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Monday, April 8th at 1:00 PM
FAFSA FSA Releases Details on Three Additional Issues With FAFSA Applicant Records
By Maria Carrasco, NASFAA Staff Reporter
Publication Date: 4/2/2024
The Office of Federal Student Aid (FSA), via an electronic announcement Monday evening, released more details on three issues concerning tax data reported on Institutional Student Information Records (ISIRs).
On Friday, FSA initially acknowledged that it was aware of issues reported by financial aid offices involving tax data on ISIRs and said it would investigate these issues. On Monday, FSA said the Department of Education (ED) and the IRS identified three issues that impact a subset of ISIRs, fewer than 20% in total. Across these three issues, the Department will reprocess 5% of previously submitted FAFSA applications because the errors would result in decreased financial aid eligibility for students if unresolved. The department plans to reprocess those records as soon as the functionality is available in the first half of April.
These issues are part of an already rocky rollout of the 2024-25 FAFSA, which NASFAA President and CEO Justin Draeger said has been plagued by issues of broken trust, data integrity, and missed deadlines.
“We note that the department quickly acknowledged and investigated these data mismatch issues when they were identified by the financial aid community,” Draeger said in a statement. “But we must also emphatically reiterate that every day matters, and with hundreds of thousands of FAFSAs needing to be reprocessed, even more delays for students are coming. Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial aid offers out to students and families.”
According to FSA, two of the three issues may occur for students and their contributors who successfully had federal tax information (FTI) transferred via the IRS Direct Data Exchange (DDX). The third issue impacts students and their contributors who were required to manually enter their income and tax information.
Specifically, the first issue FSA identified involves the data for education tax credits — which impacts about 15% of FAFSA applications. Financial aid administrators had reported that the amount transferred by the DDX did not always match the actual reported amount on the applicant’s federal tax return. FSA stated that the IRS has updated the DDX to include the actual reported amounts of education tax credits for any new FAFSAs submitted as of March 30.
Further, FSA said it will reprocess affected ISIRs if it is expected to reduce the applicant’s Student Aid Index (SAI), meaning they’ll be eligible to receive more financial aid through the reprocessing. According to FSA, about 5% of FAFSAs fall into this group.
For the other 10% of FAFSAs, FSA noted that reprocessing would increase students’ SAI and reduce their financial aid eligibility. ED will assume that institutions will intend to use current ISIRs for these students unless an institution initiates ED to generate a new ISIR for that student. Aid offices may use their professional judgment and request that ED reprocess any one or more of these FAFSAs. More information on this process will be available in the coming weeks, according to FSA.
The second issue involves inconsistencies with tax data for adjusted gross income (AGI) and filing status. Specifically, FSA found if taxpayer information is updated through an amended tax return or other adjustments, the DDX is transferring the amended AGI and filing status and the original values for other tax return elements.
According to FSA, the IRS will update the DDX to include tax data from the taxpayer’s original tax return. After the IRS makes this update, the DDX will not include amended or updated tax information, and will use original tax data consistent with the methodology used by the Data Retrieval Tool (DRT) for past years of the FAFSA. However, FSA noted that a 2024-25 ISIR will not include the flag indicating that an amended tax return was filed.
FSA estimates that this issue affects fewer than 2% of processed ISIRs. Again, ED will reprocess affected ISIRs if it is expected to reduce a student’s SAI and increase the student’s eligibility for financial aid. Aid offices may use their professional judgment and request ED to reprocess one or more of these FAFSAs.
The third issue deals with inaccurate instructions on the FAFSA form. Specifically, the written instructions on the FAFSA form for applicants who are manually entering their income taxes paid and/or their education tax credits are inconsistent with the data transferred from the IRS through the DDX process, FSA found.
FSA said this issue affects “a very small number” of FAFSAs and that the department will amend the FAFSA instructions to align with DDX. Further, the department clarified it will not consider manually entered data on affected FAFSAs to be conflicting information. But, institutions may use their own discretion to make corrections with what was manually entered by an applicant and what is being reported via the DDX.
Along with details on these three issues, FSA announced that it will release “as soon as possible” a list of Universally Unique Identification Numbers (UUIDs) corresponding to the FAFSAs that it does not intend to automatically reprocess because they are unaffected by any identified issue. FSA stated that institutions and states will be able to use this list to identify the students for whom they have accurate information. ED will also release a set of criteria that institutions could alternatively use to run a query to identify unaffected student records.
ED will also identify ISIRs that are affected by these issues, but does not plan to reprocess, because doing so would result in lower financial aid eligibility. Institutions may use their professional judgment to request that the Department reprocess any one or more of those FAFSAs.
In its announcement, FSA also gave an update to another issue. Earlier in March, ED identified an issue with how student assets are factored into the calculation of dependent students with ISIRs and stated that it would reprocess all affected FAFSAs On Monday, FSA updated its guidance to state that it will reprocess affected FAFSAs only when the corrected data and calculations would reduce students’ SAI. Due to the nature of the issue, where some dependent student assets were not included when they should have been, it appears that very few, if any, FAFSAs affected by this issue will be reprocessed.
Additionally, FSA noted that it will be providing a daily message every morning this week summarizing updates and sharing additional information to students, their families, institutions, states and other stakeholders. These daily messages will be posted on the 2024-25 FAFSA Fast News webpage.
“The department recognizes how important it is that schools and states have the information they need to extend financial aid offers and that families have the information they need to make critical education decisions,” FSA wrote.
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Call/Text "Discovery Call"
(951) 261-9799