Special Bulletin: IRS Data Retrieval Tool Back On-Line for Income-Driven Repayment Applications

Good news! The IRS Data Retrieval Tool (DRT) is once again operable for federal student loan borrowers requesting Income-Driven Repayment (IDR) plans.

When such borrowers apply for IDR plans on their federal student loans, they must provide information to the U.S. Department of Education data from their recent tax returns. The DRT the easiest and fastest way to do this but, in early March, the IRS made the DRT inoperable due to security concerns.

Now, new encryption has been added to the DRT. The Department of Education and IRS will also be back on-line to provide tax return data for the 2018-19 Free Application for Student Financial Aid (FAFSA) when that form becomes available this coming October 1.

Special Bulletin: Status of IRS Data Retrieval Tool

A key tool used by students seeking financial aid borrowers applying for income-driven repayment plans on their federal student loans is still offline. However, a new government announcement outlines a schedule for getting it back up and running.

In March, the government shut down the IRS Data Retrieval Tool (DRT), expressing concerns about the need for extra system security. Here’s where things are now according to a recent status announcement from the U.S. Department of Education —

DRT in October for Student Financial Aid Applicants: For the next 5 months, students will need to keep finding and using recent federal tax returns for themselves and their parents in order to accurately complete their Free Applications for Federal Student Aid (FAFSAs). The government’s announcement says it’ll be October 1 when a new, more secure DRT will become available to them.

DRT on May 31 for Student Loan Borrowers: Parents and ex-students seeking to certify their eligibility for one of the 4 federal student loan income-driven repayment plans will again be able to access to the DRT beginning May 31, the announcement says. Until then, they’ll need to keep submitting alternative documentation when applying for these plans. Alternative documentation could be paper copies of their federal tax returns or pay stubs.

If and when more information about this problem becomes available, College Affordability Solutions will post another bulletin.

Before College: May 1 is Right Around the Corner!

May 1 is just 34 days away. That’s the deadline for paying a nonrefundable enrollment deposit to hold a spot at the 4-year college your student decides to attend this fall. When it comes to affordability, there’s much to do.

(1) Award Letter: Be sure your student has his financial aid offer from each school he’s considering. If a school’s award letter hasn’t arrived yet, make sure you’ve completed verification (if the school required it), then contact the financial aid office to request one IMG_5726ASAP.

(2) Outside Aid: If you know about scholarships your student’s getting from parties outside the school, report them to the aid office right away. Not doing so will freeze financial aid once the school learns of these awards, because it’s required to determine that the aid it awarded isn’t affected by outside scholarships. Should reductions be required, schools usually cut loans, then work-study and, last, grants or scholarships.

(3) Appeal: File a financial aid appeal ASAP if it might lower your student’s Expected Family Contribution and qualify her for more need-based aid. The aid office can tell you how.

(4) Affordability Analysis: Evaluate the affordability of each school under consideration.

First, use the “Tuition, Fees, and Estimated Student Expenses” on the National Center for Education Statistics College Navigator website to calculate annual growth in the average cost of attending a school over the last four year. Multiply the school’s 2017-18 costs by this average for each of the next four years to project your student’s 4-year cost.

Now project the financial aid to be received over four years. Some institutional grants and scholarships are for one year only, so be sure to differentiate between them and 4-year IMG_5659awards. And watch out for schools that practice bait and switch. Assume federal and state grant amounts will remain constant each year. Keep your borrowing assumptions within annual federal loan limits.

Subtract your 4-year financial aid projection from your 4-year cost projection. Now the big question — can you and your student cover the remaining gap? If so, keep that school on the list for consideration. If not, it may have to be dropped.

(5) Fit: Fit is absolutely critical. If a college or major doesn’t work for your student, chances are he’ll transfer, which’ll increase the cost of his degree. So consider fit carefully.

Need help analyzing the affordability of the colleges your student is considering? Contact College Affordability Solutions by email at collegeafford@gmail.com or by phone at (512) 366-5354.

Before College: Should You File a Financial Aid Appeal?

Your 2017-18 Free Application for Federal Student Aid (FAFSA) — despite all the information it collects, it can’t cover everything. It doesn’t gather unusual information that could impact your student’s Expected Family Contribution (EFC) — the key to determining his eligibility for financial aid awarded on the basis of financial need.

Since 2015 ended, did you suffer:

  • A big income loss — a layoff or employment termination — that’s still affecting IMG_5702you; or
  • Any major uninsured medical expenses in 2015, 2016, or 2017; or
  • Similarly unavoidable financial problems?

If so, appeal. These may lower your student’s EFC, qualifying her for more need-based aid.

The financial aid office can tell you how to do an appeal. You’ll no doubt be asked to file it in writing and to provide documents proving your income reduction, medical bills, or other financial losses. Why? Because parties funding your student’s need-based aid often audit EFCs. If they’re not convinced that your student’s EFC is correct, the school becomes liable for need-based aid it gives him in excess of his resulting financial need.

DOG_ATTACKKeep copies of the documents you submitted with your appeal. You might need to them to respond to follow-up questions from the aid office.

Because there are so many appeals at this time of year, file yours as soon as possible to give the aid office’s staff sufficient time to review it and make a determination before May 1. That’s when your student must make a go/no-go decision about which 4-year college in which she’ll enroll next fall, and you don’t want this decision made without knowing her financial aid situation.

If your student’s EFC should be changed, the aid office will tell your student. And should additional need-based aid still be available, it’ll send him a revised financial aid award letter showing changes in such aid.

Remember, the EFC can’t be lowered for small, optional, or routine financial matters. A successful appeal will document that your situation is exceptional and unavoidable — e.g. medical bills aren’t for something like elective cosmetic surgery. It’ll also demonstrate that your situation significantly impacts your ability to help pay your student’s college costs — i.e. the loss you’ve suffered costs more than just a few hundred dollars.

If you meet these criteria, file an appeal ASAP. It could make a difference!

Questions about the financial aid process? Contact College Affordability Solutions for a free consultation at (512) 366-5354 or collegeafford@gmail.com.

Special Bulletin: IRS Data Retieval Tool for FAFSA Not Working

Hopefully you filed your 2017-18 FAFSA many weeks or months ago. If you haven’t filed it yet, you’re going to hit a snag just as we reach many college and state deadlines for getting priority to receive various forms of financial aid.

The IRS has announced that it, “. . . decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.”

The DRT is the mechanism through which most students ensure that key fields on their Free Applications for Student Financial Aid (FAFSAs) are accurately populated with data. FAFSA information is used by the U.S. Department of Education (ED) and colleges to determine how much need-based financial aid students may receive for IMG_56692017-18.

While the DRT has worked well in past years, nobody knows when it will begin operating again for 2017-18 FAFSAs. Some colleges and states are changing their FAFSA priority deadlines because of this failure. In Texas, for example, the state is allowing colleges to suspend its March 15 deadline. So check with the school(s) your student may attend during the upcoming academic year.

If necessary, get a copy of your 2015 federal tax returns out of your records and manually enter data required by the FAFSA. Do this as soon as you can because, if you miss the school or state’s FAFSA priority deadline, your student will go to the end of the line for certain grants, scholarships, loans, or work-study awards.

College Affordability Solutions will publish another special bulletin when the DRT is back up and running.

Thank You, Mr. President!

Families that struggle with college costs need help. Fortunately, they had friend in Washington over the last eight years — Barack Obama.

The President and his wife are the first couple in the White House to have borrowed for college. Coming from families of modest means, they borrowed a lot, so much that they paid off their college debts just four years before entering the White House. “When we married we got poor together,” the President once said, “we added up our liabilities and there were a lot . . . basically in the form of student loans.”

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So although Congress did little on student aid, President Obama’s administration created several helpful initiatives:

  • Federal Direct Loans. The President’s lone student aid success in Congress established the government, not banks, as the primary maker of student loans. It simplified federal student loans, reduced corruption, and redirected billions in subsidies from bankers to students.
  • PAYE and REPAYE. The President began the Pay As You Earn and Revised Pay As You Earn programs, which limit what college borrowers must repay to 10% of their discretionary incomes, and forgives what they still owe after as few as 20 years.
  • Aid Application Process. The administration made the Free Application for Federal Student Aid (FAFSA) available in October, not January, and began collecting “prior-prior” tax year data on it. So students now know what their federal student aid will be as they narrow their college choices. Also, families can img_5167now tell the IRS to load key numbers directly onto their FAFSAs, and they now have more time to verify their FAFSA data. All this makes applying for financial aid easier.

So thank you, President Obama! You made college more affordable and reduced barriers to financial aid. Millions benefitted from your efforts, and our country is better off for them!

If you want to contact College Affordability Solutions, email us at collegeafford@gmail.com or call (512) 366-5354.

Before and During College: Has Your Student Been Asked to Verify FAFSA Data?

So your student’s Free Application for Federal Student Aid (FAFSA) has already been completed and submitted. Now one or more of the colleges to which that FAFSA’s data were sent tells your student it needs to verify those data. Why are they doing this and what needs to be done?img_5119

Verification is used to confirm your student’s FAFSA. It’s needed because students sometimes make mistakes when completing FAFSA’s. So do parents whose children are dependent students. It’s also needed because, unfortunately, some families deliberately provide false information to rip off the system.

The U.S. Department of Education processes FAFSAs, and it selects them for verification — some because they likely have incorrect data, others at random. Colleges may also use their own methods to select FAFSAs for verification.

Being selected doesn’t mean anyone thinks you or your student did anything wrong. In fact, colleges may even release financial aid to students before verification is completed. But because they must repay any aid released for which students aren’t eligible, almost no schools do this.

And because there’s never enough money to cover the full financial need of all their img_5115students, most colleges won’t even award aid until verification is finished and they know exactly how much need your student has.

So your student (and you, if you too completed the FAFSA) must react quickly to any notice received about verification. Delaying may cause your student to miss out on grants and scholarships because the funds for those awards are all committed by the time verification gets done.

This notice will come to your student by email or regular mail. It’ll provide the key facts:

  • What FAFSA data need to be verified;
  • Acceptable documentation for verifying those data; and
  • Where to deliver that documentation, by when, and what happens if it’s late.

Once the college completes verification, it’ll tell your student:

  • Any corrections that are necessary; and
  • What it and/or he or she must do to correct those FAFSA data.

So watch out for verification notices, react to them quickly, and to follow their instructions to the letter. Otherwise, your student may lose grant and scholarship aid, making it much more difficult to afford college without extra borrowing!

College Affordability Solutions can advise you on all parts of the financial aid process, including verification. Email collegeafford@gmail.com or call (512) 417-7660 for assistance.