APSCU Webinar on Verification

1. APSCU Webinaron Verification Sharon H. Bob, Ph.D. Powers Pyles Sutter & Verville PC February 18, 2011 1

2. Verification Process by which certain required data reported on the FAFSA is reviewed for accuracy and completeness 2

3. School Verification Policies 3

4.  Verification Policies 4 MUST have a written policy stating: How applications are selected for verification Documentation deadlines for students and consequences for missed deadlines Method of notifying students of award changes resulting from verification Required correction procedures for students Standard procedures for referring overpayments to OIG

5. Notice to Student School must provide a written statement to students selected for verification that includes: A clear explanation of the documentation requirements Student�s responsibilities with regard to the verification process School notification requirements 5

6. Selection Process 6

7. How are Students Selected? CPS selection Edit checks which identify inconsistencies and potential errors Random selection School selection School criteria � may use CPS items or different items not required to be verified (e.g., other untaxed income, additional assets, debts) 7

8. School Selections A school MUST verify ANY application information it believes is incorrect Items may be different from ED required data verification elements 8

9. 30% Verification Option 9

10. Verification Exclusions 10

11. Verification Exclusions Selected applications may be exempt from some or all of the verification requirements due to the following: Incarceration Recent immigration Spouse or parent unavailable Only applies to spouse or parent data 11

12. Verification Exclusions, cont Death of student Only exemption that excuses school from resolving conflicting information Applicant verified by another school Certain Pacific Island residents Dependent�s parents must also meet criteria to qualify for exclusion Not a Title IV recipient For reasons other than not completing verification 12

13. Verification Exclusions, cont If the student will ONLY receive any of the following Title IV aid, verification is not required: Unsubsidized Federal Stafford Loans PLUS Loans (parent or graduate) TEACH Grant Stafford Loans (sub and unsub) received for study at an eligible foreign school 13

14. Verification Items 14

15. What do I Verify Required to Verify 5 Major Data Elements Adjusted Gross Income U.S. income tax paid Certain untaxed income and benefits Number in household Number enrolled in college �Confirming that specific FAFSA answers are correct� 15

16. Verification Documentation 16

17. What Documents Do I Need? Most common documents include: For AGI (and some untaxed income) Base year tax return For untaxed income, household size and number in college ED Verification worksheet Alternative documents may include: Official agency documentation Institutional certification Signed statement ED considers as acceptable documentation IRS retrieved items, if those items are identified. 17

18. Verification Worksheets Department developed Not required � may develop own Independent and Dependent forms Submitted to the school, not ED Master copies on IFAP 18

19. General Document Requirements Documents can be originals Documents can be copies Photocopies, fax, digital printouts Signatures on a copy are as valid as original signature 19

20. AGI and U.S. Income Tax Paid Usually verified through U.S. income tax returns Must have at least one filer signature or Preparer name and SSN, EIN or PTIN and the Preparer may type or print his own name Exception � form mailed directly to the school from IRS Check for anyone with financial data on FAFSA Type of return listed on FAFSA should match AGI should always match FAFSA data Unless adjusted for joint return 20

21. Tax Return Basic Knowledge Information required to know: Minimum income requirements for filing a tax return Correct tax filing status for an individual A person cannot be claimed as an exemption on more than one tax return 21

22. Tax Return Data Conflict Some examples that must be resolved: Married filing separately; but both claimed �Head of Household� Student claimed self as exemption, but so did parent A student claims not required to file but earned $30,000 from work 22

23. Untaxed Income and Benefits Three specific types to verify: Child support IRA/Keogh deductions Interest on tax-free bonds Child support Amount received Verification worksheet, signed statement, government agency Does not have to be verified if same amount verified in previous year 23

24. Untaxed Income and Benefits, cont Deductions for IRA/Keogh Plans Can be verified using tax returns Interest on tax free bonds Can be verified using the tax return Additional untaxed income to verify All other untaxed income on tax return Excluding schedules Other items not reported on the tax return Examples � living allowance, money received, Veteran non-educational benefits, etc. 24

25. Household Size Information obtained: Names of household members Ages Relationship to student Must be updated at time of verification Documents ED worksheet Signed statement 25

26. Household Size - Exceptions Don�t have to verify household size if: Same as reported and verified last award year Receive ISIR/SAR within 90 days of application signature Dependent student�number is 3 if parents are married or 2 if one parent Independent student�number is 2 if married or 1 26

27. Number in College Information obtained: Names of household members enrolled Ages Relationship to student Names of schools attending Must be updated at time of verification Documents ED worksheet Signed statement 27

28. College Enrollment - Exceptions Don�t have to verify enrollment if: Enrolled is one (student) Receive ISIR/SAR within 90 days of application signature Members are enrolled at least half-time at your school Confirmed through your school records 28

29. Acceptable Documentation 29

30. Remember� Regardless of verification status Must resolve all �C codes� Must resolve all conflicting information Separate process from verification Involves any information of which the school has knowledge Must resolve conflicts before disbursing any aid 30

31. Completing Verification 31

32. How to Complete the Process Compare documents with original FAFSA Use of checklist in the file FAA access to CPS � verification tool Determine if: Information is correct If reason to believe FAFSA is inaccurate, may not disburse any Title IV funds or originate Direct Loans, until correct FAFSA. 32

33. Interim Disbursements If have no reason to suspect that FAFSA information is incorrect: For Pell, ACG, SMART, FSEOG and Perkins: May only disburse for first payment period For FWS, student may work for a maximum of 60 consecutive days from start of enrollment For Direct Loan: May only originate subsidized loans (but not disburse) School is liable for the interim funds if ineligible due to incomplete or incorrect data 33

34. Verification Deadline Dates Verification must be completed by the earlier of: 120 days after last day of student enrollment Secretary�s deadline (Federal Register) School may set an earlier deadline for Direct Loans and campus-based applicants Verification is complete when your school has ALL requested documentation 34

35. Consequences If the applicant fails to provide the requested verification documentation by the school or ED deadline: Do not disburse any grants or Perkins funds Return any grants or Perkins received for academic year Do not continue FWS employment Do not disburse DL funds Return undisbursed funds to ED Do not originate Direct Loans subsidized proceeds 35

36. Deadline Dates & Consequences However�if the verified SAR/ISIR is submitted/received after the institutional deadline, but within the additional time established by the Secretary, Pell must be paid on the HIGHER of the two EFCs 2012-2013 � Pell must be paid on the valid ISIR 36

37. What is Conflicting information under the Regulations ��All student aid applications, need analysis documents, Statements of Educational Purpose, Statements of Registration Status, and eligibility notification documents presented by or on behalf of each applicant; Any documents, including any copies of State and Federal income tax returns, that are normally collected by the institution to verify information received from the student or other sources; and Any other information normally available to the institution regarding a student�s citizenship, previous educational experience, documentation of the student's social security number or other factors relating to the students eligibility for funds under the Title IV, HEA programs.� 37

38. What is Conflicting information under the Regulations, cont. �668.16(b)(3) also 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.� If the institution has the information, you must deal with it Think of an onion�you only have to deal with the outer skin (i.e., things that conflict on the surface, or with the things that you have reason to believe are inaccurate) 38

39. What is Conflicting information under the Regulations, cont. Why is it important to resolve conflicting information? Because it ensures that the right students (eligible students) receive the right (correct) amount of aid 39

40. Department of Education published new rules on verification on October 29, 2010, effective July 1, 2012 40

41. Verification Applies to Subsidized Student Financial Assistance Programs; Not Unsubsidized Student Financial Assistance Programs Subsidized-Eligibility uses EFC Verification applies Pell, FSEOG, FWS, Federal Perkins, Subsidized Loans Unsubsidized-Eligibility does not use EFC Verification does not apply TEACH Grants, Unsubsidized Loans, PLUS Loans 41

42. Completing Verification Process Must complete verification prior to exercising professional judgment Codifies long-standing policy in regulations 42

43. Selection Process Eliminates 30% limit Department targeting error-prone items to select applications to verify- ED will include specific flags that will indicate which items must be verified Institutions must verify all applicants Department selects Annual Federal Register notice will list data elements that may be selected in sufficient time to allow students to make adjustments prior to the start of the processing year. 43

44. Selection Process, cont. Institutions must continue to verify information they believe is inaccurate or conflicting Applicants selected for verification more than once in an award year are not required to provide documentation for items previously verified to the extent the information remains the same Institutions retain flexibility to select additional information or applications for verification 44

45. Exclusions 2012-2013 Death of student Not a Title IV recipient Applicant is eligible for only unsubsidized financial aid Applicant who transfers, had completed verification, and applies using same FAFSA (must receive letter and transaction number for applicable valid FAFSA) Restructured to clarify provisions applicable to: Applicants Parents of dependent applicants Spouses of independent applicants 45

46. Exclusions, cont. Lists specific situations when parent�s or spouse�s information is not subject to verification unless institution has reason to believe incorrect, need not reverify applicant�s parents or applicant�s spouse, if: Parents/spouse are residing in another country and cannot locate; Parents/spouse cannot be located; Parents/spouse are mentally incapacitated; or Spouse is deceased. 46

47. Updating Applicant required to update all changes in dependency status throughout the award year, except changes resulting from a change in the applicant�s marital status. Applicant is not required to update his or her marital status within an award year unless the institution requires the student to do so. FAA may require applicant to update marital status to address inequity or to reflect more accurately the applicant�s ability to pay. 47

48. Updating, cont. Applicant must update the number of persons in the household or the number in the household who are attending college if selected for verification. Items must be correct as of the date of verification. (Exception: If the household size or number in college was already verified during the current award year and the information has not changed.) 48

49. Items to Verify Annual Federal Register notice Items to verify Documentation For 2011 � 2012, the Department will continue to require verification of the current five data elements 49

50. Documentation Specified as acceptable in annual Federal Register notice Retained current documentation requirements with technical changes Added option to retrieve electronic data from IRS- a flag on the ISIR must confirm that the data were obtained from the IRS and were not changed after being imported to the FAFSA (02) For applicants with tax filing extension: May require completed tax return when filed Must reverify AGI and taxes paid, when/if the tax return is submitted 50

51. Documentation, cont. Tax return not signed by the tax filer Must be signed or stamped by the tax preparer and Contain the preparer�s SSN, EIN, or PTIN Codifies ED guidance 51

52. Interim Disbursements May make a disbursement after completing verification but prior to receiving a corrected ISIR if the changes would not change the amount of aid To avoid liability, all corrections are submitted to ED 52

53. Deadlines Require institutions to follow cash management procedures for Direct Loans Removed the requirement to pay Pell Grant on the higher EFC � must pay on valid ISIR. 53

54. Recovery of funds Require institution to reimburse program account if disbursement made without receiving corrected SAR or ISIR and not collected from student if adjustment to financial aid award is necessary 54

55. �Changes in FAFSA Information Removed $400 tolerance Require all corrections $25 or over to be submitted Students who complete verification when no longer enrolled can be paid on the valid SAR or ISIR (prior rule required payment on the higher of the two EFCs) 55

56. Questions?? Sharon H. Bob, Ph.D. � Sharon.Bob@ppsv.com Powers Pyles Sutter & Verville PC 1501 M Street NW, Seventh Floor | Washington, DC 20005 tel 202.466.6550 | fax 202.785.1756� February 18, 2011 56

57. Sharon H. Bob, Ph.D. 57