Student Aid Verification Process Falls Short

WASHINGTON -- The U.S. Education Department’s process for verifying the accuracy of student aid applications has no reasonable assurance of identifying errors, a Thursday report from the department's inspector general found.

The report is the inspector general's first look in several years at the process, which requires students to confirm the accuracy of their family’s financial information. But it backs up what financial aid administrators have reported recently about verification, which is widely seen as an obstacle for low-income students to get the assistance they need to attend college.

Colleges are supposed to use the verification process to make sure students are receiving the correct amount of federal aid. But additional bureaucratic hurdles can mean many students never complete the application process.

Among the issues identified by the inspector general: the Education Department hadn’t evaluated which income data it used to verify the accuracy of financial aid applications -- items like adjusted gross income, income taxes paid and the total number of family members in the household. But the department couldn't provide analysis showing that those data elements were most prone to introduce errors in a student aid award.

The department also hadn’t evaluated whether its target number of aid applications flagged for verification is appropriate. In each financial aid cycle, the Education Department seeks to verify 30 percent of all applications for federal student aid received. Federal officials identify those applications and task colleges with verifying students' family income. But the inspector general found that it hadn't evaluated whether that target was overly burdensome for colleges and students.

“It affirms what aid administrators have been reporting for years, which is that there’s a lack of robust analysis happening at the department to justify the verification gauntlet we put our least-advantaged students through,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators.

A NASFAA survey of member institutions last year found that 84 percent of student aid applicants who went through verification saw either no change to their expected family contribution or a change so small it did not affect the size of their Pell Grants. At two-year colleges, which serve higher proportions of low-income students, 91 percent of aid applicants saw no change to their Pell award after verification.

The organization argued those survey results suggested verification rates were too high or that algorithms used by the Education Department to select aid applications were poorly targeted.

But the verification process has a significant impact on whether a student actually enrolls in college, according to surveys by aid administrators. The National College Access Network found that 25 percent of Pell-eligible students selected for verification in 2016-17 financial aid award cycle did not complete the process, derailing their applications for federal student aid, which the group calls "verification melt."

In the time period examined by the inspector general report, covering the 2015-16 and 2016-17 academic years, the verification rate actually spiked at many colleges. At some institutions, the number exceeded 70 percent.

Kim Cook, NCAN’s executive director, said it’s unclear why those spikes occurred. The process has often been opaque even to campus officials who work full-time on financial aid issues, she said.

“These are questions we’ve been asking and have really not had answers to,” Cook said. “Verification has been a black box.”

In responses submitted to the inspector general, the Office of Federal Student Aid said it had already made some significant improvements to the verification process. FSA chief operating officer Mark A. Brown said in an April 3 letter that the agency concurs with most of the findings but that its usefulness was limited because of changes made since the period reviewed.

FSA made two key changes during that time period, he said. Beginning in the fall of 2017, the agency expanded the number of statisticians who review verification models in real time.

The IG review also took place before the Education Department began using prior-prior-year income information for federal student aid applications, Brown wrote. That change boosted use of the IRS data retrieval tool, an online program that allows families to automatically import tax information already on file with the federal government into student aid applications. Use of the tool simplifies the verification process for many families, he wrote.

NASFAA’s Draeger, however, said that both the Education Department and Congress could take steps to improve verification requirements for students. The department should consult more closely with stakeholder groups on its verification process, he said. And legislation should allow more data sharing between federal agencies so students are not required to verify family income information themselves.

“We don’t have to keep asking low-income students to prove over and over again that they’re poor,” he said.