FSA Releases Details on Three Additional Issues With FAFSA Applicant Records
By Maria Carrasco, NASFAA Staff Reporter
The Office of Federal Student Aid (FSA), via an electronic announcement Monday evening, released more details on three issues concerning tax data reported on Institutional Student Information Records (ISIRs).
On Friday, FSA initially acknowledged that it was aware of issues reported by financial aid offices involving tax data on ISIRs and said it would investigate these issues. On Monday, FSA said the Department of Education (ED) and the IRS identified three issues that impact a subset of ISIRs, fewer than 20% in total. Across these three issues, the Department will reprocess 5% of previously submitted FAFSA applications because the errors would result in decreased financial aid eligibility for students if unresolved. The department plans to reprocess those records as soon as the functionality is available in the first half of April.
These issues are part of an already rocky rollout of the 2024-25 FAFSA, which NASFAA President and CEO Justin Draeger said has been plagued by issues of broken trust, data integrity, and missed deadlines.
“We note that the department quickly acknowledged and investigated these data mismatch issues when they were identified by the financial aid community,” Draeger said in a statement. “But we must also emphatically reiterate that every day matters, and with hundreds of thousands of FAFSAs needing to be reprocessed, even more delays for students are coming. Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial aid offers out to students and families.”
According to FSA, two of the three issues may occur for students and their contributors who successfully had federal tax information (FTI) transferred via the IRS Direct Data Exchange (DDX). The third issue impacts students and their contributors who were required to manually enter their income and tax information.
Specifically, the first issue FSA identified involves the data for education tax credits — which impacts about 15% of FAFSA applications. Financial aid administrators had reported that the amount transferred by the DDX did not always match the actual reported amount on the applicant’s federal tax return. FSA stated that the IRS has updated the DDX to include the actual reported amounts of education tax credits for any new FAFSAs submitted as of March 30.
Further, FSA said it will reprocess affected ISIRs if it is expected to reduce the applicant’s Student Aid Index (SAI), meaning they’ll be eligible to receive more financial aid through the reprocessing. According to FSA, about 5% of FAFSAs fall into this group.
For the other 10% of FAFSAs, FSA noted that reprocessing would increase students’ SAI and reduce their financial aid eligibility. ED will assume that institutions will intend to use current ISIRs for these students unless an institution initiates ED to generate a new ISIR for that student. Aid offices may use their professional judgment and request that ED reprocess any one or more of these FAFSAs. More information on this process will be available in the coming weeks, according to FSA.
The second issue involves inconsistencies with tax data for adjusted gross income (AGI) and filing status. Specifically, FSA found if taxpayer information is updated through an amended tax return or other adjustments, the DDX is transferring the amended AGI and filing status and the original values for other tax return elements.
According to FSA, the IRS will update the DDX to include tax data from the taxpayer’s original tax return. After the IRS makes this update, the DDX will not include amended or updated tax information, and will use original tax data consistent with the methodology used by the Data Retrieval Tool (DRT) for past years of the FAFSA. However, FSA noted that a 2024-25 ISIR will not include the flag indicating that an amended tax return was filed.
FSA estimates that this issue affects fewer than 2% of processed ISIRs. Again, ED will reprocess affected ISIRs if it is expected to reduce a student’s SAI and increase the student’s eligibility for financial aid. Aid offices may use their professional judgment and request ED to reprocess one or more of these FAFSAs.
The third issue deals with inaccurate instructions on the FAFSA form. Specifically, the written instructions on the FAFSA form for applicants who are manually entering their income taxes paid and/or their education tax credits are inconsistent with the data transferred from the IRS through the DDX process, FSA found.
FSA said this issue affects “a very small number” of FAFSAs and that the department will amend the FAFSA instructions to align with DDX. Further, the department clarified it will not consider manually entered data on affected FAFSAs to be conflicting information. But, institutions may use their own discretion to make corrections with what was manually entered by an applicant and what is being reported via the DDX.
Along with details on these three issues, FSA announced that it will release “as soon as possible” a list of Universally Unique Identification Numbers (UUIDs) corresponding to the FAFSAs that it does not intend to automatically reprocess because they are unaffected by any identified issue. FSA stated that institutions and states will be able to use this list to identify the students for whom they have accurate information. ED will also release a set of criteria that institutions could alternatively use to run a query to identify unaffected student records.
ED will also identify ISIRs that are affected by these issues, but does not plan to reprocess, because doing so would result in lower financial aid eligibility. Institutions may use their professional judgment to request that the Department reprocess any one or more of those FAFSAs.
In its announcement, FSA also gave an update to another issue. Earlier in March, ED identified an issue with how student assets are factored into the calculation of dependent students with ISIRs and stated that it would reprocess all affected FAFSAs On Monday, FSA updated its guidance to state that it will reprocess affected FAFSAs only when the corrected data and calculations would reduce students’ SAI. Due to the nature of the issue, where some dependent student assets were not included when they should have been, it appears that very few, if any, FAFSAs affected by this issue will be reprocessed.
Additionally, FSA noted that it will be providing a daily message every morning this week summarizing updates and sharing additional information to students, their families, institutions, states and other stakeholders. These daily messages will be posted on the 2024-25 FAFSA Fast News webpage.
“The department recognizes how important it is that schools and states have the information they need to extend financial aid offers and that families have the information they need to make critical education decisions,” FSA wrote.
Publication Date: 4/2/2024
Amanda G | 4/3/2024 1:29:30 PM
Just read this on the Fast News blog for today:
"We are continuing to work closely with the IRS to release a full list of FAFSA® forms unaffected by recent tax data inconsistencies. We expect to start sending that list before the end of the week.
Once the Department releases the full list later this week, schools will have all the total unaffected records. Our goal remains to help schools package aid offers as quickly as possible. We will share updates throughout the week to ensure schools are ready to leverage the tools we are providing."
Am I understanding correctly that, instead of sending schools a list of the "20%" of students affected by this issue that they instead intend to send a list of the "80%" of FAFSA forms UNAFFECTED by the tax data inconsistencies? What? Why? If would be far easier to check a shorter list of students whose tax data is wrong that to check against a list of students whose tax data is correct.
Eric M | 4/3/2024 1:27:59 PM
I do not know how ED could not reprocess these records. They claim that this new FAFSA will be a great step forward for students, yet they cannot even give us accurate information with which to work. Financial Aid office are already painfully short staffed and have more on their plate then is reasonable, and now, ED expects our offices to do their job for them. Unacceptable!
Ryan G | 4/3/2024 12:45:25 PM
Attempting to validate all of my ISIR packaging rules is an impossible task if I can't rely on the data from the ISIRs being accurate. I need clean ISIRs with the correct comment codes and reject flags.
Kristine B | 4/3/2024 9:30:07 AM
This is extremely frustrating. I would like to see all the FAFSA's re-processed so that we have correct information on all student records. I foresee the unprocessed ISIR to cause issues for students/colleges later on if they are not reprocessed. No college will have time to utilize a database to search for ISIR's that were not re-processed, we can barely keep up with all the daily changes that are causing issues/delays.
H. Rachele Nixon G | 4/3/2024 8:53:15 AM
Inaccurate ISIR's should be reprocessed. It is unacceptable that ED has rolled this out with some many issues (known or unknown or shall we say unacknowledged by ED). Who is ultimately responsible for correct aid processing once auditors arrives.
Reprocess the ISIR's!
Heather A | 4/3/2024 8:49:59 AM
So, if I have a tax transcript on file that shows different data than the DDX has on the FAFSA. Is my school liable in an audit?
Heather A | 4/3/2024 8:47:45 AM
Should we advise students to NOT make any changes to their FAFSA because it could cause a re-calculation & loss of aid based on their filing date? I just cannot believe they don't intend to reprocess all of them.
Laura T | 4/2/2024 5:36:13 PM
I think this may be the straw that breaks the camel's back. We've stayed strong and had faith through delay after delay and issue after issue. But putting this burden back on financial aid offices is too much. All ISIRs that are known to be incorrect need to be reprocessed. We must start with correct ISIR information. NASFAA, please advocate for this community and demand an actual solution!
Valerie S | 4/2/2024 5:27:14 PM
Another area of concern brought up in several meetings today is the equity issue. A student who filed a FAFSA earlier is allowed to keep more aid than they are really eligible for but another student who files now receives less aid because the issues are resolved. The question has been raised, "Could this be a reason for a class action lawsuit?" All FAFSA filers should be treated the same.
Kimberly L | 4/2/2024 5:8:26 PM
I vote to have the ISIRs reprocessed. It is too burdensome for the financial aid administrators to accurately identify and repair the problems. I've been in financial aid for more than 30 years. I have never encountered this many challenges.
Sheree T | 4/2/2024 3:12:41 PM
Did you all see the GENERAL-24-29 posted at fsapartners? It also addresses the errors, but they included a paragraph entitled, I kid you not, "IRS Data are Dynamic".
I will save you the time:
"Schools that establish institutional verification selection policies, and who choose to collect IRS documentation such as tax transcripts or copies of tax returns to match against FA-DDX data, may still notice inconsistencies due to the dynamic nature of IRS data. The FTI provided by the IRS via the FA-DDX may not match copies of tax returns or transcripts provided by the taxpayer since their copies do not include adjustments made by the IRS when processing returns or after filing because of IRS’s matching against third-party information returns, audits, and other changes. FA-DDX transmits information that is accurate at the time it is provided. Schools are reminded that the IRS is the required source for income and tax information for FAFSA, and that FTI is considered IRS documentation. The FA-DDX is the first authority in the hierarchy of IRS tax documentation for federal student aid purposes. Other documentation from the IRS, such as applicant-provided tax returns, is secondary to the FA-DDX."
What this says to me is that schools cannot use IRS return transcripts to correct this data because it is "accurate", while in the same publication, telling us that it is not accurate.
I am going to have to keep a bottle of headache medicine near me at all times.
Paula K | 4/2/2024 1:59:51 PM
What I find amazing is the fact that ED is going against it's own regulations regarding conflicting info by giving schools the option to ignore incorrect data if getting a reprocessed ISIR means the student's aid eligibility will be reduced. I agree that all the ISIRs should be reprocessed, regardless of the outcome to the student. I would prefer to work with the most accurate data possible. We are barely wrapping our heads around all of the changes as it is.
Jennifer B | 4/2/2024 1:46:20 PM
I agree with all my colleagues. Just reprocess all the records. Totally unacceptable!
Amanda G | 4/2/2024 12:40:46 PM
The easiest, fairest, thing to do would be just reprocess all impacted ISIRS. Sending us a list to check? Telling us to make a determination on a case by case basis? I am dumbfounded that they have the audacity to push this work off on FAAs who are already stressed out and overwhelmed by testing and finding their errors for them and trying to keep up with all the announcements, errors, and changes. Now we have to attempt to solve their problems using a list of students and some cosmic voodoo logic that makes sense to no one on a case by case basis too? Simply astonishing.
James H | 4/2/2024 12:35:10 PM
As a new FA Director with 20+ years as a financial aid advisor...THIS IS UNREAL!!! The inability of ED to take responsibility to reprocess all errors is incomprehensible. Let alone expect any overworked and exhausted FA staff to correct ED continuous errors = UNREAL!!!
Susan C | 4/2/2024 11:14:14 AM
It was my understanding that the intent of pulling FTI was so that we had accurate data. If ED is aware the data is inaccurate, they should absolutely be reprocessing all of these ISIRS!
Jeff A | 4/2/2024 11:11:59 AM
Yes, but remember ED was able to produce many new regulatory NPRMs, Final Rules, and should prioritize another NRPM and final rule for this Fall, before they get around to some minor tweaks to the FAFSA process.
Certainly you don't think they should abandon working on an impending NPRM and Final Rule, abandon FVT/GE reporting and accompanying regs that may be defeated in court, and abandon the BDR rules currently under restriction by a judge? Oh, and should they not prioritize getting student loans forgiven simply because a borrower asks them to without any documentation to prove it is warranted?
And they need to work on the next virtual 'non-conference'.
Ryan G | 4/2/2024 10:58:42 AM
1. Yes, unacceptable.
2. ED will have to reprocess all of the incorrect FAFSAs.
3. When and where does ED address the change to Income Tax Paid to include self-employment tax (Line 4 of Schedule 2 which is included on Line 24 of the 1040)? How was this missed in the 45 webinars over the last 12 months?
Joshua M | 4/2/2024 10:53:50 AM
if a student impacted, adds a school or updates something on their fafsa, does that trigger reprocessing again then? Thus possibly creating an now higher SAI?
Melissa C | 4/2/2024 10:50:16 AM
ED really needs to reprocess. This is unfair to all FAAs.
Laurie C | 4/2/2024 10:34:21 AM
This is unbelievable! ED needs to just reprocess ALL the impacted ISIRs for each of these fumbled issues. They are just passing the buck to the FA offices and we don't have time to do their work. Yes, I'm a little angry.
Stephanie K | 4/2/2024 10:17:59 AM
It is completely irresponsible to not reprocess all impacted ISIRs. There are many instances that would make not reprocessing messy for schools and students not to mention the unfairness and inequity of it all, mainly to students but to schools with less resources - monetarily with gift aid and staffing. Get it together ED and rally to do the right thing!
Timothy O | 4/2/2024 9:45:44 AM
This is crazy. ED please do your job and reprocess all that are incorrect!!!! States and institutions also use this information to determine their funding, they might like correct information.
Eric A | 4/2/2024 9:34:37 AM
And still no mention of the fact that we can't view tax or income data on most of the ISIRS!! ED is an embarrassment.
Charles M | 4/2/2024 9:27:18 AM
If I'm understanding correctly, we could end up with a higher SAI later in the award year, after the school makes an unrelated FAFSA change, and that change would prompt the correct IRS data to feed through when the change is processed. Seems ridiculous to not reprocess and drag this issue out for the rest of the academic year, and cause it to impact a student at any point later in the year.
Matt F | 4/2/2024 9:20:57 AM
It is absolutely ridiculous that ED isn't going to re-process all of the incorrect ISIRs and instead pass that work on to financial aid administrators who are overworked, overstressed, and have been losing sleep trying to stay on top of all of the mess created by ED. Fix it.
Sheree T | 4/2/2024 9:8:00 AM
The taxes paid amounts are also incorrect. The few students that I was able to check because we had 2022 taxes all had errors if they had self-employment tax or other "below the line" taxes, and it was not subtracting the excess repayment amounts. ED needs to address that as well.
I like how they say "fewer than 20%" as if one-fifth of 6.6 million FAFSA applications with incorrect data is not a horrifyingly large number.
Melissa S | 4/2/2024 9:7:19 AM
I consider this is unacceptable. The Department needs to correct the issues they created so we can award aid on accurate data. This will creating further delays and additional effort for institutions to identify who we want reprocessed information as that process (PJs/correction) is also not outlined and untested. The effort involved to tell us who to package when our systems are not built to select people out in mass like these numbers is just as problematic. All of the errors their untested system created should be
reprocessed.
Gina P | 4/2/2024 9:0:20 AM
ED should absolutely reprocess all of the errors. ED is claiming to be caught up but not if the work is not accurate. We cannot sacrifice expedience for quality-not that any of this has been expedient. It is not fair to anyone, especially students and their families. If ED does not have the time to reprocess, why would anyone think financial aid staff do. We would have to search for the errors, that's time and fix them, which is also time. All I can say is WOW! We waited this long for what?
Delisa F | 4/2/2024 8:49:12 AM
Why wouldn't ED just reprocess! Pass the responsibility to the schools!! Unacceptable.
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