Transcript Verification Basics plus proposed rules

Cathleen Wright
Director of Financial Aid
Texas Lutheran University
 Must
have written policies and procedures on
the following:
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Deadlines for document submission and
consequences of failure to meet those deadlines
Method of notifying students of award changes
due to verification
Required correction procedures for students
Standard procedures for referring overpayment
cases to the Department.
 Must
give each applicant selected for
verification a written statement explaining
the following:
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Documents required for verification
Student responsibilities
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Correction procedures
Submission deadlines
Consequences of missing deadlines
Notification methods
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How you will notify of award changes
Time frame of notification
 Those
selected by CPS
 Those selected by School
 30%
Verification Option – verify all CPS
selected applicants up to 30% of the schools
total federal aid applicants.

Applications the school selects or that have
conflicting data do not count toward 30%
 Incarceration
 Recent
Immigrant
 Spouse unavailable
 Parents unavailable
 Death
of the student
 Applicant verified by another school
 Pacific Island resident
 Not an aid recipient
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Not eligible because of SAP
Withdrew before receiving aid
 Household
Size
 Number Enrolled in College
 Adjusted Gross Income
 U.S. Income Tax Paid
 Certain Untaxed Income and Benefits
Note: Schools may choose additional items.
 Verification
worksheet
 Don’t have to verify if:
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Same as reported and verified in previous year
ISIR/SAR received within 90 days after
application signed
For dependent student, household size for
married parent is 3 or is 2 if parent is single,
divorced, separated or widowed.
Household size for married independent student
is two or is one if student is single, divorced,
separated or widowed.
 Verification
worksheet
 Don’t have to verify if:
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Only one in college
ISIR/SAR received within 90 days after
application signed
The family members the student lists are
enrolled at your school and you have confirmed
their enrollment.
 Acceptable
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documentation:
Signed federal tax return
Tax transcript
Form W-2
Form 4868
Signed statement
 Can
accept copies, fax or digital images
 Must be signed by at least one tax filer or
have tax preparer information
 Must
check tax returns for anyone reported
on the FAFSA.
 Type of form reported on FAFSA should match
form filed.
 AGI on FAFSA should match AGI on tax return
unless:

You adjust for divorce, separation or professional
judgment.
 Untaxed
income – any income excluded from
federal income tax
 Must verify:
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Child support
IRA/Keoug deductions
Interest on tax-free bonds
Any other untaxed income reported on the
federal tax return.
 Not
required to verify any untaxed income or
benefit received from a federal, state or
local government agency that is based on
need.
 Students
selected for verification must
complete it.
 Have authority to withhold disbursements
until verification completed. (recommended)
 Interim disbursements
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Pell Grant, Perkins and SEOG – can make one
disbursement for the student’s first payment
period.
FWS – can employ for up to 60 days
Stafford – can originate but not disburse
 $400

tolerance for dollar items
AGI + untaxed income – tax paid
 No
tolerance for non-dollar items
 Correction
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If selected for verification - can disburse aid on
original EFC until corrected ISIR received
If not selected for verification – do not disburse
aid until corrected ISIR received
 Correction

increases eligibility
decreases eligibility
If EFC decreases – must wait for corrected ISIR to
be received to disburse aid.
 Cannot
update income or asset information if
accurate at time FAFSA was filed.
 Must update household size, number in
college and dependency status in certain
circumstances
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Dependency status – must update any time during
award year unless changed because of a marital
status change.

Must be updated regardless of whether student
selected for verification
 Household
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size and number in college
Cannot be updated unless student selected for
verification
If selected for verification – must be updated to
be correct at time of verification unless they
changed due to change in marital status, in
which case updating is not permitted.
 Obligated
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to know:
If student or parent was required to file a tax
return
The correct filing status for the student or parent
That an individual cannot be claimed by more
than one person. i.e. student cannot claim
himself and also be claimed on parent tax return
 Must
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resolve conflicting information
Keep in mind that if have W-2s, must verify
income from work on FAFSA or risk having
unresolved conflicting information in the file
If income from work on tax return doesn’t match
income from work on ISIR – must resolve
If have interest income on tax return but no
assets – possible conflict – must resolve
If both parents filed Head of Household – must
question whether that is correct filing status
 NPRM
published in June 18, 2010 Federal
Register
 Selection for verification:
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Removes 30% cap - must verify all selected apps
Eliminates certain exclusions:
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Pacific Island residents
Incarcerated students
Recent immigrants
Modifies exclusions for:
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Parent’s or spouse’s contact information unknown
Parent or spouse is mentally incapacitated
 Verification
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items
Variable selection that corresponds to the most
error-prone data elements for a particular
student
Determined by ED and published in Federal
Register each year
Eliminates the minimum five required data
elements
 Can
accept tax data electronically loaded by
IRS to FAFSA in lieu of tax returns
 Require schools to verify ISIR before
processing Special Condition/Professional
Judgment changes
 No
tolerance – must make all corrections
 Must update student’s dependency status
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Whether selected for verification or not
Includes changes in marital status
 Allows
schools to make interim aid
disbursements as long as:
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Verification is completed
Corrections have been submitted
Changes are not expected to affect eligibility
Questions?