NAICU Washington Update

New FAFSA Verification Processes Hit a Snag

August 30, 2012

A new requirement for students whose application for federal student aid is tagged for verification was meant to make for a more efficient process, but is causing problems instead - particularly for low-income students who have inconsistent access to the Internet.

As of July 16, students whose applications for federal student aid have been selected for verification for the 2012-13 award year are required to meet the tax return documentation requirement by using an automated FAFSA IRS Data Retrieval Tool, or alternatively, by submitting an IRS Tax Return Transcript to their institution.  Previous rules allowed students to meet the requirement through paper copies of tax returns.  Neither of the new methods of verification is working for some students, putting them in jeopardy of losing their eligibility for federal student aid.

In recent years, the Department of Education has wanted to move away from paper processes, and has encouraged students to use the relatively new IRS Data Retrieval Tool (DRT).  Many students have successfully used DRT, or provided IRS Tax Return Transcripts; however, the expiration of the paper tax return as an option for verification has left some students in the lurch. 

The Department first tried to address the problem through a Dear Colleague letter allowing paper copies of 2011 IRS tax returns to be accepted until July 15, 2012, the end of the most recent award year.  Then on August 21, the Department issued additional guidance for a limited number of circumstances (identity theft, amended tax returns, or for taxes to U.S. territories or foreign countries).  In these cases, students may use “a signed copy of the appropriate tax return or other documentation” as verification for both the 2012-13 and 2013-14 award years. 

The Department also acknowledged that there may be other unique circumstances where a signed copy of a tax return or other documentation may be acceptable, and will continue to provide guidance as appropriate.

Still, the requirement concerns advocates for low-income students, who are urging the Department to reinstate paper copies as acceptable verification - especially for low-income families and traditional underserved groups with inconsistent access to the Internet. This class of students are not covered by the exceptions in the guidance.

NAICU is asking its member colleges if any are facing issues with the new process.  Feedback should be sent to Maureen Budetti, NAICU's Director of Student Aid Policy, at

MORE News from NAICU