Verification

1. Verification TASFAA 2010 New Aid Officers Workshop Consuela Mitchell Deputy Director of Financial Aid The University of Texas at Dallas 2009-2010 Application & Verification Guide (AVG)

2. Verification • Process of verifying accuracy of FAFSA data • Regulations define: • Whose application must be verified(AVG-82) • Data elements to be verified(AVG-85) • Documentation used to verify data elements(AVG-87) • Regardless of verification selection, must always resolve discrepancies and conflicting information

3. Verification Policies andProcedures Must: • Be written • Address school options where flexibility exists • Be made clear to all students • Be consistently applied (AVG-81)

4. Verification Policies and Procedures Must include: • Procedures for identifying and processing selected applications • Deadline for applicant to provide documentation • Consequences of failure to meet deadline (AVG-81)

5. Verification Policies and Procedures Must include: • Procedures applicant must follow to correct application information • Method for notifying applicant of verification results and change in EFC and/or award • Procedures for referring overpayments to ED • Procedures for referring cases of suspected fraud or other criminal misconduct to ED Office of Inspector General (AVG-81)

6. Verification Topics • Whose application must be verified • Quality Assurance Program requirements • Which data elements must be verified • Acceptable documentation • Data element corrections • Data element updates • Interim disbursements • Verification time frames • Policies and procedures

7. Whose Application Must Be Verified? • Applicants selected by Central Processing System (CPS) • Applicants selected by institution

8. Programs to Which Verification Applies • Federal Pell Grant • Academic Competitiveness Grant (ACG) • National Science and Mathematics Access to Retain Talent (SMART) Grant • Campus-based programs • Subsidized Stafford Loan programs (FFEL and Direct Loan)

9. 30% Verification Option • 30% is cap, not minimum • Applications making up 30% must be CPS-selected • If more than 30% selected by CPS, may choose to verify more than 30% • Document files of CPS-selected applicants not verified • 30% option does not relieve institution of responsibility to resolve conflicting information (AVG-82)

10. Institutionally-Selected Applications • Institution can select additional applications not selected by CPS • Selection may be based on such data elements as: • Estimated tax figures • Low family income levels • Large household size or number in college • Completion of certain FAFSA data elements • Other institutional criteria

11. Verification Exclusions • Certain types of applicants and data elements exempt from verification • Reason for verification exclusion should be documented in student’s file • Except for applicant who dies during the award year, if conflicting information or reason to believe application information is inaccurate, exclusions do not apply (AVG-83)

12. Verification Exclusions Exclusions include or are limited to: • Entire application—student and parent data • Applicant’s spousal data only • Certain data elements

13. Quality Assurance Program • Participation voluntary • ED provides guidelines, tools, and incentives for participation • Participating schools exempt from prescribed verification requirements • School sets verification parameters • School must reassess and self-correct verification process on ongoing basis • Every other year – Random Sample must be completed • Quality Assurance Website: http://ifap.ed.gov/qahome/Default.html (AVG-82)

14. Required Verification Data Elements • Number in household • Number of household members in college • Adjusted gross income (AGI) • U.S. income tax paid, and • Certain untaxed income and benefits (AVG-85)

15. Required Verification Data Elements Certain untaxed income and benefits • Child support received • Untaxed IRA/Keogh deductions, and • Interest on tax-free bonds (AVG-90)

16. Untaxed IRA/Keogh deductions * Untaxed pensions and annuities * Interest on tax-free bonds * Untaxed combat pay†*(AVG-21) †(AVG-20) Required Verification Data Elements Other untaxed income and benefits on the tax return

17. Items That May Be Verified Using the Tax Return • Adjusted gross income • U.S. income tax paid • IRA/Keogh deductions and payments • Untaxed portions of pension distributions • Untaxed IRA distributions • Interest on tax-free bonds • Untaxed combat pay (when reported) (AVG-85)

18. Acceptable Tax Return Formats • Photocopy, facsimile, or digital image of original paper tax return • If original copied without signature, at least one filer must sign copy • Tax form completed to duplicate original return and signed by at least one filer • Other signed e-file documentation (AVG 88-89)

19. Acceptable Tax Return Formats • Form 8453 is a signature form for e-filers and not acceptable • In lieu of return with filer signature, a return with tax preparer’s stamped, typed, signed, or printed name, and SSN, EIN, or PTIN

20. Alternative Sources of Documentation • IRS tax transcript listing tax return information • Signed statement and W-2s from filer, if tax returnor tax transcript unavailable

21. Tax Filing Extensions • Collect W-2’s and one of following: • IRS Form 4868; or • Copy of IRS approval of extension beyond 4-month extension • Collect and review tax return when filed

22. Child Support Documentation Obtain verification worksheet or writtenstatement certifying amount of child support received for all children • Statement must be signed by applicant and at least one parent (if dependent) • Statement must be signed by applicant if independent • If support paid through government agency, statement from that agency is acceptable (AVG -91)

23. Child Support Documentation Request additional documentation if information provided appears inaccurate • Copy of separation agreement or divorce decree • Signed statement from parent providing support • Copies of canceled child support checks or money order receipts (AVG-91)

24. Number in Household & in College • Statement or verification worksheet listing each household member’s: • Name • Age • Relationship to applicant • Postsecondary school (if any) attending at least half-time in program leading to recognized educational credential • If institution doubts statement, it should obtain statement from each postsecondary institution listed by applicant (AVG -86)

25. Verification Corrections • Changes to data elements that were incorrect at time of application • If data correct as reported and valid ISIR/SAR: • Pay Federal Pell Grant, ACG, SMART Grant, FSEOG, and Federal Perkins Loan • Employ students under FWS • Certify/originate and disburse/deliver FFEL or Direct Loans (AVG 93-95)

26. Tolerance Option $400 net error tolerance for all Title IV programs FAFSA Parent AGI + Student AGI + Parent Untaxed Income + Student Untaxed Income – Parent U.S. Taxes Paid – Student U.S. Taxes Paid = FAFSA data (uncorrected sum) Net Difference:  $400 Correct Parent AGI + Student AGI + Parent Untaxed Income + Student Untaxed Income – Parent U.S. Taxes Paid – Student U.S. Taxes Paid = Correct data (corrected sum)

27. Example: Tolerance Option FAFSA DataCorrect Data Parent AGI $15,800 $15,500 Parent Untaxed Income + 1,200 + 1,500 Student AGI + 9,200 + 9,200 Student Untaxed Income + 0 + 0 Parent U.S. Income Taxes Paid – 500 – 0 Student U.S. Income Taxes Paid – 200 – 300 = $25,500 = $25,900 Net difference: $25,500 – $25,900 = $400

28. Recalculating EFC: Federal Pell Grant, ACG, & SMART Grant Programs • If net error is greater than $400, • Recalculation of the EFC is necessary • If net error is less than or equal to $400, • No recalculation of the EFC is necessary (AVG-94)

29. Verification Updates • Changes to data elements that were correct at time of application but have since changed • Applicable only to 3 items: • Dependency status • Number in household • Number of household members enrolled in college (AVG 102-103)

30. Verification Updates Dependency status • All students must update dependency status if it changes at any time • Cannot be updated if it changes as result of change in student’s marital status (AVG-103)

31. Verification Updates Number in Household and Number in College • If selected, data must be accurate as of verification • If not selected, cannot update for changes occurring after original application filed • If not selected, not required to monitor data element change (AVG-103)

32. Verification Updates • Cannot update change in student’s marital status • Mustupdate household size if dependent student’s parent remarries after application, before verification

33. Professional Judgment • If using PJ authority to adjust data elements used to calculate EFC on selected application, application must be verified first • If using projected-year income data to recalculate EFC, projected-year data do not need to be verified (AVG 105-106)

34. Verification Status Codes • V – Verified • W – Without Documentation • S – Selected/Not Verified • Blank – Not Verified (AVG 95)

35. Interim Disbursements In the absence of conflicting information or reason to believe information isinaccurate, institutions have the following disbursement options when verification still incomplete: • Federal Pell Grant, ACG, SMART Grantand campus-based: • Withhold payment • Make 1 disbursement for 1st payment period • Employ applicant up to 60 days under FWS (AVG-93)

36. Interim Disbursements Subsidized FFEL/Direct Loans: • Refuse to certify or originate loan; or • Certify or originate loan, but not disburse/deliver loan proceeds (AVG-93)

37. Interim Disbursements Verification not required for: • Unsubsidized FFEL/Direct Loans • PLUS Loans • Nonfederal LEAP and SLEAP awards • Robert C. Byrd Honors Scholarships (AVG-81)

38. Interim Disbursements • If school makes interim disbursement and student later determined ineligible, or if verification not completed, award for which student is ineligible is an overpayment • Student with overpayment is ineligible for Title IV funds • School liable if overpayment not resolved (Chap. 5)

39. Verification Time Frames Institution determines when in award cycle to verify based on: • Institution’s resources and procedures • When verification process would be least disruptive to office and least problematic for students

40. Verification Time Frames Verification Deadlines • Campus-based and FFEL/Direct Loans: • Institutionally-established deadline • Federal Pell Grant, ACG, and SMART Grant: • Institutionally-established deadline • Institution must have verification documents and valid SAR/ISIR by earlier of 120 days after last day of enrollment or deadline published annually by ED in Federal Register (AVG-94)

41. Available Resources • Federal Student Aid Handbook • Application and Verification Guide http://www.ifap.ed.gov/fsahandbook/0910AVG.html • Institutional Policies and Procedures • IRS Publication 17 found at www.irs.gov • Consuela Mitchell • consuelamitchelll@sbcglobal.net