By Carrie Warick, Director of Policy and Advocacy
Update (March 9, 6 p.m. ET): U.S. Department of Education and IRS issue joint statement alerting of their concern of identity theft, which caused them to disable the tool temporarily. However, the statement says that the tool will likely be unavailable for "several weeks." NCAN members should adjust their FAFSA strategies accordingly, and NCAN will follow up with advice soon.
Update (March 9, 5 p.m. ET): fafsa.gov posted the following announcement on its home page: "The IRS Data Retrieval Tool is unavailable at this time. We regret any inconvenience. To fill out a FAFSA, you can manually input your tax information. Remember, if you’re filling out the 2017–18 FAFSA form, your 2015 tax information is required (not 2016)."
Update (March 16, 12:55 p.m. ET): On March 13, the Texas Higher Education Coordinating Board said in a memo to chancellors and presidents of public and independent institutions in Texas that the March 15 statewide priority aid deadline does not prevent colleges from extending priority to students who file their FAFSA later. On March 16, the Indiana Commission for Higher Education said the state's March 10 financial aid filing deadline would be extended to April 15.
Today, the Internal Revenue Service (IRS) and the U.S. Department of Education (ED) confirmed in a joint statement that the Data Retrieval Tool (DRT) that allows students to import their tax information to the FAFSA form is unavailable and that they are working on the issue. The statement, shared by Andrew Kreighbaum of Inside Higher Ed, provides instructions for families, but no communication is yet available on the FAFSA website. Further, the IRS website and fafsa.gov still instruct financial aid filers to use the DRT rather than request a tax transcript. NCAN is requesting that the IRS and ED work together to communicate with students, including updating their relevant webpages about the outage, and that they rectify this situation as soon as possible.
Meanwhile, NCAN is advising our members to prepare as though this will be a long-term outage and to encourage students to file the FAFSA as soon as possible by manually entering financial information in their FAFSA online. Further, we encourage members to contact their elected officials, asking them to encourage ED and IRS to work together to resolve this outage.
The DRT outage and lack of clear communication around it comes in the middle of FAFSA filing season for students across the country. Filing deadlines are upcoming in states like Indiana (March 10) and Texas (March 15). Students who had previously been told to use the DRT and were relying on it to facilitate their FAFSA completion will now encounter a new wrinkle in the 11th hour that may prevent many from filing on time and gaining access to valuable financial aid. This concern is especially acute for returning students who used the DRT in past years and may wait until closer to the deadline to file. The only reassurance for Indiana and Texas is the substantial increases (117% and 146%, respectively) in their high school senior FAFSA filing through Feb. 17, 2017. These numbers demonstrate that many seniors have already filed their FAFSA, but data are not available for returning students who are filing renewals.
The IRS DRT was a big step forward for FAFSA simplification. During the 2015-16 FAFSA filing year, 38 percent of FAFSA filers (over 7.4 million students) used the DRT (FAFSA Data by Demographic Characteristics). These students not only had an easier time filing the FAFSA, but they were less likely to be flagged for a tedious process called “verification,” which requires requesting an official tax transcript to verify that the income information they manually entered on the FAFSA is accurate. Because of the current DRT outage, NCAN is advising our members to request students’ tax transcripts early in anticipation of increased rates of financial information verification.
Verification’s challenges should not be overlooked. College access practitioners and financial aid administrators outlined the challenges students face when trying to complete this process in a November 2016 TICAS report. The verification process takes two weeks to complete on average but can last even longer if a student struggles to obtain the needed documentation. Every additional step put between a student and their financial aid creates an obstacle that could prevent their postsecondary enrollment, persistence, and/or completion.
The IRS response to reporters recommends that students and families obtain a copy of their tax return from their own files or from the tax software or tax preparer that they used. It is true that following these steps will allow students to manually enter their information and complete the FAFSA on time, which is exactly what NCAN advises our members do with students they serve. However, these tax return copies will not shield students from the verification process, which requires an official tax transcript. Verification aside, students without access to a copy of their 2015 tax records will need an official tax transcript to even be able to file their FAFSA in the first place.
Students can get a transcript online if they are able to confirm their identities. In order to confirm identity, an independent student or the parent of a dependent student will need:
- First Name
- Last Name
- Tax filing address (must match exactly, for example, ST vs. Street)
- Social Security Number
- Tax filing status
- One of the following: credit card, mortgage number, home equity loan number or auto loan number
- Mobile phone number with account in his/her name
- Email address
In writing this blog, I decided to retrieve my own transcript online, a process that the site said would take 15 minutes. My first attempt failed because my family plan cell phone is in my husband’s name. Using my husband’s information instead, I had three more failed attempts to confirm his identity: our mortgage didn’t match with his name, I couldn’t find our auto loan number remotely from my office, and my Internet browser timed out while loading the “send code to mobile phone” page. On the fifth try, I finally succeeded in verifying my husband’s identity, but it took over 30 minutes for my confirmation email to arrive to confirm our new username. When I entered that code, it was no longer valid, and I would need to start over. I did not bother.
If you do not have a copy of your tax returns, you must go through this online process or wait five to 10 business days to get a transcript in the mail. Imagine trying to do all of this during a financial aid workshop, where you assumed you would not need a tax return because you thought you could use the DRT.
For low-income families, the situation is likely worse. Imagine this scenario: You rent your home, take public transportation, and only have a debit card. Because of these factors, you already are unable to verify your identity and get a tax transcript online. You must file the FAFSA manually using your tax return. Because you are low-income, you are much more likely to be flagged for verification, meaning that even if you have a copy of your return in your records, you will still need to call to order a tax transcript. If it is mailed to you, it will add another 10 business days to the FAFSA filing process.
The IRS DRT reduces the number of students selected for verification, which is a cumbersome process that can delay a financial aid award package, affecting the student’s ability to make an informed decision about where to enroll. This change also reverses the momentum of Early FAFSA and the switch to using prior-prior year income, which represented a big advantage because using older, already completed taxes was supposed to increase the percentage of students able to use the DRT. Finally, March is peak season for upperclassmen to be filing their FAFSA renewals. A surge of upperclassmen flagged for verification is going to increase the burden on financial aid administrators.
The IRS and ED need to work together to fix this for students. They need much broader communications to students about the outage and what paperwork should be obtained in its absence, and they need to share a timeline about when the DRT will be restored. NCAN will continue to monitor the situation, advise as necessary, and keep members informed.
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Students! You need copies of 2015 tax returns to file #FAFSA. Don’t count on #IRS DRT to get your financial info http://ow.ly/fMzT309JWQp