On Wednesday, the Department of Education (ED) published Dear Colleague Letter (DCL) GEN-16-14, detailing procedures schools must follow when income and tax information on a student’s 2016-17 FAFSA conflicts with his or her 2017-18 FAFSA. This situation may arise due to the transition from prior year to prior-prior year (PPY) income as the basis for need analysis. In this implementation year, the same data (2015) will be used for both award years.
If the two FAFSAs conflict, ED will apply a series of assumptions and analyses to determine whether the conflict can likely be explained by the applicant’s circumstances, or whether the discrepancy is small enough to ignore. Where there is no obvious probable explanation, or the discrepancy is too large to ignore, ED will flag the 2017-18 ISIR with comment #399 for resolution by the school. ED will consider the school to be in receipt of the ISIR when the CPS provides it to the institution’s designated Student Aid Internet Gateway (SAIG) mailbox; since ISIRs for 2016-17 will not carry the comment, schools should ensure that they retrieve and inspect 2017-18 ISIRs appropriately, based on the guidance in this DCL.
Only applicants whose 2017-18 ISIRs are flagged with comment #399 need be resolved for the conflicting data resulting from the PPY transition (i.e., income and tax information). Resolution of other conflicting or suspect information, such as citizenship status or high school completion, is not waived. Note also that not all of the information used to calculate an expected family contribution (EFC) is from the base year; information such as number in household or college must be current as of the date of filing the FAFSA.
The guidance in this DCL reflects NASFAA’s continued advocacy efforts on this issue. NASFAA has pressed ED to balance statutory requirements for conflicting data resolution against burden on students and institutions. NASFAA urged ED in an initial letter in December 2015 to consider in developing its guidance the fact that this initial year of PPY presents a unique and nonrecurring situation with respect to conflicting data and to consider the impact on institutions needing to implement complicated and onerous procedures for a single year.
NASFAA advocated for five specific measures to be incorporated into ED’s guidance. Of those, four appear in GEN-16-14:
NASFAA’s remaining request that has not yet been incorporated into current guidance would exempt schools in receipt of both a 2016-17 and 2017-18 ISIR from resolving conflicting data once the student is no longer enrolled at the institution. Initially, ED did not think they could go that far, but during the course of NASFAA’s 2016 National Conference in early July, ED personnel drew a comparison with certain long-standing verification policies, and announced that they had reversed themselves on this particular issue. It is NASFAA’s understanding that GEN-16-14 was too far along in the clearance process to incorporate this new interpretation, but that ED will clarify it in Q&As over the next few weeks.
The DCL explains that to prevent conflicting information up front, ED will employ warning edits that the student will receive during the application process, when differences between 2016-17 and 2017-18 FAFSA information is detected. The warning will remind applicants that they should be using 2015 data, in case the differences are due to an applicant using 2016 tax return information.
In accordance with the agreed-upon principle that ED should perform initial screening, where 2015 data continues to be reported differently between the two FAFSAs, ED will determine whether the differences would actually result in a significant difference in EFC. The threshold will not be made public, but any ISIR that would not, upon correction, reflect a significant enough change in EFC will not be flagged for resolution.
Further, conflicting information that would result in a significant change in EFC beyond ED’s threshold will be flagged for required resolution only if the student is expected to be eligible for a Pell Grant in 2017-18.
ED considers that certain changes in the applicant’s circumstances between the two years (e.g., dependency or parent’s or student’s marital status) makes the comparison of data irrelevant, and any differences in information are not considered conflicting.
If professional judgment adjustments were made in either year (and properly reported as such), there is also no basis for comparison, and any differences in information are not considered conflicting.
If none of the preceding circumstances apply where the conflicting data appear to have a significant impact on EFC, the 2017-18 ISIR will be flagged. If the institution possesses ISIRs for both years, and aid was or will be disbursed for either year, the school must resolve the conflict. If the 2016-17 data was incorrect, financial aid will have to be adjusted for affected students as long as the deadline for submitting corrections has not passed (September 9, 2017).
The DCL gives additional details about when and how to resolve conflicting information, and what action to take if resolution results in an overaward or actual overpayment. The DCL also repeats previous guidance about use of the IRS-DRT: using the download tool for both FAFSAs should prevent or eliminate conflicts. If 2015 data is downloaded for only one of the FAFSAs, that downloaded data may be regarded as the correct data without further documentation, as long as the student (or parent) did not subsequently amend it.
NASFAA will monitor continuing developments with regard to this and other PPY transition issues. Please email firstname.lastname@example.org with any specific questions related to this guidance. NASFAA’s PPY Implementation Task Force will also be hosting a webinar on the guidance in the near future; please stay tuned for more details.
Publication Date: 8/5/2016