ISIR Verification changes for 2013-2014

Verification Tracking GroupsThe 2013-2014 Financial Aid Award Year is just around the corner. Just when you thought you were getting the hang of the rules for Verification in the 2012-2013 award year, the rules are changing again. Are you ready for what the U.S. Department of Education is heralding as “Customized Verification”?

Beginning with the 2013-2014 Institutional Student Information Report (ISIR), the Central Processing System (CPS) will select a student for verification based on the data reported they reported on the FAFSA, and assign that ISIR to a “Verification Tracking Group.” The Financial Aid office will have to verify specific data on the ISIR based on the Verification Tracking Group the applicant’s ISIR has been assigned to.

As the chart (above, right) indicates, there are five Verification Tracking Groups, each with their own “Verification Tracking Flag,” indicating they type of Verification required.


While the official word out of Washington is that ED won’t be providing Sample or Model Verification Worksheets to institutions, opting rather to provide institutions with sample language to help them describe the verification process to their students, Jeff Baker Et Al, seemed to soften their position when called on the carpet by the Financial Aid Community at last week’s FSA Conference in Orlando Florida. Either way, customized verification looks like a win for Financial Aid Officers as it is likely to reduce administrative burden, especially for those students and families using the IRS Data Retrieval tool to complete their FAFSA. Could we be that lucky?

Nope. Think again.

We’ve got two new verification items to contend with. High School Completion Status and Identity / Statement of Educational Purpose. Whaaaaaat? Well, it’s a new set of documents to collect and a new process to follow, but that’s ED for you. Keeping us on our toes. For a complete overview of the changes for verification check out these resources:


Gainful Employment Ruling Struck Down

English: Photo of Education Secretary (2009-)....

Just days after the Department of Education released Gainful Employment Informational Debt Measures and Gainful Employment Informational Loan Medians to institutions, GE is Dead!

On Saturday, United States District Judge Rudolph Contreras struck down Gainful Employment rules in a suit that the Association of Private Colleges and Universities brought against the Department of Education and Secretary Arne Duncan to challenge Gainful Employment rules.

Check out the full text of the legal decision here:

Does your campus culture promote financial literacy?


2011 10 06 - 1237 - Washington DC - Occupy DC

2011 10 06 - 1237 - Washington DC - Occupy DC (Photo credit: thisisbossi)

April is National Financial Literacy Month and on campuses across the country, students, faculty and staff are getting engaged as schools integrate default aversion strategies into everyday campus life in an effort to lower default rates and promote financial health through education. Financial literacy campaigns have become a prime strategy for preventing student loan defaults. Unfortunately, many schools still view financial literacy as an isolated function of the Financial Aid office but, it takes the combined effort and understanding of everyone on campus to create a culture capable of promoting financial literacy. Want to know how to get your school’s head in the game? Read on.

First things first. Let’s assume that very few people outside of the financial aid office ever think about financial literacy. It’s probably also safe to assume that few people within the financial aid office ever think about student retention, persistence and success. Where these two conversations converge is where the magic happens. 

It’s just as important for everyone on campus to know how student success is determined and to be able to identify barriers to student persistence as it is for everyone on campus to know what tools and resources are available to students to overcome them. Barriers come in all shapes and sizes and they’re not always financial either. Social and academic integration, parental support, family background, and even cultural values can create barriers to student success. And the student’s most at risk of defaulting on their student loans are the ones who leave school before attaining either degree. By cultivating an understanding of the characteristics and risk factors that contribute to default, schools can proactively engage the students who need assistance academically as well as financially. 

Clueless about starting that dialogue on campus? Don’t worry, you’re not alone. Many schools contract with third party services to provide financial literacy to their students. With the old FFEL lenders, servicers and guarantors, looking for a way to stay in the student lending game, many have shifted their entire focus to default aversion planning and financial literacy. There’s a lot of choices out there so call a few and choose the one that fits for your campus.

Okay – this is a “Financial Aid” blog, so what can you do in the Financial Aid office to help educate your students and families? Here are a few suggestions:

  • Conduct entrance and exit counseling. Already doing it? Great! Ever try to get 100% of your departing students to complete exit counseling? Raise the bar. Go for it.
  • Make sure mom and dad are part of the financial aid process. As independent as today’s dependent students may seem, the FSA program is predicated on the student’s parents being the first source of financial aid, before the Pell Grant and Direct Loans even come into play. Remember, mom and dad can use a co-borrower to take out that PLUS loan too.
  • Brush up on your understanding of Income Based Repayment (IBR), Graduated Repayment and all of the other repayment plans that are extended to borrowers of Federal Student Loans. Being able to explain all of the options to your students is the first step to helping them choose wisely.
  • Advise students to borrow Federal Student Loans before exploring other, more costly options. Private, credit-based loans can carry significantly higher interest rates than Direct Loans.
  • Contract with a third party default management company. Unlike a collection agency, a third party default management company can help you maintain contact with students after they leave school. The best ones build a long-term relationship with each student and will contact students throughout repayment of their federal loans to help keep them on track.
  • Use loan calculators! Loan calculators are great for demonstrating the cost of borrowing in real terms. Most online loan calculators show not only principal and interest over the term of the loan, but many allow you to compare rates and repayment terms too.
  • Encourage students to make interest only payments on their loans. This reduces capitalization and makes repayment more affordable in the long run.
  • Encourage students to borrow conscientiously and whenever possible reduce their reliance on federal student aid.
  • Promote scholarships. Free money is always better than something that has to be repaid. Send an email blast or a tweet whenever you hear about a new scholarship that your student could benefit from. 

CPS jumps the gun on the 2011 tax filing deadline.

On Tuesday, March 13, 2012 Federal Student Aid’s Central Processing System sent out a notice to all those early FAFSA filers who indicated that they “will file” but have not yet completed their 2011 Federal Income Tax Return, on their 2012-2013 FAFSA. The message left some FAFSA filers wondering if they had missed the traditional April 15, 2012 Federal Income Tax Filing deadline. An Ed official who spoke on the condition of anonymity stated “this was just an early April Fools joke.”  Nonetheless, it’s always good practice to proofread your email communications to students before hitting the send button.

This year, the official deadline to file your 2011 Federal income Tax Return is Tuesday, April 17, 2012.

A sample of the erroneous email is below.

When you completed your 2012-2013 Free Application for Federal Student Aid (FAFSA), you indicated that you were going to file your taxes and were providing estimated 2011 tax information.  Now that the federal tax filing deadline has passed and you have probably filed your 2011 tax returns, it is time for you to update your FAFSA. You can update your FAFSA at  You should change your answer on the FAFSA (question 32) to reflect that you have “already completed” your tax return.  Once you’ve made this change, you will need to update the information you initially reported on the FAFSA to reflect the actual information from the 2011 tax return you filed.  If you filed a federal tax return with the IRS, when you access your FAFSA online, you may be eligible to use the IRS Data Retrieval Tool, which is the best and easiest way to provide accurate tax information.  With just a few simple steps, you can view information from your IRS tax return and transfer that information directly into your FAFSA.
If you are unable to use the IRS Data Retrieval Tool, you are still required to update the income information on your FAFSA so that it reflects the information on the 2011 tax return you filed.  The tax-related questions you should review on your FAFSA include adjusted gross income, income tax paid, number of exemptions, and income earned from work.  You should also ensure that your FAFSA correctly identifies the type of tax return that was filed (IRS 1040, 1040A, 1040EZ, foreign tax return, etc.) and that you have entered the correct amounts for Additional Financial Information (questions 43a-f) and Other Untaxed Income (questions 44a-j).
It is important that you make the necessary changes to the tax information so that your FAFSA includes the same information that was included on your tax return.  However, when making corrections based on your completed federal tax returns, do not update other information that was correct at the time you filed your FAFSA.  For example, do not change your answer for household size (question 93) or for number in college (question 94); unless your answer was incorrect as of the date your FAFSA was originally signed.
Your ability to receive federal student aid can be impacted if you do not make the necessary updates or corrections.
Thank you for your attention to this important matter.  If you have additional questions regarding the IRS Data Retrieval Tool, online help is available.  Visit and click the “Browse Help” feature on the FAFSA home page for information on the tool and the FAFSA process.

Two-Factor Authentication comes to Federal Student Aid

Did you know that more than ninety-thousand people have access to Post-Secondary School Federal Financial Aid network services? Yup. They do. This number encompasses all FSA users including personnel at schools, guarantee agencies, lenders, third-party servicers, call centers and everyone else at the Department of Education, their partners and their subcontractors. Together they service over thirteen million students and over thirty-million aid awards. And while aid administrators are generally a trustworthy bunch, FSA isn’t immune to the malicious threats which plague today’s digital world. The solution? Two-Factor Authentication.

What is Two-Factor Authentication? It’s simple, really. In order to access FSA websites like FAA Access to CPS, COD and NSLDS, users will have to use two passwords.

The first of the two “factors” is your FSA User ID and Password.

The second,  will be a one-time password generated by a token like the one depicted below. A new unique password will be generated each time a user attempts to gain access to one of the FSA system websites. Only “privileged users” of FSA network services will receive a TFA token. Just who is a privileged user anyway? Well if you are one of the more than ninety-thousand people working in Federal Student Aid, you are.

FSA - TFA Token

Last month Ed, began the phased distribution of tokens and token information to schools. While they planned an elaborate state by state deployment, Ed hasn’t been sticking to their stated schedule so it’s anyone’s guess as to when you’ll get yours. My bet, it’ll be happening sooner than you might expect.  Primary Destination Point Administrators and COD Security Administrators in group 4 and 5 on the chart below, have already begun receiving instructions from ED.

Token Deployment Schedule

Want to know more about Two-Factor Authentication? Check out the presentation from the 2011 FSA conference here: Two-Factor Authentication: Session #56


2012-13 FAFSA Verification-IRS Tax Return Transcript Matrix

Just days after NASFAA released it’s overly complicated version of an IRS Tax Return Transcript Matrix exclusively to NASFAA members, David Bergeron and the good folks at FSA made good on their promise to release one to the FSA community. In a simple to use, one page Excel document, the Ed version, compares the seven ISIR information items that may need to be verified for a student or parent who filed or will file a 2011 Federal Income Tax return to the item name reported on the IRS Tax Return Transcript as well as  the corresponding line item numbers from the three 2011 IRS tax returns.

You can get a copy of the matrix here: 2012-2012 IRS Tax Return Matrix

The February 24th, 2012 Electronic Announcement offers some guidance on interpreting the transcript as well – so aid administrators, pay attention:

…for some items the transcript may  report two or three values.  This is  because the IRS calculates or recalculates the amount reported by the tax filer  for some items.  If only one value is  reported on the transcript that value must be used for verification.  If more than one value is reported on the  transcript, the value associated with the item name that includes the words  “Per Computer” must be used for verification.  The “Per Computer” line should be used for  verification even if it is different than what was reported by the tax filer.

This is great guidance!

You can read the full Electronic Announcement here: February 24, 2012 Electronic Announcement – (General) Subject:  2012-13 FAFSA Verification-IRS Tax Return Transcript Matrix

An unusual verification scenario

A colleague recently encountered an unusual verification scenario. When a student filed head of household on her Federal Income Tax returns and listed her spouse and child in the household size, she decided to examine the situation closer to ensure that all of the information in the file was consistent. She knew that in order to file as head of household, the student generally couldn’t be married and she set out to identify any conflicting information.

When she interviewed the student, she explained that she was married in another country and that although she was a Permanent Resident herself, her husband who was unemployed, was a nonresident alien. Since he didn’t work, he didn’t file taxes. She remarked that she and her husband were not considered married in the United   States. This didn’t sound right to the experienced financial aid administrator, so she pulled out good-old IRS Publication 17 to do some research.

She knew right where to look, and thumbed to the page on Head of Household.

It read:

Head of Household

You may be able to file as head of household if you meet all the following requirements.

  1. You are unmarried or “considered unmarried” on the last day of the year.
  2. You paid more than half the cost of keeping up a home for the year.
  3. A “qualifying person” lived with you in the home for more than half the year (except for temporary absences such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to love with you.

She reread the first requirement aloud, recalling the student’s similar statement. “You are unmarried or “considered unmarried” on the last day of the year.”

What did that mean?

She read on, eventually finding her answer.

It read:

Nonresident alien spouse.  You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. However, your spouse is not a qualifying person for head of household purposes. You must have another qualifying person and meet the other tests to be eligible to file as head of household.

Much to her surprise, the student’s story checked out and she quickly phoned the student to give her the good news. She was excited to tell her all about the exciting guidance she found in IRS Publication 17. When she got around to calling me, we agreed, this was one of those stories for the infamous “book” of financial aid rarities and oddities.

Got a great financial aid related story to tell? Tell us about it below.