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Administrator and Student

To reduce the burden on both the students and institutions, the U.S. Department of Education is changing the federal student aid verification process.

Changes Coming to Federal Student Aid Verification as Process Moves to Customization

  • 3/13/2013

Changes Coming to Federal Student Aid Verification as Process Moves to Customization

by Diane C. DiFebbo and Brenda Scherer

The Federal Student Aid regulations are already numerous and complex, and verification procedures require educational institutions to request a significant amount of information from students. To reduce the burden on both the students and institutions, the U.S. Department of Education (ED) is changing the verification process.

ED has teamed up with the Internal Revenue Service to create an IRS data retrieval system, where the students are required to link their Free Application for Federal Student Aid (FASFA) to the IRS database. This will help reduce the amount of documentation the institution has to process.

In addition, ED is moving toward a customized verification process where students will be placed in different tracking groups, each with unique information to verify.

For the 2012 – 13 award year, schools must verify household size, number of persons in college, Supplemental Nutrition Assistance Program (SNAP) benefits, and child support paid for all applicants selected for verification. Beyond those items, additional items may be required depending on whether the applicant used the IRS data retrieval system while completing the FASFA. If a student uses the IRS data retrieval system, no further verification is usually required. However, if the system is not used, the institution must obtain documentation to verify adjusted gross income, U.S. income tax paid, education credits, untaxed IRA distributions, untaxed pensions, IRA deductions, and tax-exempt interest for tax filers. For those not filing taxes, the institution must obtain documentation to support income earned from work. Ideally, this will prompt institutions to encourage students to make use of the IRS data retrieval system.

Verification tracking groups V1 – V3

Beginning in the 2013 – 14 award year, the verification process will place students into one of five verification tracking groups. The information that must be verified will depend on the tracking group: Tracking group V1 will be similar to the old verification requirements; groups V2 and V3 have fewer items for the institution to verify. For tracking group V2, institutions only need to verify the SNAP benefits for students, and group V3 requires only verification of child support paid by the student or his/her spouse, the parents, or both.

Verification tracking groups V4 – V5

Tracking group V4 requires two new items not verified in past years: high school completion status and identity/statement of educational purpose. Verification of high school completion status requires schools to document evidence of a high school diploma or recognized equivalent, including documentation for homeschooled children. The identity/statement of education purpose item requires schools to document that the student appeared in person and provided a valid, government-issued photo identification and a signed statement of educational purpose. If students cannot appear in person, as would be the case for most online program applicants, students must still provide the valid government-issued photo ID and an original, notarized statement of education purpose signed by the applicant. Lastly, tracking group V5 will need to verify all the items included in the tracking groups V1 and V4.

Ideally, the new tracking groups will help reduce the amount of information institutions need to gather from the students, and verification procedures will become less burdensome. But, as with any new process, there may be tweaks to the regulations in the future as the Department of Education continues to improve the verification process. 

Diane C. DiFebbo, Partner or 407-244-9309

Brenda Scherer, Nonprofit and Government Manager or 612-376-4626