The Internal Revenue Service (IRS) would share income and other taxpayer data directly with the Department of Education (ED) during the financial aid application process under the Student Financial Aid Simplification Act, introduced by Rep. Peter Welch (D-VT) on Feb. 20. The legislation was initially introduced in the 112th Congress in September 2012.
Under the current IRS data retrieval process, the IRS shares income tax data with the student and/or parent, and they decide if they want to import that tax data into the student’s Free Application for Federal Student Aid (FAFSA).
By amending the Higher Education Act and the Internal Revenue Code, the new legislation would remove the student and parent from that process. By applying for Title IV aid, the taxpayer would authorize the Department of Education (ED) to obtain income data and other taxpayer data needed to compute an expected family contribution (EFC) directly from the IRS. Under the bill, the information that would be shared is that from the tax return filed two years prior to the student’s planned enrollment data. This process would be mandatory on the part of the Title IV applicant without the ability to opt out.
The Student Financial Aid Simplification Act also amends the Internal Revenue Code to allow the IRS, upon request from ED, to share with ED any taxpayer information needed to calculate a student’s EFC.
Supplementary info needed to determine a student’s financial aid eligibility which is not available from the IRS (e.g., citizenship, dependency status, household size, etc.) would still be collected from the applicant separately.
Publication date: 3/1/2013
Publication Date: 3/1/2013