About 20 percent of 6.6 million federal-aid forms processed so far this year include inconsistent tax information, the U.S. Department of Education announced on Monday night. The latest snag in the rollout of the new Free Application for Federal Student Aid, or FAFSA, will cause further delays for colleges and students. And financial-aid officers now must determine how to handle yet another curveball.
As The Chronicle first reported last week, the department said it was investigating reports from colleges that some processed federal-aid forms, known as Institutional Student Information Records, or ISIRs, included inaccurate tax information. Several financial-aid officers detected in late March that the FAFSA hadn’t been consistently retrieving all the data points required to calculate the Student Aid Index, or SAI, a number used to determine how much federal aid an applicant should get. A financial-aid offer based on an incorrect SAI, it’s fair to say, is like a house built on a faulty foundation.
The department and the Internal Revenue Service later identified three problems affecting a subset of FAFSAs. Two involved applicants and contributors who had transferred their federal tax information directly from the IRS to their FAFSA; the other affected those who were required to manually enter income and tax information. (The department shared more specific details about the errors here.)
So what happens next? The department said it would reprocess and resend only those FAFSAs with errors that, if left uncorrected, would deprive applicants of financial aid they are eligible for — about 5 percent of all the processed applications. The reprocessing, the department said, would begin “as soon as the functionality is available, which we expect in the first half of April.”
As for the rest of the ISIRs with errors, the department said in an announcement on Tuesday that it would take no further action without being prompted: “Where adjustments would result in less aid to students, we will not reprocess unless asked to do so by schools.”
So, it’s up to colleges, the department said, “to decide, on a case-by-case basis,” what to do with ISIRs containing inconsistent data that, if reprocessed, would likely increase an applicant’s SAI and thus reduce their aid eligibility. Institutions may request that the department generate an updated ISIR for one or more aid applications, according to Monday’s announcement. But unless that happens, “the department will assume that institutions intend to proceed with the current ISIRs for these students.”
But wait, how will colleges know which ISIRs contain errors and which ones don’t?
The department said it will release, “as soon as possible,” a list of Universally Unique Identification Numbers corresponding to FAFSAs unaffected by the errors, as well as criteria colleges could use to identify such aid forms on their own. Furthermore, the department said that, “in the coming days,” it would identify ISIRs containing the recently identified errors that it doesn’t plan to reprocess.
Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial-aid offers out to students and families.
If all that seems clear, then you’re ahead of some financial-aid officers who were scrambling to make sense of the announcement on Tuesday.
“Many of our members are saying, ‘Why didn’t they just reprocess every applicant who was affected?’” Karen McCarthy, vice president for public policy and federal relations at the National Association of Student Financial Aid Administrators, or NASFAA, told The Chronicle. “But it’s clear, when you read the announcement, that the department is trying to not have to reprocess so many FAFSAs, which could really cause everything to grind to a halt, while still allowing schools to adjust if they want to. But there are all these convoluted steps. The department is sending out this list of applicants who don’t have these issues, so then schools are somehow going to do, I don’t even know what yet, with that list.”
The situation puts financial-aid staff in a strange position. Here’s the federal government telling colleges that they’re free to decide whether to base financial-aid offers on ISIRs that contain errors.
“We have heard that concern from a lot of our members, mostly because they do view part of their role as being a good steward of federal funds,” McCarthy said. “Also, depending on how big the discrepancy is, if a college doesn’t make an adjustment, and the student gets more aid this year based on this incorrect information, what happens next year when they come back and say, ‘Now I’m not eligible for the same aid, but nothing has changed’?”
The latest problems with FAFSA data follow another tax-information headache. In late March, the department announced that a technical problem had caused inaccurate estimates of aid eligibility for about 200,000 dependent students who had reported assets on their FAFSA. The department clarified on Monday that, for that batch, too, it now plans to reprocess only forms for which corrected data would reduce an applicant’s SAI, increasing their aid eligibility.
Justin Draeger, president and chief executive of NASFAA, said in a written statement on Tuesday that the rollout of the new FAFSA had been “plagued by issues of broken trust, data integrity, and missed deadlines.” Though Draeger said that the department had moved quickly to investigate reports of mismatched data, he reiterated what every college official should know right now: Every day counts, hundreds of thousands of FAFSAs need reprocessing, and many students must contend with more delays. “Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial-aid offers out to students and families,” said Draeger.
The question that’s keeping financial-aid officers up at night is this: What if additional FAFSA-calculation problems turn up tomorrow?
“What I have heard from a lot of our schools is ‘Is there more coming? Is there another shoe that’s gonna drop?’” McCarthy said. “They really don’t want to send out aid offers and then have to send out revisions.”
Soon, colleges will have to decide if they feel comfortable enough to get their aid offers out the door. “I’m just not sure,” McCarthy said, “that there are many schools at that point yet.”
