FAFSA data Goal is to target verification based upon most error prone data items specific to an applicant  Non-selected applicants are again subject to risk model when submitting corrections 43

44. V ERIFICATION S ELECTION ISIR Flags & Comment Codes  Verification Flag Y- Selected for verification N - Not selected for verification * - Selected on a subsequent transaction  Verification Selection Flag Blank – corrected transaction not selected Y - corrected transaction now selected & transaction being corrected was not selected  Comment Codes 170 & 171 44

46. V ERIFICATION S ELECTION 2012-13 Institutions must verify all applicants selected by CPS for verification - Removes institution’s option to verify only 30% of applicant pool 46

47. 2012-13 V ERIFICATION & FAFSA C ORRECTIONS For subsidized programs, all changes resulting from verification must be submitted to CPS if change is - To any nondollar item or - A single dollar item of $25 or more If required to submit one change, must submit all changes 47

48. R EQUIRED V ERIFICATION I TEMS 2012-13  Regulation eliminates five required verification items  ED will publish Federal Register Notice each award year listing possible verifiable items and acceptable documentation  SAR/ISIR will specify required verification items for individual applicant  Institution may verify additional items for an applicant 48

49. 2012-13 R EQUIRED V ERIFICATION I TEMS From the 2011 tax return Adjusted gross income U.S. income tax paid Untaxed IRA distributions Untaxed Pensions Education credits IRA deductions Tax Exempt Interest 49

50. A CCEPTABLE D OCUMENTATION For items on 2011 tax return Information obtained through IRS data retrieval on FOTW  IRS Request Flag value of 02 OR A tax transcript obtained from the IRS  See DCL GEN-11-13 50

51. T AX T RANSCRIPT S AMPLE 51

52. T AX T RANSCRIPT S AMPLE 52

53. 2012-13 R EQUIRED V ERIFICATION I TEMS Not on tax return Number in household Number in college Food stamps – Supplemental Nutrition Assistance Program (SNAP) Child support paid 53

54. A CCEPTABLE D OCUMENTATION Number in household  Signed statement Includes name, age, and relationship to applicant 29 54

55. E XCEPTIONS T O H OUSEHOLD S IZE V ERIFICATION  For dependent student when parents marital status is- – separated or unmarried (single, divorced, or widowed) and family size on the FAFSA = 2 – married and family size on the FAFSA = 3  For independent student who is- – separated or unmarried (single, divorced, or widowed) with the family size on the FAFSA = 1 – married and the family size on the FAFSA = 2 55

56. A CCEPTABLE D OCUMENTATION Number in college Signed statement Name and age of each household member who is/will attend eligible postsecondary educational institution as at least a half-time student in the 2012– 2013 Name of the eligible institution(s) that each household member is or will be attending during the 2012–2013  Not required if applicant is only member in college 56

57. A CCEPTABLE D OCUMENTATION Food Stamps - Supplemental Nutrition Assistance Program (SNAP) - if receipt is indicated on the 2012-13 FAFSA  Documentation from the agency that issues the Food Stamps benefit or alternative documentation as determined by the institution to be sufficient to confirm that the applicant received benefit in in 2010 or 2011 32 57

58. A CCEPTABLE D OCUMENTATION Child Support Paid - if reported on the 2012-13 FAFSA  Statement signed by child support payor- Amount of child support paid Name of the person to whom child support was paid and Name of the children for whom child support was paid 33 58

59. T AXPAYER H AS IRS E XTENSION For 2012-13  Verification is complete if you have -- – Documentation of IRS extension for tax year 2011 & – 2011 W-2 Forms or statement from self-employed individual  School may require an individual granted a tax filing extension to provide a copy of their completed and signed tax return when filed  If school receives a copy of the return, it MUST verify AGI and taxes paid  If school does not receive copy, may return all funds disbursed 59

60. V ERIFICATION & P ROFESSIONAL J UDGMENT For 2012-13  Codifies policy that all applicants selected for verification must complete verification before any PJ adjustments to FAFSA or cost of attendance are made  Refers to HEA section 479A(a)  Statement must be included in school’s written policies and procedures about verification 60

61. U PDATING F OR M ARITAL S TATUS For 2012-13 you may require updating due to change in applicant’s marital status if institution determines update is necessary to address inequity or accurately reflect ability to pay and Student is selected for verification OR Marital status change results in dependency status change 61

62. V ERIFICATION & I NTERIM D ISBURSEMENTS For 2012-13 Interim disbursements may be made without receipt of corrected ISIR if completed verification makes no change to aid eligibility However all required corrections must be submitted to CPS and school must receive revised ISIR transaction 62

63. V ERIFICATION C OMPLETED A FTER E NROLLMENT E NDS  In 2012-13, student no longer limited to lesser Pell award if verification completed after enrollment ends  Student would receive Pell payment based upon correct EFC 63

64. IRS EXTENSION  You must verify with documentation of IRS extension and W-2 Forms or statement from self-employed individual  School may require an individual granted a tax filing extension to provide a copy of their completed and signed tax return when filed - If school receives a copy of the return, it MUST verify AGI and taxes paid  If school does not receive copy, may return all funds disbursed 64

65. TAX RETURN PREPARER  For 2012-13, clarifies that tax returns submitted with preparer signature (wet, stamped, typed or printed) with the name and address of the preparer must also have their SSN, EIN, or PTIN 65

66. F UTURE V ERIFICATION  In the future, the ISIR will indicate Whether an applicant has been selected for verification, and Specific item or items that must be verified But... we’re not there yet...  2013-14 will Serve as transition year Be a “hybrid” of the current and future verification selection processes 66

67. 2013-14 C USTOMIZED V ERIFICATION  Like current process, applicant data will be subjected to risk model on 01 transaction  Three categories of selection Targeted selection - data meets a risk criteria and record is selected for “targeted” verification Discretionary selection - data does not meet risk criteria for targeted selection, but is selected to verify a non-targeted data element Combination of targeted and discretionary selection 67

68. 2013-14 ISIR ISIR would include Verification Flag (Y, N, *) Fields for all FAFSA data elements subject to verification for a given year (per FR notice) Verification codes for each of those data elements indicating verification selection status Y = Data element selected for verification N = Data element not selected for verification V = Data element selected for verification, but student transferred data using the IRS data retrieval tool and did not change it 68

69. 2013-14 SAR  Will tell students that they were selected, but will not indicate the specific fields that need to be verified 69

70. S UBSEQUENT T RANSACTIONS  Verification selection would generally occur on initial (01) transactions only  Corrections that are processed after selection would continue to be flagged as selected  If the student was not selected for verification on initial (01) transaction, selection status would not change based on a correction, unless one of the following occurs Student’s dependency status changes Eligibility for Auto Zero EFC is lost 70

71. S UBSEQUENT T RANSACTIONS  If one of these conditions is met on a correction- CPS will apply risk model to corrected FAFSA information If applicant meets a risk criteria, will be selected for verification on the resulting correction transaction Verification flag set to Y FAFSA data elements to be verified identified on ISIR 71

72. S UBSEQUENT T RANSACTIONS  Sometimes, data elements subject to verification will change from one transaction to another  Dependency status changes  Tax filing status changes  Student/Parent changes any data items retrieved from IRS  Student become eligible/ineligible for Automatic Zero EFC  In these cases – Verification flag would remain Y New verification tracking flag = R Reset verification indicators for appropriate data elements (Y, N, V) 72

73. S UMMARY OF C USTOMIZED V ERIFICATION  Verification selection will generally occur on 01 transactions only  Some applicants will get selected for verification on subsequent (02 or higher) transactions but should be small number  CPS will determine which FAFSA data elements must be verified for individual students  Specific data elements requiring verification for each transaction will be communicated on ISIR 73 73

74. FAFSA I NFO N OT R ELATED T O V ERIFICATION 74

75. W HO I S A P ARENT O N T HE FAFSA?  ONLY biological or adoptive parents  Not legal guardians  Not foster parents  Step-parents must be included if Currently married to biological or adoptive parent Not married to biological or adoptive parent but has legally adopted student 75

76. FAFSA H OUSEHOLD  Siblings of dependent student are included in the parents’ household if Parent will provide more than 50% of support for sibling during award year OR Sibling would be dependent if filed FAFSA  Foster children are not in the household and foster payments are not income  Independent Student’s boyfriend/girlfriend Only if student provides more than 50% of support for friend and will do so during award year 76

77. TIDBITS  In-kind support is not untaxed income on FAFSA Examples – support other than money Food Clothing Living rent-free  Federal law defines marriage as legal union of man and woman Same-sex couples cannot be married on the FAFSA 77

78. C ONFLICTING I NFORMATION  Requires that the institution “communicates to the individual designated to be responsible for administering Title IV, HEA programs, all the information received by any institutional office that bears on a student’s eligibility for Title IV, HEA program assistance 668.16(f) 78

79. C ONFLICTING I NFORMATION  Develops and applies an adequate system to identify and resolve discrepancies that the institution receives from different sources with respect to a student’s application for financial aid under Title IV, HEA programs  Applies to ALL Title IV recipients and any information that affects Title IV aid eligibility 79

80. W HAT I S N OT CONFLICTING INFORMATION ?  Household size differs from number of tax return exemptions  Dependent under IRS rules vs. Department definition of dependent  Assumptions made by CPS  FAFSA filed using estimated income  W-2 Box 14  Tax filer claimed multiple or conflicting credits  Secondary INS confirmation successful but student has expired INS document 80

81. Q UESTIONS ???? Jamie A. Malone Training Officer U.S. Department of Education 312-730-1528 jamie.malone@ed.gov What did she say???? I was thinking Hmmm … 81

82. P LEASE PROVIDE ANY COMMENTS REGARDING THIS TRAINING OR THE TRAINER TO : Jo Ann Borel Title IV Training Supervisor joann.borel@ed.gov 202-377-3930 82