IRS Debacle Sows Confusion, Hassles

Researchers say removal of an IRS tool for financial aid applicants may have slowed FAFSA submissions, while college aid groups warn that affected students could already be losing out on aid.

April 10, 2017
 

As the Trump administration maintains radio silence related to the suspension of a data tool that's key to the financial aid application process, some researchers have found evidence suggesting the tool's removal may be contributing to a slowdown in application rates. And aid advisers say the more burdensome application process has delayed college decisions for many students.

The U.S. Internal Revenue Service and the Department of Education announced last month -- after more than a week of questions from financial aid officers and advocacy groups -- that they had taken down the data retrieval tool that allows users to automatically import their family's income information into the Free Application for Federal Student Aid. In a more recent update, the administration said the tool could be unavailable until the beginning of the next aid cycle. Student advocates warned that without the site, the FAFSA application process would be slowed for students, who also would face more income verification checks after completing the applications.

Nick Hillman, a professor of educational leadership at the University of Wisconsin at Madison, has worked with Ellie Bruecker, a graduate student at the university, to track the effects of the tool's closure with recent data from the Office of Federal Student Aid. They said it's hard to compare this aid application cycle to previous years because of two important changes -- the earlier application period that began Oct. 1, and the use of income data from two years prior. But the data for first-time FAFSA filers suggest that the tool's suspension may have contributed to a slowdown in applications last month.

States with March priority aid deadlines typically see an uptick of FAFSA applications as students submit at the last minute, followed by a sharp drop-off in applications. But the researchers spotted similar downward trends even in states without March deadlines.

"We're also seeing states where we would not expect to see that drop are tracking right along with them," Bruecker said.

Hillman said it's not clear that the removal of the tool is driving a slowdown in applications. But he said it definitely doesn't help.

About half of all FAFSA applicants used the data retrieval tool in 2014-15. That number jumped to 56 percent last October, the first month of the new, earlier aid cycle.

Hillman said he's concerned about the rate to which FAFSA applications have slowed throughout the overall aid cycle after a strong start in that month.

Carrie Warick, director of policy and advocacy at the National College Access Network, said she was confident that total applications this year would match the previous cycle. She pointed to numbers showing that applications by April had already reached 91 percent of last year's total. But Warick said the whole point of changes like the early FAFSA timeline and the use of earlier income data was to encourage more students to apply for aid.

"Our goal is to not just to meet last year's numbers but certainly to increase them," she said.

Hassles for Students

Financial aid professionals who work directly with students said the data tool's outage already is hurting students' ability to obtain aid. That's because even a delay of a couple weeks while the verification process is underway can mean students miss out on institutional and state grant aid.

"Literally every day that goes by, you have a chance of not getting aid you're eligible for," said Austin Buchan, the CEO of College Forward, a nonprofit in Austin, Tex., that helps underserved students access financial aid.

Unlike the Pell Grant program, which is an entitlement for low-income students, states and colleges have limited amounts of aid to distribute to eligible students. Students stuck in limbo for days or weeks after their application is selected for verification could miss out on those opportunities, experts said.

Cheryl Jones, program director of the Access College Foundation, which works with students in southeastern Virginia high schools, said qualifying low-income students will receive a Pell Grant and a federal student loan regardless of when that process is completed. But she said losing out on an institutional scholarship because of delays related to the FAFSA could mean the difference between a student attending Old Dominion University or Virginia Wesleyan University and a local community college.

"That's the aggravating thing," Jones said. "This could bridge the gap of that student not having to pay a dime for four years."

And the fast approaching May 1 decision day for students is when settling questions about financial aid becomes even more important.

Groups like Access College are, as a matter of course, requesting a tax transcript for applicants as soon as they complete and file the FAFSA. But the transcript, which is required for verification checks, can take between eight and 10 days to arrive by mail. Adding to the challenges for advisers on high school and college campuses are new requirements unrelated to the data retrieval tool's outage for non-tax filer verification. This year students whose parents' incomes are so low they do not file income taxes have been required to submit verification of nonfiler status.

Ann Hendrick, director of Get2College, a nonprofit that works with high school students across Mississippi, said some FAFSA applicants have received verification notices from colleges advising them to use the data retrieval tool to address verification issues.

"If that language is still on the colleges' and universities' verification documents, it creates more confusion," she said.

The slow adjustment of standardized forms from colleges points to a larger problem for financial aid counselors -- the lack of action from the federal government to alleviate the suspension of the tool.

IRS Commissioner John Koskinen told lawmakers last week that 8,000 fraudulent tax refunds were issued by the agency after a security breach of the website, which prompted the shutdown. National financial aid groups as well as members of Congress have acknowledged the importance of those security concerns while calling on the Education Department and the IRS to ease the burden on affected students with steps like more prominently notifying applicants of the tool's availability and adjusting criteria for income verification checks.

Last week, the National Governors Association issued its own call for a more proactive response. Groups like Jones's Access College Foundation, which work with students who are renewing their FAFSA on college campuses as well as with high school seniors, are as frustrated with what they see as the lack of response to those requests.

"We want some real answers. We want some real action to start taking place so these kids can get what they need," Jones said.

Read more by

Back to Top