New verification rules for 2012-2013 and beyond

Beginning with the 2012-2013 award year, schools will no longer be able to accept a copy of a student’s tax return to complete verification. Under new rules for verification official IRS tax return transcripts will be required instead.

Under certain conditions, an applicant selected for verification will need to submit to the school an official IRS Tax Return Transcript of 2011 tax year information for the applicant, his or her spouse, and his or her parents, as applicable. See DCL GEN-11-13 for a complete listing of such conditions. A transcript is not required to be signed by the tax filer since it originates from the IRS.

Under the new rules, schools will only be required to verify the data selected by CPS. Ed also removed the 30% verification limit and expects targeted verification of error prone data will reduce the burden on aid administrators while strengthening the efficacy of the FSA program. Students who complete the IRS data retrieval through FAFSA on the web will be less likely to be selected for verification as long as they don’t change any information pulled from the IRS.

According to Jeff Baker, speaking at last weeks FSA conference in Las Vegas, the department of education is having some trouble creating a verification worksheet for the up coming award year that will be comprehensive yet still allow aid administrators to verify only the data selected by CPS. He offered reassurance the Ed would ultimately provide additional guidance after the 1st of the year, but made no promises regarding the verification worksheet.

Some aid administrators voiced their frustration with the new rules citing cutbacks at their schools in addition to heavy workloads and asked Ed to move quickly to develop guidance and worksheets. While the 2012-2013 award year doesn’t officially begin until July 1, 2012, students can begin applying as early as January 1, 2012 so aid administrators will need to be ready pretty soon.

While the potential for the new rules to reduce the administrative burden associated with verification exists, aid administrators expect to see more conflicting information such as students filing as married and head of household on their tax return. Administrators are also concerned about the length of time it will take to get a copy of the tax return as Ed will no longer allow schools to make interim Pell disbursements. Unsubsidized Direct Loans and Parent PLUS disbursements will still be allowed.

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9 thoughts on “New verification rules for 2012-2013 and beyond

  1. Good Question. When a student completes a FAFSA and uses the IRS data retrieval process to populate the online application with last years tax data any changes made to that data by the student will cause the file to be selected for verification. The problem you are referring to really only exists when a Financial Aid Administrator uses Professional Judgment authority to change one or more of the data elements used (in this case a rolled over 401K) to calculate the EFC since doing so would also cause the file to get selected for verification.

  2. Pingback: 2012-2013 Student Aid Eligibility Worksheet for Question 23 | FAST FACTS BLOG

  3. Pingback: Sample Verification Worksheets for 2012-2013 | FAST FACTS BLOG

  4. Dear blogger,

    I am having trouble locating the Regulation which prohibits interim disbursements for the 2012-2013 award year. Can you point me in the right direction?

    • You’ll find it in the October 2010 Program Integrity Regulations. See 668.58 for details.

      Sec. 668.58 Interim disbursements.
      (a)(1) If an institution has reason to believe that an applicant’s
      FAFSA information is inaccurate, until the information is verified and
      any corrections are made in accordance with Sec. 668.59(a), the
      institution may not–
      (i) Disburse any Federal Pell Grant, FSEOG, or Federal Perkins Loan
      Program funds to the applicant;

  5. I haven’t been able to find the source document that shows that we can’t take interim Pell disbursements any longer. Can you cite your reference? I’m looking for an effective date for this change.

  6. Pingback: 2012-13 FAFSA Verification-IRS Tax Return Transcript Matrix | FAST FACTS BLOG

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