Dept of Ed. and IRS Announce Joint Venture to Populate FAFSA with Tax Data

As widely expected and reported yesterday, Secretary of Education Arne Duncan announced improvements to the FAFSA, beginning this summer, and a planned future partnership with the IRS that could radically change the application process for students and relieve students and schools of the verification process.

"This plan is a huge win for students, and we are delighted that the Department is moving quickly to simplify the FAFSA, which has been a barrier to college access for so long," said Dr. Philp Day, President and CEO of NASFAA. "We are very excited about the IRS partnership, which would streamline the process for students even more, and, we hope, remove the federal requirement that our schools collect tax returns to verify applicant data so that they can focus on counseling students."

In a White House press briefing, IRS Commissioner Douglas Shulman said his agency was glad to partner with the Department of Education to be part of the President's initiative to simply the FAFSA. Shulman said the current FAFSA is "an endurance test" that collects data not even required on tax returns.

The Department is planning to address FAFSA simplification, which is mandated by the HEOA, in several stages.

Since May 2009, the Education Department has provided instant estimates of Pell Grant and student loan eligibility, rather than forcing applicants to wait weeks. Links to graduation rates and other college information are also provided.
Available summer 2009, enhanced skip-logic used in the new web-based FAFSA will reduce user navigation for many applicants by more than half. Duncan said there will be a 20% reduction in the number of questions asked and a 50% reduction in the number of web pages it takes to complete the application.
Starting in January 2010 there will be a pilot project where students applying for aid for the spring semester will be able to seamlessly retrieve their relevant tax information from the IRS for easy completion of the online FAFSA. The Department of Education and the IRS will be working together to examine the possibility of expanding this option to all students in the future.
The Administration will also introduce legislation seeking statutory authority from Congress to eliminate financial information from the aid calculation formula that is not available from the Internal Revenue Service (IRS). This will remove 26 financial questions from the FAFSA form that have little impact on aid awards and can be difficult to complete. Only questions that rely upon information that applicants must already provide to the IRS would remain.

Secretary Duncan thanked the IRS for its cooperation in studying the feasibility of the project, which many doubted could happen, and Treasury Secretary Timothy Geithner for asking the IRS to make it a priority. He also noted that White House Chief of Staff Rahm Emanuel had taken a special interest in the project.

"Simplifying the FAFSA is another significant action in our quest to keep a college degree within the reach of every person who aspires to higher education," Duncan said. The Department has a published a fact sheet on its simplification efforts titled Making College More Affordable By Simplifying The Student Financial Aid Application.

Posted 06/25/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.