Removing the Mask from Verification

KASFAA Spring 2007 ConferenceBowling Green, KYApril 11-13, 2007 Removing the Mask from Verification Presented by: Victoria Owens Director of Student Financial Aid Jefferson Community & Technical College Louisville, KY

What is Verification? The confirmation of the information provided by the students (and parents or spouses) on their applications. • Confirms the accuracy of specific data elements reported on FAFSA • Subject to options by financial aid administrators • Sometimes uncovers conflicting information

Required Verification Items • Household Size • Number in College • Adjusted Gross Income (AGI) or income from work for non-taxfilers • US Taxes Paid • Certain types of untaxed income and benefits: • Social Security benefits • Child Support • IRA/ Keogh deductions • Foreign income exclusions • Earned income credit • Interest on tax-free bonds • All other untaxed income included on US income tax return, excluding information on the schedules 34 CFR 668.56

Required Policies Your Verification policy must be written and cover the procedures regarding: • Deadlines for documentation & consequences for failing to meet deadline • A method of notifying students of award changes due to verification • Required correction process • Referral of overpayment cases to the US Department of Education You must also provide selected applicants with written information covering: • Documents required for verification • Student responsibilities • Notification methods

Verification Options Applications are selected for verification either by the Central Processing System (CPS) or by the school. • The Student Aid Report (SAR) or the Institutional Student Information Record (ISIR) will indicate selection by CPS • School selection • Beyond those selected by CPS (Ex. 100%) • May verify data items other than CPS-selected required items • Have reason to believe data is questionable

Verification Options • 30% Option • School must verify all CPS-selected verifications up to 30% of the school’s total number of federal aid applicants. • School-selected do not count • Conflicting information corrections do not count

Verification Exclusions Selected applicants may be exempt from verification requirements. Examples include but not limited to: • Student applicant incarcerated at time of verification • Student applicant is recent immigrant (i.e.- arrived to US during calendar years 2007 or 2008) • Death of student applicant • Student applicant is Pacific Island resident 34 CFR 668.54(b)

Acceptable Documentationfrom 2007-2008 Federal Student Aid HandbookUS Department of Education verification worksheets are not required for documentation collection. School may create its own verification documents as long as information/signatures are obtained.

Acceptable Documentation- Household Size Listing: • Names of household members • Their ages • Their relationship to the student • Option to not verify, if following apply: • Household size is same as reported & verified in the previous year, • You received the SAR/ ISIR within 90 days after the application was signed • For dependent students, the size reported for married parents is 3 – or 2, if the parent is single, divorced, separated, or widowed • Household size is 2 for a married independent student or one if the student is single, divorced, separated, or widowed.

Acceptable Documentation- Number Enrolled in CollegeMust meet criteria as defined on FAFSA Listing: • Names • Ages of those enrolled • Name of school of attendance • Option to not verify, if following apply: • The reported number enrolled is one (the student only), • You received the SAR/ ISIR within 90 days after the application was signed • The family members are also enrolled at least half time at your school & you have confirmed enrollment through your school’s records.

Acceptable Documentation- Adjusted Gross Income (AGI) & US Taxes Paid • Tax documents depend on filing method- paper or electronic • IRS Form 1040EZ, 1040A, 1040 • E-file provider’s format • IRS Form 8453 does NOT have enough information & cannot be used for verification • Document must have signatures (or preparer’s stamp or other official validation) • Must be complete and legible

Acceptable Documentation- Income Earned from Work (Non-filers) • Individual’s W-2 forms • Signed statement certifying non-filer status and listing the sources & amounts of income. Special Note: If you have reason to believe this person would have been required to file a US tax return, this constitutes conflicting information and must be resolved

Acceptable Documentation Financial Aid Administrators are not expected to be tax experts, but should know: • Whether an individual is required to file a federal tax return • That an individual cannot be claimed by more than one person • The individual’s correct filing status Reference: IRS Publication 17, 501, or 570

Acceptable Documentationfrom 2007-2008 Federal Student Aid Handbook • Using a joint return to figure individual AGI and Taxes paid • Tax Table (preferred method). Use IRS Tax Table. Calculate using deductions & exemptions the individual would have used if filed a separate return. • Proportional distribution. Determine percentage of joint AGI belonging to the individual & assess the joint taxes paid by that same percentage.

Acceptable Documentation- Untaxed Income and Benefits • Except for Social Security benefits and child support, the required items can be verified using the tax return or alternative tax documents. • Not required to verify any untaxed income & benefit received from a federal, state, or local government agency on the basis of a financial need assessment.

Completing the Process • Interim Disbursements- disbursement made before verification is completed (if you have no reason to believe the SAR/ISIR information is inaccurate.) • School is liable if verification shows student not eligible for amount paid or if student never completes the process. • Limitations vary based on program (Pell, Perkins, SEOG, FWS, Staffords)

Completing the Process • Selection after Disbursement- • School must verify before making further disbursements. • There is a change flag on the ISIR to call attention to this situation. • IF verification yields reduced or ineligible aid, the student is responsible for repaying all aid (though Stafford loan funds & FWS wages earned can be kept)

Completing the Process • After Documentation is Complete • School must compare documents to SAR/ ISIR considered for payment. • All correct info- may award & disburse • Errors/ inconsistencies revealed- may have to make corrections or update information. • Tolerance • $400 total difference • NO non-dollar item difference • May award without submitting correction or recalculating the EFC. Note: No tolerance for errors in non-dollar items- school/ student must correct it. • Deadline • As published in Federal Register- expected to be Sept 24, 2008 or 120 days after the last day of student’s enrollment, whichever is earlier. • Late Disbursement • If processed SAR/ISIR with official EFC while student was still enrolled. • If EFC changes as result, Pell awarded based on the higher EFC.

Corrections, Updates, and Adjustments • Corrections- information reported on initial FAFSA is wrong or was incorrect at the time. • Updates-changes to FAFSA info. Which was correct when initially filed but has since changed. • Dependency status, household size, number in college. • Updating not permitted when a result of applicant’s marital status change. • Adjustments- change made by aid administrator using professional judgment.

Answer to Questionfrom Conference Session Question: If a student was independent at time of filing FAFSA due to being pregnant; however, at the time of verification the student has had a miscarriage, how does that affect her status? Answer (from NASFAA Training & Tech Assistance): Dependency status must be updated. [668.55]

Questions? Verification Resources/ Tools: • Federal Student Aid Handbook – Application and Verification Guide section • Code of Federal Regulations Both located at the Information for Financial Aid Professionals (IFAP) website: www.ifap.ed.gov

Removing the Mask from Verification