NCAN Report Highlights Unintended Consequences of FAFSA Verification Process

By Joelle Fredman, NASFAA Staff Reporter

The Department of Education (ED) currently selects roughly 30 percent of all student FAFSA applications for verification—and 50 percent of those from Pell-eligible students—in an effort to manage improper payments. A new white paper from the National College Access Network (NCAN), however, highlights the unintended consequences of this practice for students and suggests ways in which ED can simplify the process of applying for and receiving federal financial aid. The report also complements the results of a survey NASFAA published Monday that questions the effectiveness of verification.

While ED has stated that the verification process is meant to ensure that it can meet its goal to keep improper payments under 7.85 percent, Carrie Warick, NCAN’s director of policy and advocacy and the author of the white paper, wrote that there is no public information on how this process meets those goals, dubbing FAFSA verification “the black box of the higher education policy space.” The last time ED did publish verification data was for 2014-15, and it only included average selection rates across institutions, not by sector.    

In fact, a recent NASFAA survey of 45 member-institutions, representing more than 700,000 students, revealed that verification does not result in changes in eligibility for most students. Specifically, 84 percent of verified applicants did not see a change in their Expected Family Contribution (EFC) or saw a change so miniscule it did not affect their Pell Grant award. That figure was 91 percent for verified applicants at two-year institutions.     

In the white paper, Warick wrote that the verification process—in addition to not changing a majority of applications—can actually have negative effects on students. While 81 percent of Pell-eligible students go on to receive their grant, that figure is only 56 percent for those selected for verification. She wrote that it is “unknown how many of these students are able to find a way to pay for higher education and still enroll and how many forgo their plans entirely.”

Warick added that the additional time it takes to process a student’s financial aid information may also delay students in knowing how much aid they will be awarded, which can run the risk of stopping them from applying to schools they don’t think they could afford, and to lose out on aid given out on a first-come, first-served basis.   

“FAFSA verification is unintentionally and quietly wreaking havoc on students trying to access financial aid,” Warick wrote. “While some level of review is necessary, the level of burden unequally placed on low-income students has not been publicly demonstrated to be necessary.”

While the Internal Revenue Service (IRS) Data-Retrieval Tool (DRT) and the use of prior-prior year tax information beginning in award year 2017-18 was meant to reduce the number of selected students, Warick cited a NASFAA survey that found no change in verification rates followed. However, a new bill introduced earlier this month—the Faster Access to Federal Student Aid (FAFSA) Act of 2018—has the potential to simplify the application, verification, and student loan repayment processes through better integration with ED and the IRS. The bill would allow for cross-agency data-sharing that would improve and streamline the federal student aid system, and implements a portion of NASFAA’s 2017 FAFSA simplification proposal.

In her report, Warick offered several policy recommendations for Congress, ED, and institutions to adopt in order to improve the process of applying for and receiving federal financial aid. For example, Warick suggested ED “create a one-stop verification clearing house through FSA” to prevent students from having to complete the verification process at each institution they apply to, or at least standardize the process.

She also suggested that ED allow students to submit a tax return instead of a tax transcript to verify income information, eliminate the requirement for non-tax-filers to provide proof of their non-tax-filing status, and train institutions in what is required during verification and clarify that they “should not go above and beyond those requirements simply for fear of program review or audit.”

Warick concluded that to “ease the process of repeat verification,” institutions should “increase assistance for students though clearer processes, notifications in places where students will see it (e.g. personal email versus university email,) and cataloging of permanent documents (e.g. birth certificates and death certificates.)”

 

Publication Date: 11/27/2018


Kimberly L | 11/30/2018 11:58:50 AM

I agree with Armand and Elizabeth. I would like to add that the FAFSA is basically an open-book test about the student and their immediate family members. I have worked in financial aid close to 30 years and have encountered students and parents from a variety of socio-economic backgrounds. In my opinion, many people want to approach the FAFSA as if it is an application for "instant credit". I explain to people that the FAFSA needs to be approached like a homework assignment. I have also experienced that many people leave questions blank or insert zeros. However, after asking follow up questions, I learn that most of the income is under reported. It is my understanding that the main reason the IRS Data Retrieval was implemented, is because there was a significant number of students and parents who were submitting fraudulent tax returns. As a tax payer and a financial aid administrator, I agree that students and parents should receive more help to accurately complete the FAFSA. I am against excusing certain populations because they find the form too difficult.

Elizabeth T | 11/27/2018 6:22:38 PM

I agree that verification can use some streamlining, however, students and parents could also help themselves by using data retrieval and READING the verification forms which contain instructions on what is needed. Lack of reading, from my viewpoint, causes many of the issues students may have in getting the required documents. Verification can also help students who may have completed the FAFSA wrong; often after it's corrected, the student either has subsidized loan eligibility versus all unsubsidized loan eligibility and sometimes has pell grant eligibility where they had none before.

Armand R | 11/27/2018 3:2:09 PM

"While 81 percent of Pell-eligible students go on to receive their grant, that figure is only 56 percent for those selected for verification." It has been my experience that many of the applications selected for verification have data items that are incorrect. The reason for the difference in these figures is that many of these students didn't have the eligibility in the first place. Verification is good stewardship of public tax dollars.

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