1. Verification TASFAA 2010 New Aid Officers Workshop Consuela Mitchell Deputy Director of Financial Aid The University of Texas at Dallas 2009-2010 Application & Verification Guide (AVG) 1

2. Verification Process of verifying accuracy of FAFSA data Regulations define: Whose application must be verified (AVG-82) Data elements to be verified (AVG-85) Documentation used to verify data elements (AVG-87) Regardless of verification selection, must always resolve discrepancies and conflicting information 2

3. Verification Policies and Procedures Must : Be written Address school options where flexibility exists Be made clear to all students Be consistently applied (AVG-81) 3

4. Verification Policies and Procedures Must include: Procedures for identifying and processing selected applications Deadline for applicant to provide documentation Consequences of failure to meet deadline (AVG-81) 4

5. Verification Policies and Procedures Must include: Procedures applicant must follow to correct application information Method for notifying applicant of verification results and change in EFC and/or award Procedures for referring overpayments to ED Procedures for referring cases of suspected fraud or other criminal misconduct to ED Office of Inspector General (AVG-81) 5

6. Verification Topics Whose application must be verified Quality Assurance Program requirements Which data elements must be verified Acceptable documentation Data element corrections Data element updates Interim disbursements Verification time frames Policies and procedures 6

7. Whose Application Must Be Verified? Applicants selected by Central Processing System (CPS) Applicants selected by institution 7

8. Programs to Which Verification Applies Federal Pell Grant Academic Competitiveness Grant (ACG) National Science and Mathematics Access to Retain Talent (SMART) Grant Campus-based programs Subsidized Stafford Loan programs (FFEL and Direct Loan) 8

9. 30% Verification Option 30% is cap, not minimum Applications making up 30% must be CPS-selected If more than 30% selected by CPS, may choose to verify more than 30% Document files of CPS-selected applicants not verified 30% option does not relieve institution of responsibility to resolve conflicting information (AVG-82) 9

10. Institutionally-Selected Applications Institution can select additional applications not selected by CPS Selection may be based on such data elements as: Estimated tax figures Low family income levels Large household size or number in college Completion of certain FAFSA data elements Other institutional criteria 10

11. Verification Exclusions Certain types of applicants and data elements exempt from verification Reason for verification exclusion should be documented in student’s file Except for applicant who dies during the award year, if conflicting information or reason to believe application information is inaccurate, exclusions do not apply (AVG-83) 11

12. Verification Exclusions Exclusions include or are limited to: Entire application—student and parent data Applicant’s spousal data only Certain data elements 12

13. Quality Assurance Program Participation voluntary ED provides guidelines, tools, and incentives for participation Participating schools exempt from prescribed verification requirements School sets verification parameters School must reassess and self-correct verification process on ongoing basis Every other year – Random Sample must be completed Quality Assurance Website: http://ifap.ed.gov/qahome/Default.html http://ifap.ed.gov/qahome/Default.html (AVG-82) 13

14. Required Verification Data Elements Number in household Number of household members in college Adjusted gross income (AGI) U.S. income tax paid, and Certain untaxed income and benefits (AVG-85) 14

15. Required Verification Data Elements Certain untaxed income and benefits Child support received Untaxed IRA/Keogh deductions, and Interest on tax-free bonds (AVG-90) 15

16. Required Verification Data Elements Untaxed IRA/Keogh deductions * Untaxed pensions and annuities * Interest on tax-free bonds * Untaxed combat pay † *(AVG-21) †(AVG-20) Other untaxed income and benefits on the tax return 16

17. Items That May Be Verified Using the Tax Return Adjusted gross income U.S. income tax paid IRA/Keogh deductions and payments Untaxed portions of pension distributions Untaxed IRA distributions Interest on tax-free bonds Untaxed combat pay (when reported) (AVG-85) 17

18. Acceptable Tax Return Formats Photocopy, facsimile, or digital image of original paper tax return If original copied without signature, at least one filer must sign copy Tax form completed to duplicate original return and signed by at least one filer Other signed e-file documentation (AVG 88-89) 18

19. Acceptable Tax Return Formats Form 8453 is a signature form for e-filers and not acceptable In lieu of return with filer signature, a return with tax preparer’s stamped, typed, signed, or printed name, and SSN, EIN, or PTIN 19

20. Alternative Sources of Documentation IRS tax transcript listing tax return information Signed statement and W-2s from filer, if tax return or tax transcript unavailable 20

21. Tax Filing Extensions Collect W-2’s and one of following: IRS Form 4868; or Copy of IRS approval of extension beyond 4-month extension Collect and review tax return when filed 21

22. Child Support Documentation Obtain verification worksheet or written statement certifying amount of child support received for all children Statement must be signed by applicant and at least one parent (if dependent) Statement must be signed by applicant if independent If support paid through government agency, statement from that agency is acceptable ( AVG -91) 22

23. Child Support Documentation Request additional documentation if information provided appears inaccurate Copy of separation agreement or divorce decree Signed statement from parent providing support Copies of canceled child support checks or money order receipts (AVG-91) 23

24. Number in Household & in College Statement or verification worksheet listing each household member’s: Name Age Relationship to applicant Postsecondary school (if any) attending at least half- time in program leading to recognized educational credential If institution doubts statement, it should obtain statement from each postsecondary institution listed by applicant (AVG -86) 24

25. Verification Corrections Changes to data elements that were incorrect at time of application If data correct as reported and valid ISIR/SAR: Pay Federal Pell Grant, ACG, SMART Grant, FSEOG, and Federal Perkins Loan Employ students under FWS Certify/originate and disburse/deliver FFEL or Direct Loans (AVG 93-95) 25

26. Tolerance Option $400 net error tolerance for all Title IV programs FAFSA Parent AGI + Student AGI + Parent Untaxed Income + Student Untaxed Income – Parent U.S. Taxes Paid – Student U.S. Taxes Paid = FAFSA data (uncorrected sum) Net Difference:  $400 Correct Parent AGI +Student AGI +Parent Untaxed Income +Student Untaxed Income –Parent U.S. Taxes Paid –Student U.S. Taxes Paid =Correct data (corrected sum) 26

27. Example: Tolerance Option FAFSA Data Correct Data Parent AGI $15,800 $15,500 Parent Untaxed Income + 1,200 + 1,500 Student AGI + 9,200 + 9,200 Student Untaxed Income + 0 + 0 Parent U.S. Income Taxes Paid – 500 – 0 Student U.S. Income Taxes Paid – 200 – 300 = $25,500 = $25,900 Net difference: $25,500 – $25,900 = $400 27

28. Recalculating EFC: Federal Pell Grant, ACG, & SMART Grant Programs If net error is greater than $400, Recalculation of the EFC is necessary If net error is less than or equal to $400, No recalculation of the EFC is necessary (AVG-94) 28

29. Verification Updates Changes to data elements that were correct at time of application but have since changed Applicable only to 3 items: Dependency status Number in household Number of household members enrolled in college (AVG 102-103) 29

30. Verification Updates Dependency status All students must update dependency status if it changes at any time Cannot be updated if it changes as result of change in student’s marital status (AVG-103) 30

31. Verification Updates Number in Household and Number in College If selected, data must be accurate as of verification If not selected, cannot update for changes occurring after original application filed If not selected, not required to monitor data element change (AVG-103) 31

32. Verification Updates Cannot update change in student’s marital status Must update household size if dependent student’s parent remarries after application, before verification 32

33. Professional Judgment If using PJ authority to adjust data elements used to calculate EFC on selected application, application must be verified first If using projected-year income data to recalculate EFC, projected-year data do not need to be verified (AVG 105-106) 33

34. Verification Status Codes V – Verified W – Without Documentation S – Selected/Not Verified Blank– Not Verified (AVG 95) 34

35. Interim Disbursements In the absence of conflicting information or reason to believe information is inaccurate, institutions have the following disbursement options when verification still incomplete: Federal Pell Grant, ACG, SMART Grant and campus-based: Withhold payment Make 1 disbursement for 1st payment period Employ applicant up to 60 days under FWS (AVG-93) 35

36. Interim Disbursements Subsidized FFEL/Direct Loans: Refuse to certify or originate loan; or Certify or originate loan, but not disburse/deliver loan proceeds (AVG-93) 36

37. Interim Disbursements Verification not required for: Unsubsidized FFEL/Direct Loans PLUS Loans Nonfederal LEAP and SLEAP awards Robert C. Byrd Honors Scholarships (AVG-81) 37

38. Interim Disbursements If school makes interim disbursement and student later determined ineligible, or if verification not completed, award for which student is ineligible is an overpayment Student with overpayment is ineligible for Title IV funds School liable if overpayment not resolved (Chap. 5) 38

39. Verification Time Frames Institution determines when in award cycle to verify based on: Institution’s resources and procedures When verification process would be least disruptive to office and least problematic for students 39

40. Verification Time Frames Verification Deadlines Campus-based and FFEL/Direct Loans: Institutionally-established deadline Federal Pell Grant, ACG, and SMART Grant: Institutionally-established deadline Institution must have verification documents and valid SAR/ISIR by earlier of 120 days after last day of enrollment or deadline published annually by ED in Federal Register (AVG-94) 40

41. Available Resources Federal Student Aid Handbook Application and Verification Guide http://www.ifap.ed.gov/fsahandbook/0910AVG.html http://www.ifap.ed.gov/fsahandbook/0910AVG.html Institutional Policies and Procedures IRS Publication 17 found at www.irs.gov www.irs.gov Consuela Mitchell consuelamitchelll@sbcglobal.net 41