Over the last decade, the Department of Education (ED) has made attempts to reduce financial aid verification rates. But despite the attempts to ease the burden, a complex web of promised solutions and new requirements has resulted in little to no change in verification rates, creating a troubling situation for both students and schools.
Financial aid administrators know all too well how easily the verification process can derail students who otherwise would receive the financial aid needed to pursue their college dreams. Not only can it impose an undue burden on students who have already overcome incredible obstacles, but it also creates more work for aid administrators, taking their valuable time away from the people who matter most: their students.
A new resource, "History of Changes to Financial Aid Verification," first revealed at the 2018 NASFAA National Conference in Austin this summer, outlines the sort of "one step forward, two steps back" pattern that the financial aid community has come to know with regard to verification.
Nearly 10 years ago, ED first made the IRS Data Retrieval Tool (DRT) available for limited use. This tool alone should have greatly reduced if not essentially eliminated the need for verification, as it imports data already considered verified into a student's FAFSA. A few years later, during the 2012-13 award year, ED proposed creating a more targeted, fine-tuned verification system, while simultaneously removing the 30 percent cap. The latter was done with the expectation that the former would produce a more accurate and efficient verification system. Around the same time the DRT became available for more widespread use and was recognized as an acceptable form of verification documentation.
However, these seemingly positive changes ended up falling short of their promise. "In the end, the fine-tuning came up short while the amount of data elements and numbers of students selected for verification soared," NASFAA President Justin Draeger wrote in a recent op-ed published in The Hill.
Another stumbling block came along when ED imposed the verification of non-filing (VONF) status requirement in the 2014-15 award year, a cumbersome and lengthy process that was eventually extended to all schools.
With the implementation of prior-prior year (PPY) income data in award year 2017-18, there was more promise for reduced verification burden, as more applicants would be using the DRT. But shortly thereafter, the IRS DRT was suddenly taken offline — a move that was not initially transparently acknowledged by either ED or the IRS, and lasted throughout the 2016-17 and 2017-18 award years. Without the DRT, applicants required to submit documentation for VONF had to jump through additional hoops to obtain tax transcripts before ED allowed for alternative documentation. Soon after the DRT was restored, ED revealed there was a glitch in the verification model, but subsequently said there would be no changes to verification requirements for 2019-20.
In sum, a series of unfortunate events, some controllable by ED and some not, have led to this current predicament.
In attempting to make adjustments to the verification model, ED is caught between a rock and a hard place, as it tries to balance competing congressional mandates that seek to maintain program integrity while also making student aid funds available to needy families. Lawmakers are at the same time pushing for financial aid dollars to make it to the right students with as little burden as possible. But they also are quick to pounce on any anecdotes of financial aid abuse, misuse, or misappropriation.
While the situation could be improved with greater transparency from ED as to the reasoning or data behind selection criteria, and whether there is data to show the necessity of VONF, the real solution is to fix the FAFSA. Simplifying and improving the FAFSA expanding the use of the DRT and by auto-importing data already considered verified by other federal agencies would eliminate the need for verification altogether.
NASFAA has proposed creating a tiered application that offers applicants a customized set of questions, rather than sticking with a blanket approach for applicants from all income levels. The more complex a family's financial status, the more data would be required from them. But by expanding the information that can be imported via the IRS, all applicants would have fewer questions to complete.
Publication Date: 7/26/2018