Verification, Tax Transcript Woes & Pell Lifetime Eligibility Limits Jo Lopez Front Range Community College

What & Why of Verification GEN – Information to be verified for FAFSA Previously 30% of applicants were randomly selected for verification Now there is not a cap as to how many student can be selected for verification

Verified Items Are picked for each aid year by each student beginning Number of household members Number of household members enrolled at least half-time in eligible postsecondary institutions (not including parents for dependent students) Foods Stamps (Supplemental Nutrition Assistance Program – SNAP) *change for Child Support Paid * change for

Verified Items Information for Tax Filers When Applicant Selected for Verification – Adjusted Gross Income (AGI) – U.S. Income Tax paid – Untaxed Income Untaxed IRA distributions Untaxed pensions Educational credits IRA deductions Tax Exempt interest

Verified Items Information for Non-Tax Filers When Applicant Selected for Verification – Income earned from work

How do we Verify this information Department of Education Verification Worksheet Institutional Verification Worksheet Self-certification by student (child support paid) For non-tax filers you must obtain a W-2 form for each source of employment. [Must also obtain signed statement providing the sources and amounts of the person’s income earned from work on and not on W-2’s and certifying that the person has not filed and is not required to file a tax return on Verification Worksheet

IRS Data Retrieval Process Applicants selected for verification who retrieve and transfer their income tax return information using the IRS Data Retrieval Process will be considered to have verified the FAFSA IRS information (02 code is acceptable; all other codes are not) However if changes were made to the transferred information or if an institution has reason to believe that the information transferred is inaccurate, the applicant must provide other acceptable documentation

IRS Tax Return Transcript These are required by applicant and/or parents when they did not use the IRS Data Retrieval Process when completing FAFSA or FAFSA on the Web (FOTW) correction process When information included on the FAFSA using the IRS Data Retrieval Process was subsequently changed When a married independent applicant and spouse filed separate tax returns When the parents of a dependent student filed separate tax returns Need to watch to make sure both don’t claim Head of Household)

IRS Tax Return Transcript When an applicant and/or applicant’s parent had a change in marital status after the end of the tax year on December 31, 2011 When the applicant or parent(s) or spouse, as applicable, filed an amended tax return

IRS Tax Return Transcript If applicant and/or parent(s) have filed an amended return and cannot use the IRS Data Retrieval process … They must request and submit an IRS Tax Return Transcript AND an IRS Tax Account Transcript

Food Stamps (SNAP) If applicant and/or parent(s) received SNAP benefits in 2010 or 2011, the student must provide a signed statement indicating receipt of the benefit If reason to doubt the receipt of SNAP benefits, you may require the student to show documentation from the agency that supplied the benefit or alternative documentation you find to be sufficient

Child Support Paid The applicant and/or parent(s) that paid child support in 2011, will need to provide a signed statement (student if independent or parents if dependent) including: – Annual amount of support – Name(s) of those who paid the support – Name(s) of who support was paid to – Name(s) of the child(ren) support was paid for.

Question Can an institution select students for verification other than those selected by the Department of Education? Yes … but it needs to be in your Institutional Policy and Procedures

Question Can an institution verify other FAFSA criteria? Again, yes but it needs to be in your Institutional Policy and Procedures

Question Student’s parents are undocumented workers, how do you provide their income? Parent(s) can file taxes using Federal Tax Identification Numbers (FTIN) Use all zeroes for SSN

Tax Transcript Woes Student and/or parent is unable to obtain an IRS Tax Return Transcript Per GEN 12-07, Schools have the option until July 15, 2012 to use a signed copy of the relevant 2011 IRS Tax Return (form 1040, 1040A or 1040EZ) for students who attempt unsuccessfully to use IRS Data Retrieval Tool or obtain IRS Tax Return Transcript

Pell Lifetime Limitations 600% or equivalent of 12 full-time semesters GEN Federal Pell Grant Duration of Eligibility Check NSLDS website to see percentage of used eligibility Department of Education recently sent letters to students who exceeded 450%

Per NASFAA Letter of 02-17: Preliminary Information – Implementation of the 12 Semester Lifetime Limit for Federal Pell Grants … -Student not on report to school (LEU = zero to 450%) “Even if such student were to receive a full scheduled award for the Award Year, he/she would still be eligible for a full 100% scheduled award for ” - LEU greater than 450% but less than or equal to 500%) – “These students likely will have full eligibility for 100% of their Pell Grant scheduled award, unless a later disbursement moves their LEU to greater than 500%.” Example – COD shows 450% and subsequent COD report shows disbursement of 75% of scheduled award so student’s new LEU would be 525%. This student’s eligibility for would be only 75% of scheduled award. -LEU greater than 500% but less than 600% - “These students will not have full eligibility for Pell grant, but likely will have eligibility for a portion of that scheduled award. Example – Student has LEU on COD report of 566.6%, thus student would be eligible for 33.3% of the scheduled award.” - LEU 600% or higher – “These students will have no Pell grant eligibility for the award year.”

Notifications Mid-April – s to be sent to all applicants who appear to be Pell eligible and who have in excess of 450% of Pell lifetime eligibility. Will be repeated weekly until July. July, 2012 – COD will updated to return COD Warning Edit 177 or 178 when a student’s LEU is near or exceeds 600% (Interim weekly reports will be discontinued once COD System enhancements are in place in July)

Notifications July, 2012 (continued) – CPS will begin reporting Pell grant LEU information on ISIRs and SARs to alert schools and applicants who are close to or have exceeded 600% LEU based on prior Pell grant disbursement history. (This will be done using ‘comment codes’ but until these are in place, notifications will be sent to students) – NSLDS – Schools should be able to access NSLDS to determine what a student’s Pell Grant Lifetime Eligibility Used (LEU) is.

From: Date: April 15, :38:15 AM MDT To: Subject: Recent Changes That Affect the Amount of Your Federal Pell Dear : We want to alert you to a recent change in the law that affects your Federal Pell Grant award for the school year and beyond. This change limits the total number of years a student may receive a Pell Grant to the equivalent of six years. Based on our records, you have received more than five years of Pell Grant funding. This means that the amount of your Pell Grant award will be less than the amount you would have been eligible to receive if the law had not changed. Note that you still may be eligible for other federal, state, and school financial aid. For information on how we calculate the "equivalent of six years" click on the following link: If you have questions about the information in this , please contact your school's financial aid office. Federal Student Aid U.S. Department of Educationwww.studentaid.ed.gov/pell-limit

Question What effects will this have on students? As explained in the , this will reduce the amount of Pell they may receive, however, they may be eligible for other Federal financial aid.

School Responsibilities As institutions/schools, we need to develop communications and educate our students so they are aware of the Pell change Encourage students to make wise choices when using their financial aid Make sure students are aware how each term of enrollment effects the 600%