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.

Draft Cohort Default Rates Delayed, but coming…

In a message addressed to the Financial Aid Community, Federal Student Aid announced the release dates of the  FY 2010 2-Year and FY 2009 3-Year Draft Cohort Default Rates. All schools, both domestic and foreign, enrolled in the Electronic Cohort Default Rate (eCDR) process will receive their FY 2010 2-Year and the FY 2009 3-Year Draft Cohort Default Rate and accompanying documentation via their Student Aid Internet Gateway (SAIG) mailbox.This year, the reports will be delivered separately and several days apart as follows:

  • FY 2010 2-Year Draft Cohort Default Rates – On February 27, 2012
  • FY 2009 3-Year Draft Cohort Default Rates – On March 5, 2012

Although sanctions from the 3 year Cohort Default Rate will not be imposed until 2014, many schools will review the student level data in the report to ensure the accuracy of the official Cohort Default Rate which will be published in September. In 2014, institutions that have three-year rates higher than 30 percent will face possible sanctions, including loss of eligibility to participate in Title IV programs. Trial rates project the following data by sector.

TYPE OF INSTITUTION LESS THAN 2 YEARS 2-3 YEARS 4+ YEARS
Public —10.8% overall 14.7% 17.9% 7.9%
Private7.6% overall 26.1% 16.7% 7.3%
Proprietary25.0% overall 27.6% 27.9% 22.7%
Foreign – 4.7% overall

During the Draft Cohort Default Rate Review period,schools have 45 days to challenge/appeal the rates by submitting an Incorrect Data Challenge appeal to the data manager via the eCDR appeals process. A good idea since benefits as well as sanctions apply to cohort default rate thresholds.

  • FY 2010 2-Year Incorrect Data Challenges are due – April 12, 2012
  • FY 2009 3-Year Incorrect Data Challenges are due –  April 19, 2012

For more information about Cohort Default Rates, check out the revised edition of the Cohort Default Rate Guide.

http://www.ifap.ed.gov/DefaultManagement/CDRGuideMaster.html

Related articles

Sample Verification Worksheets for 2012-2013

Earlier this week, the US Department of Education published sample Dependent and Independent Verification Worksheets.  Copies of the worksheets are available here:

http://www.ifap.ed.gov/eannouncements/020312SampleVerificationWorksheets1213.html

Schools are not required to use the sample worksheets.  Schools  may develop their own worksheets or they may choose not to use a worksheet at all but  rather, to collect the required documents, statements, certifications and  signatures through other means. In addition to the usual PI and household size, schools will be required to verify specific data elements from the student’s 2011 Federal Income Tax Transcript. SNAP and Child Support are also among the potentially verifiable items. To get a complete listing of the of the information that may need to be verified for applicants who complete the FAFSA for the 2012-2013 award year check out GEN 11-13 which was published way back in July of 2011.

2012-2013 Student Aid Eligibility Worksheet for Question 23

On January 17th, the 2012-2013 Student Aid Eligibility Worksheet for Question 23 also known as the Drug conviction worksheet was published for the 2012-2013 award year in English and Spanish. Students who answer either “Yes” to question 23 of the 2012-2013 FAFSA which asks if the student has ever been convicted for possessing or selling illegal drugs while receiving Federal Student Aid should complete the worksheet to determine if the conviction will affect their eligibility for aid.

Students who meet the following criteria are generally eligible for aid:

  • Students who never received Federal Student Aid (Federal Student Grants, Federal Student Loans, Federal Work-Study)
  • Students who have never been to college
  • Convictions that occurred before they turned age 18
  • Convictions that were removed from their record
  • Convictions other than Federal or State convictions,
  • If the offense occurred during a period on non-enrollment during which the student did not receive aid.

A copy of the worksheet is available here: http://www.ifap.ed.gov/drugworksheets/attachments/011112StudentAidEligibilityDrugWkshten1213.pdf