Program Integrity Final Rule

1. Program Integrity Final Rule Verification Requirements

2. Verification – Definitions • FAFSA • ISIR and SAR • Specified Year – base or prior-prior year §668.52

3. Verification – Definitions • Subsidized student financial assistance – need based • Unsubsidized student financial assistance – not need based §668.52

4. Verification -Applicant Selection • Schools must verify ALL CPS-selected applicants • 30% cap on school-defined applicants eliminated • Schools must verify all selected applicants unless verification exclusions apply • Schools must complete verification prior to PJ §§668.53-668.54

5. Verification Exclusions Excluded from verification: • Applicant dies, does not receive aid, or receives only unsubsidized aid • Transfer student if prior school completed verification • Parent or spouse resides outside U.S. and cannot be contacted • Parents (both) or spouse mentally incapacitated • Parents or spouse cannot be located §668.54

6. Verification Exclusions • No longer excluded from verification • Legal residents of Commonwealth of Northern Mariana Islands, Guam and American Samoa • Citizens of Republic of Marshall Islands, Federated States of Micronesia and Republic of Palau • Incarcerated applicants • Recent immigrants • Parents who are deceased • Parents or spouses who are physically incapacitated

7. Verification - Updates • Must update FAFSA information if household size or number in college changes • Must update dependency status changes during the award year (unless due to change in marital status) • May update dependency status changes due to change in marital status during the award year- • To address inequity or • To reflect ability to pay §§668.55;668.58

8. Information to be Verified • Department to annually publish a list of verification data in the Federal Register • Selected applicants’ SARs/ISIRs will list specific data items to be verified Items to be verified may change annually and differ from applicant to applicant §668.56

9. Documentation • Verification of AGI, income earned from work and taxes paid • Tax return or tax transcript • Signature of at least one filer • Do not need original signature • Numbers obtained via IRS Data Retrieval (“02” IRS Request Flag code) • Applicant not required to file tax return • Signed statement listing income or W-2s §668.57

10. Documentation (cont’d) • Unable to obtain tax return • Copies of W-2s • Self-certified statement of AGI • IRS grants 6-month tax filing extension • No requirement to obtain copy once filed • If school requires copy once filed, it MUST re-verify AGI and taxes paid §668.57

11. Documentation (cont’d) Can accept tax returns signed by tax preparer (instead of tax filers) • Signature or stamp • Preparer name and address and • Social Security number (SSN) or • Employer Identification Number (EIN) or • Preparer Tax Identification Number (PTIN) §668.57

12. Interim Disbursements • If verification does not change eligibility, school may make interim disbursement of: • Pell Grant, • Perkins Loan, • Work-study, • SEOG, and • Subsidized Stafford Loan • If interim disbursement creates overpayment, school is liable §668.58

13. Tolerances • For subsidized student financial assistance, any change to a single dollar item of $25 or more must be submitted to CPS – • The $400 tolerance for dollar items is replaced by the $25 tolerance • No change was made for non-dollar items • Pell Grant eligibility must be recalculated and the award paid based on the revised EFC §668.59(a)

14. Recovery of Funds • If the school makes an ‘interim disbursement’ of subsidized student financial assistance and does not receive corrected ISIR/SAR by deadline, it must reimburse the program as appropriate. §668.61