Federal Student Aid (FSA) on Thursday at its 2023 virtual training conference outlined new provisions of federal tax information (FTI) and FAFSA data use under the FUTURE Act and FAFSA Simplification Act, answering key questions from financial aid offices.
Michael Ruggless, program specialist with FSA’s Policy Implementation and Oversight group, began the session by distinguishing the difference in FAFSA data definitions after the implementation of the FUTURE Act and FAFSA Simplification Act.
After implementation, FAFSA data will include applicant and contributor information provided on the FAFSA, and manually entered or provided income and asset information. Separately, FTI data includes any federal tax return information received from the IRS by the Department of Education (ED) under the FUTURE Act Matching Program (FA-DDX), and information indicating whether a tax return was filed. Derived FAFSA data will include the Student Aid Index (SAI) and federal Pell Grant eligibility.
Ruggless stressed the importance that starting with the 2024-25 FAFSA cycle, FTI received via Institutional Student Information Records (ISIRs) is not considered FAFSA data and therefore, the current FAFSA data sharing rules will not apply to FTI. Instead, FTI data access, use, and disclosure are restricted under both the Internal Revenue Code (IRC) and the Higher Education Act (HEA).
“Starting in 24-25, and succeeding FAFSA cycles, FAFSA data no longer includes FTI data or income information that is received by the department from the IRS,” Ruggless said.
After receiving FTI from the IRS, ED is allowed to redisclose the FTI to institutions of higher education, state higher education agencies, and designated scholarship organizations (United Negro College Fund and the Hispanic Scholarship Fund), solely for the use in the application, award, and administration of federal, state, or institutional financial aid or aid awarded by UNCF or HSF. Institutions, state agencies, and UNCF and HSF are permitted to further redisclose to their contractors that assist in the application, award, and administration of financial aid programs.
Institutions may, with the applicant’s written consent, release FTI to a scholarship granting organization, or to an organization assisting the applicant in applying for and receiving Federal, State, local, or tribal assistance, that is designated by the applicant to assist the applicant in applying for and receiving financial assistance for any component of the applicant's cost of attendance. While institutions may not release FTI for other purposes, even with the applicant’s written consent, they must release a complete ISIR (including FTI) directly to an applicant upon their request. The applicant can then redisclose their own FTI in any way that they choose.
Institutions are prohibited from using FTI for any purpose other than the application, award, and administration of financial aid to the applicant. This prohibition includes research purposes. Institutions may use the FAFSA data, excluding FTI, for research that does not release any individually identifiable information on any applicant, to promote college attendance, persistence, and completion.
During the session, FSA answered several frequently asked questions that address these concepts, such as whether institutions are permitted to disclose FTI data to other departments and offices on campus and whether aid offices can share FAFSA information without FTI data.
Ruggless said the ability to disclose FTI data depends. The disclosure must be related solely to the application, awarding and administration of federal, state, and institutional financial aid programs. He added that if the use, access, or disclosure of the FTI is for another purpose, it is prohibited under the IRC.
“Even with written consent to the applicant, FTI data may only be disclosed or used to assist the applicant applying for and receiving aid towards cost of attendance or to permit another party to participate in discussions that include FTI data,” Ruggless said.
Ruggless added that FAFSA data that does not include FTI may be disclosed and used by other internal institutional offices consistent with the HEA. That use must also meet a FERPA exception in order to be further redisclosed without FERPA consent of the student.
Ruggless also confirmed that financial aid offices can share Pell Grant eligibility status with academic advisors at their institution to identify Pell recipients, refer them to resources, and support their persistence and completion, so long as they have written consent from the student.
Another question asked was if FTI from the FAFSA be accessed or disclosed to, or be used by a TRIO Program. Ruggless said it depends, and that if an institution is determining student eligibility for an amount of a TRIO grant, then FTI data may be accessed and used.
FTI data cannot be used to determine student eligibility for the TRIO program, such as additional student services and resources, since it is not a program authorized by the IRC. However, FSA stated that with written consent from the applicant, a TRIO advisor or administrator “may participate in discussions with a financial aid administrator for purposes of the TRIO program.”
Furthermore, FTI data can be shared with a contractor, either an individual or organization, that assists in the awarding of institutional aid, or to carry out the application, award, and administration of student financial aid programs. Additionally, Ruggless clarified that institutions are permitted to disclose FTI if the student record is a part of an audit.
Financial aid professionals have also asked whether an institution or state higher education agency can implement a written consent requirement that would permit the access, disclosure, and use of FTI for any purpose. However, Ruggless said consent must be done on a case-by-case basis.
“Having a written consent requirement policy that requires all students to sign it is not permitted,” Ruggless said. “It must be done on a case-by-case basis and it must meet the requirements under Section 494 (a) [of the HEA], which specify the key components of written consent and what must be included in that written document that is signed by the student.”
Ruggless ended the session by highlighting two resources for financial aid professionals to use – a FSA electronic announcement and FERPA guide. It is NASFAA’s understanding that ED will be releasing additional guidance on data sharing in the near future. Stay tuned to Today’s News for further updates.
Publication Date: 12/1/2023