Verification

TASFAA 2010 New Aid Officers Workshop

Consuela MitchellDeputy Director of Financial AidThe University of Texas at Dallas

2009-2010 Application & Verification Guide (AVG)

1

Verification

Process of verifying accuracy of FAFSA data

Regulations define: Whose application must be verified (AVG-82)

Data elements to be verified (AVG-85)

Documentation used to verify data elements (AVG-87)

Regardless of verification selection, must always resolve discrepancies and conflicting information

2

Verification Policies and Procedures

Must: Be written

Address school options where flexibility exists

Be made clear to all students

Be consistently applied

(AVG-81)

3

Verification Policies and Procedures

Must include:

Procedures for identifying and processing selected applications

Deadline for applicant to provide documentation

Consequences of failure to meet deadline

(AVG-81)4

Verification Policies and Procedures

Must include: Procedures applicant must follow to correct

application information Method for notifying applicant of verification

results and change in EFC and/or award Procedures for referring overpayments to ED Procedures for referring cases of suspected fraud

or other criminal misconduct to ED Office of Inspector General

(AVG-81) 5

Verification Topics

Whose application must be verified Quality Assurance Program

requirements Which data elements must be verified Acceptable documentation Data element corrections Data element updates Interim disbursements Verification time frames Policies and procedures

6

Whose Application Must Be Verified?

Applicants selected by Central Processing System (CPS)

Applicants selected by institution

7

Programs to Which Verification Applies

Federal Pell Grant

Academic Competitiveness Grant (ACG)

National Science and Mathematics Access to Retain Talent (SMART) Grant

Campus-based programs

Subsidized Stafford Loan programs (FFEL and Direct Loan)

8

30% Verification Option 30% is cap, not minimum

Applications making up 30% must be CPS-selected

If more than 30% selected by CPS, may choose to verify more than 30%

Document files of CPS-selected applicants not verified

30% option does not relieve institution of responsibility to resolve conflicting information

(AVG-82)

9

Institutionally-Selected Applications

Institution can select additional applications not selected by CPS

Selection may be based on such data elements as: Estimated tax figures Low family income levels Large household size or number in college Completion of certain FAFSA data

elements Other institutional criteria 10

Verification Exclusions

Certain types of applicants and data elements exempt from verification

Reason for verification exclusion should be documented in student’s file

Except for applicant who dies during the award year, if conflicting information or reason to believe application information is inaccurate, exclusions do not apply

(AVG-83)

11

Verification Exclusions

Exclusions include or are limited to:

Entire application—student and parent data

Applicant’s spousal data only

Certain data elements

12

Quality Assurance Program

Participation voluntary

ED provides guidelines, tools, and incentives for participation

Participating schools exempt from prescribed verification requirements

School sets verification parameters

School must reassess and self-correct verification process on ongoing basis

Every other year – Random Sample must be completed

Quality Assurance Website: http://ifap.ed.gov/qahome/Default.html

(AVG-82)13

Required Verification Data Elements

Number in household

Number of household members in college

Adjusted gross income (AGI)

U.S. income tax paid, and

Certain untaxed income and benefits

(AVG-85)

14

Required Verification Data Elements

Certain untaxed income and benefits Child support received Untaxed IRA/Keogh deductions, and Interest on tax-free bonds

(AVG-90)

15

Required Verification Data Elements

Untaxed IRA/Keogh deductions *

Untaxed pensions and annuities *

Interest on tax-free bonds *

Untaxed combat pay †

*(AVG-21)

†(AVG-20)

Other untaxed income and benefits on the tax return

16

Items That May Be Verified Using the Tax Return

Adjusted gross income U.S. income tax paid IRA/Keogh deductions and payments Untaxed portions of pension distributions

Untaxed IRA distributions

Interest on tax-free bonds

Untaxed combat pay (when reported)(AVG-85)

17

Acceptable Tax Return Formats

Photocopy, facsimile, or digital image of original paper tax return If original copied without signature, at least

one filer must sign copy

Tax form completed to duplicate original return and signed by at least one filer

Other signed e-file documentation

(AVG 88-89) 18

Acceptable Tax Return Formats

Form 8453 is a signature form for e-filers and not acceptable

In lieu of return with filer signature, a return with tax preparer’s stamped, typed, signed, or printed name, and SSN, EIN, or PTIN

19

Alternative Sources of Documentation

IRS tax transcript listing tax return information

Signed statement and W-2s from filer, if tax return or tax transcript unavailable

20

Tax Filing Extensions

Collect W-2’s and one of following:

IRS Form 4868; or

Copy of IRS approval of extension beyond 4-month extension

Collect and review tax return when filed

21

Child Support Documentation

Obtain verification worksheet or written statement certifying amount of child support received for all children Statement must be signed by applicant and at least one parent (if dependent) Statement must be signed by applicant if independent If support paid through government agency,

statement from that agency is acceptable(AVG -91)

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Child Support Documentation

Request additional documentation if information provided appears inaccurateCopy of separation agreement or divorce

decree Signed statement from parent providing

support Copies of canceled child support checks or money order receipts

(AVG-91)23

Number in Household & in College

Statement or verification worksheet listing each household member’s: Name Age Relationship to applicant Postsecondary school (if any) attending at least

half-time in program leading to recognized educational credential

If institution doubts statement, it should obtain statement from each postsecondary institution listed by applicant

(AVG -86) 24

Verification Corrections

Changes to data elements that were incorrect at time of application

If data correct as reported and valid ISIR/SAR:

Pay Federal Pell Grant, ACG, SMART Grant, FSEOG, and Federal Perkins Loan

Employ students under FWS

Certify/originate and disburse/deliver FFEL or Direct Loans

(AVG 93-95)25

Tolerance Option

$400 net error tolerance for all Title IV programs

FAFSA Parent AGI

+ Student AGI+ Parent Untaxed Income+ Student Untaxed Income– Parent U.S. Taxes Paid– Student U.S. Taxes Paid

= FAFSA data (uncorrected sum)

Net Difference: $400

Correct

Parent AGI

+ Student AGI

+ Parent Untaxed Income

+ Student Untaxed Income

– Parent U.S. Taxes Paid

– Student U.S. Taxes Paid

= Correct data (corrected sum)

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Example: Tolerance Option

FAFSA Data Correct Data

Parent AGI $15,800 $15,500Parent Untaxed Income + 1,200 + 1,500Student AGI + 9,200 + 9,200Student Untaxed Income + 0 + 0Parent U.S. Income Taxes Paid – 500 – 0Student U.S. Income Taxes Paid – 200 – 300

= $25,500 = $25,900

Net difference: $25,500 – $25,900 = $40027

Recalculating EFC: Federal Pell Grant, ACG, & SMART Grant Programs

If net error is greater than $400,

Recalculation of the EFC is necessary

If net error is less than or equal to $400,

No recalculation of the EFC is necessary

(AVG-94)

28

Verification Updates

Changes to data elements that were correct at time of application but have since changed

Applicable only to 3 items: Dependency status Number in household Number of household members enrolled

in college

(AVG 102-103) 29

Verification Updates

Dependency status

All students must update dependency status if it changes at any time

Cannot be updated if it changes as result of change in student’s marital status

(AVG-103)

30

Verification Updates

Number in Household and Number in College

If selected, data must be accurate as of verification

If not selected, cannot update for changes occurring after original application filed

If not selected, not required to monitor data element change

(AVG-103) 31

Verification Updates

Cannot update change in student’s marital status

Must update household size if dependent student’s parent remarries after application, before verification

32

Professional Judgment

If using PJ authority to adjust data elements used to calculate EFC on selected application, application must be verified first

If using projected-year income data to recalculate EFC, projected-year data do not need to be verified

(AVG 105-106)

33

Verification Status Codes

V – Verified

W – Without Documentation

S – Selected/Not Verified

Blank – Not Verified

(AVG 95)

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Interim Disbursements

In the absence of conflicting information or reason to believe information is inaccurate, institutions have the following disbursement options when verification still incomplete: Federal Pell Grant, ACG, SMART Grant and

campus-based: Withhold payment Make 1 disbursement for 1st payment period Employ applicant up to 60 days under FWS

(AVG-93)35

Interim Disbursements

Subsidized FFEL/Direct Loans:

Refuse to certify or originate loan; or

Certify or originate loan, but not disburse/deliver loan proceeds

(AVG-93)

36

Interim Disbursements

Verification not required for:

Unsubsidized FFEL/Direct Loans

PLUS Loans

Nonfederal LEAP and SLEAP awards

Robert C. Byrd Honors Scholarships

(AVG-81)37

Interim Disbursements

If school makes interim disbursement and student later determined ineligible, or if verification not completed, award for which student is ineligible is an overpayment

Student with overpayment is ineligible for Title IV funds

School liable if overpayment not resolved(Chap. 5)

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Verification Time Frames

Institution determines when in award cycle to verify based on:

Institution’s resources and procedures

When verification process would be least disruptive to office and least problematic for students

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Verification Time Frames

Verification Deadlines Campus-based and FFEL/Direct Loans:

Institutionally-established deadline Federal Pell Grant, ACG, and SMART Grant:

Institutionally-established deadline Institution must have verification documents

and valid SAR/ISIR by earlier of 120 days after last day of enrollment or deadline published annually by ED in Federal Register

(AVG-94)

40

Available Resources

Federal Student Aid Handbook Application and Verification Guide

http://www.ifap.ed.gov/fsahandbook/0910AVG.html

Institutional Policies and Procedures

IRS Publication 17 found at www.irs.gov

Consuela Mitchell consuelamitchelll@sbcglobal.net 41