Key Financial Aid Tool Could Be Down for Months

After briefings with congressional committees, federal agencies deliver more bad news on the status of the IRS data retrieval tool.

March 31, 2017
 
IRS Commissioner John Koskinen

The Department of Education and the Internal Revenue Service said Thursday that an important online tool for financial aid applicants could be down for months while protections are added to protect the security of users.

That means a more time-consuming process for students and their families completing the Free Application for Federal Student Aid and, potentially, a more burdensome verification process after students submit the application. The impact of the IRS data retrieval tool's continued outage will extend far beyond first-time college students, affecting current students renewing the FAFSA as well as student loan borrowers seeking to enroll in or update information for income-driven repayment plans.

Groups that advocate for college access and student aid say that will mean fewer students complete the process to obtain financial aid. And they expressed frustration that the two agencies involved haven't done more to communicate clearly about the issue to students or shown an understanding of how vital the data retrieval tool is to the aid application process.

The tool was rolled out in the 2010-11 academic year so that students could automatically import family tax data already on file with the federal government into their aid application. It was intended to streamline the application process and reduce verification checks of family income that often act as a barrier to low-income students completing the aid process. The tool was also the basis for the new government policy that allowed for the use of an earlier year of tax data in determining financial aid eligibility. But the government took the tool down without notice early this month and said after several days of complaints from student aid groups that it was because of concerns over a security breach.

A joint statement from the two agencies Thursday said the tool will be unavailable until security protections are added. Students and families, the statement said, should plan for the tool to be off-line until the start of the next FAFSA season, which starts October 1.

"While this tool provides an important convenience for applicants, we cannot risk the safety of taxpayer data," said IRS Commissioner John Koskinen. "Protecting taxpayer data has to be the highest priority, and we will continue working with [the Office of Federal Student Aid] to bring this tool back in a safe and secure manner."

The latest update followed separate briefings Thursday with members of the House of Representatives Oversight Committee as well as the House and Senate education committees. But the administration provided no indication of any actions taken to help students affected by the outage, as requested in recent letters from prominent student aid groups and lawmakers to Education Secretary Betsy DeVos.

Among those steps called for by student aid groups:

  • Updating information regarding availability of the tool on federal websites.
  • Allowing signed copies of tax returns for income verification purposes in place of tax transcripts.
  • Revising of selection criteria for the verification process to account for lower rates of utilization of the tool.

Members of the education committees had also called on DeVos to make sure the Federal Student Aid call center had the capacity to deal with a higher call volume resulting from the tool's outage. And they asked that the department communicate with states about options, including moving back their priority aid deadlines.

Students whose applications are flagged by the department or their institution for income verification would have to submit a tax transcript -- a document that can take as many as 10 days to receive. Groups like the National College Access Network this month began advising local partner organizations to have students request a transcript as soon as they file their FAFSA in case of a verification check. Some colleges and universities will withhold awarding a financial aid package until that process is complete. That can affect a student's decision on which college to attend. For others, it can create barriers that prevent them from getting the federal aid they need to go to college.

Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, said Koskinen's statement "betrays a disheartening lack of understanding about how vital this tool has become in streamlining the financial aid application process." Although NASFAA said students can still manually complete the FAFSA online, it renewed its call on the department to improve communication about the data retrieval tool and soften the impact on affected students.

NCAN said in a statement posted to the group's website that protecting the identities of taxpayers and students is vital. But the group cautioned that security enhancements should not make using the data retrieval tool prohibitive for low-income applicants. After the IRS relaunched its Get Transcript tool following a 2015 cyberattack, NCAN said, new security requirements adversely affected low-income users.

Key members of the oversight committee sent a letter to DeVos Thursday that did not mention the data retrieval tool but warned that "cybersecurity at the department is far short of where it should be." The committee asked for documents addressing findings of a 2016 audit by the department's inspector general.

"This means many, many more people are going to face a lengthier and more daunting process for applying for needed aid and for getting student loan payments tied to their income," said Lauren Asher, president of the Institute for College Access and Success.

TICAS estimates that more than six million student loan borrowers are currently in income-driven repayment plans. Those plans require borrowers to update their income information annually with loan servicers. Missing deadlines to update income information will have negative consequences for the payments borrowers are required to make, Asher said. But without the data retrieval tool, borrowers can't update their income information online and must instead send a printed form to their loan servicer. TICAS is pushing for the department to work with loan servicers so borrowers don't miss those deadlines, among other steps.

"The impact on students and borrowers will partly be determined by what kind of communication and outreach the department undertakes," Asher said.

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