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The Senate on Thursday passed bipartisan legislation that would streamline applications for student aid and enrollment in income-driven loan repayment plans. The bill, dubbed the FAFSA Act, would do so by amending the tax code and the Higher Education Act to allow the IRS to share taxpayer information directly with the Education Department.
Federal law doesn’t currently allow the two agencies to share taxpayer data. They launched the IRS data retrieval tool as a workaround that lets student aid applicants automatically import family income information into the Free Application for Federal Student Aid.
But non-tax filers in particular are frequently subject to income-verification requirements. The legislation would do away with that process by including tax-filing status in information sharing.
The bill would also allow data sharing between the IRS and the Education Department to verify the earnings of borrowers seeking to enroll in income-driven repayment. About a third of federal student loan borrowers are enrolled in those repayment plans, and they must submit documentation to certify their earnings each year. But each year, nearly 20 percent of those borrowers fail to do so on time.
The bill was introduced by Senator Lamar Alexander, the chairman of the Senate education committee, and Senator Patty Murray, the ranking Democrat on the committee. Senator Sheldon Whitehouse, a Rhode Island Democrat, and Senator Cory Gardner, a Colorado Republican, also co-sponsored the bill.
Alexander’s office said the legislation would allow eight to nine million additional applicants to file the FAFSA using existing IRS information and automate the enrollment process for seven million borrowers using income-driven repayment. It also said the bill would make students' data more secure.
The National Association of Student Financial Aid Administrators backs the bill and called on the House to take up the legislation.
