FAFSA ON THE WEB, IRS DATA RETRIEVAL, & VERIFICATION

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

2. FAFSA ON THE WEB

3. FAFSA Processing • 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. 2

4. FOTW Completion Time 38% 3

5. 2012-13 Web Demonstration Site • FAFSA on the Web and FAAAccess demonstration sites available • To access sites, go to http://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. 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 Housing Plan Error Messaging 7

9. 2012-2013 High School Question • 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 Gender Question Edit 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 FOTWif the question is not answered 10

12. Asset Threshold Question Comment codes are used to notify schools when the asset threshold question was displayed to the applicant and the response is “No” 2011-2012 2012-2013 • Comment codes deleted • Response to asset threshold question provided on ISIR record layout, Student Inquiry, and ISIR Compare

13. Who Sees Asset Threshold Question? • 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 • 12

14. Homeless Youth Determination • Financial Aid office may determine that student meets homeless youth definition • Students who meet this criteria can use FOTWto set the Special Circumstances Flag to ‘3’ 13

15. Homeless Youth Determination 14

16. IRS DATA RETRIEVAL

17. IRS Data Retrieval • IRS Data Transferred between January 30, 2011 & July 2011 • Initial FAFSA -- 2,617,428 • FAFSA Corrections -- 334,306 17

18. IRS Data Retrieval • 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 Confirmation Page • 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”

20. 2012-2013 IRS DRT Filtering Questions • 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 Logic • 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. Dynamically Displayed IRS DRT Messaging 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.”

23. Dynamically Displayed IRS DRT Messaging • 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. Two New IRS Data Flagsfor 2012-2013 32 32

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34. IRS Data Retrieval 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 34

35. New IRS DRT Notifications 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

37. What 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

38. Tax Info You Must Know • 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

39. Tax Info You Must Know • 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

40. Effective Date of Verification Regulations • Effective July 1, 2012 for 2012-13 award year • Remember 12/13 FAFSA processing has already begun!

41. Verification - Definitions • 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

42. Verification - Definitions • 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

43. Verification Selection • 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

44. Verification Selection 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

46. Verification Selection2012-13 • Institutions must verify all applicants selected by CPS for verification • Removes institution’s option to verify only 30% of applicant pool

47. 2012-13 Verification & FAFSA Corrections • 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

48. Required Verification Items2012-13 • 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

49. 2012-13 RequiredVerification Items 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. Acceptable Documentation 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