VERIFICATION So Were All Singing Off the Same Page

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VERIFICATIONSo Were All Singing Off the Same
Page

• David R. Gelinas
• Director of Financial Aid
• Sewanee The University of the South
• 2005-06 NASFAA National Chair

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Required Policies

• You must have WRITTEN policies and procedures on
• Deadlines for submitting documentation
• And the consequences for missing them
• How youll notify students if verification
  changes the award
• Required correction procedures
• Procedures for referring overpayment cases

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BUT WAIT! Theres more

• You must give each student selected (again in
  writing) an explanation of
• Required documents
• Student responsibilities
• Notification methods

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Who Must Be Verified

• Applicant selected by Central Processing System
  (CPS) or the school
• CPS selected The SAR with the star
• Any application the school believes has either
  incorrect or discrepant information
• As required under 34 CFR 668.54(a)(3) and
  668.16(f)
• Any additional application(s) the school selects
• You can select em all! (I do)

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Limitation/Exclusions

• You can stop at 30 of the schools total number
  of federal aid applicants.
• You can exclude
• Incarcerated student
• Recent immigrant
• Unavailable spouse
• Unavailable parents
• Deceased student
• Verified by another school
• Pacific Island resident
• Not an aid recipient

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Important Caveat

• Conflicting Information MUST ALWAYS be
  resolved, regardless of verification status.
• If your school has conflicting information
  concerning a students eligibility or you have
  any reason to believe a students application
  information is incorrect, you must resolve the
  discrepancies before disbursing FSA funds.
  (2006-07 Application Verification Guide (AVG),
  p. 101)

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What Must You Verify?

• If CPS-selected, you must verify
• Number enrolled in college
• Household size
• Adjusted gross income (AGI)
• U.S. income tax paid
• Certain untaxed income and benefits
• Legal citation 34 CFR 668.56(a)

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What CAN You Verify?

• In addition to verifying these required items
  for CPS-selected students, you can choose to
  verify any other application items, requiring any
  reasonable documentation, in accordance with
  consistently applied institutional policies. You
  may decide which students must provide
  documentation for any additional data elements
  and what constitutes acceptable documentation.
  (AVG-79)

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Collecting Verification Information

• You basically need to collect a properly signed
  verification worksheet or other properly signed
  documentation and
• Signed copies of the appropriate tax returns
• You should remind your students that they must
  submit the completed worksheet and copies of the
  relevant income tax returnsto your financial aid
  office, not to the U.S. Department of
  Education. (AVG-79)

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Verifying Household Size

• If the student completed the Departments
  verification worksheet, no further documentation
  for this item is required. (AVG-80)
• Instead of the worksheet, you may accept a signed
  statement listing
• Names of household members
• Their ages
• Their relationship to the student

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Verifying Household Size

• You dont have to verify this when
• Its the same as reported and verified in the
  previous award year
• You receive the SAR or ISIR within 90 days after
  the date the application was signed
• For a dependent student, a married household size
  of 3 or a single-parent household size of 2
• For an independent student, a married household
  size of 2 or a single household size of 1

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Verifying Number in College

• If the student completed the Departments
  verification worksheet, no further documentation
  for this item is required. (AVG-80)
• Instead of the worksheet, you may accept a signed
  statement listing
• The names and ages of those enrolled
• The names of the schools they plan to attend

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Verifying Number in College

• You dont have to verify this when
• The reported number enrolled is 1 (the student)
• You receive the SAR or ISIR within 90 days after
  the date the application was signed
• The family members listed are enrolled at least
  half-time at your school, and youve confirmed
  their enrollment internally

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Verifying AGI and U.S. Income Tax Paid

• To verify AGI and taxes paid, you must first
  identify everyone whose financial data was
  reported on the FAFSA and which tax returns, if
  any, they filed. You must check the tax returns
  for anyone whose financial data were reported on
  the FAFSA the student and his spouse or parents
  if applicableThe type of tax return filed
  reported on the FAFSA should match what the
  student and parents actually filed. (AVG-81)

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Verifying AGI/Taxes Paid

• For verification purposes, you can accept a copy
  (such as a photocopy, fax, or digital image) of
  the original signed return filed with the IRS.
• If a fax, photocopy, or other acceptable copy
  was made of an unsigned tax return, the filer (or
  at least one of the filers of a joint return)
  must sign the copy.
• You can also accept a tax form that has been
  completed to duplicate the filed return it
  must contain at least one filers signature.
  (AVG-84)

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Verifying AGI/Taxes Paid

• You may also accept a paper return on which the
  preparer has stamped, typed, signed or printed
  her name (NOT the companys name) and her SSN,
  EIN (Employer ID Number), or PTIN (Preparer Tax
  ID Number).
• You may also accept a copy of tax account
  information mailed directly to your school by the
  IRS.
• If mailed to you by the filer(s), must have a
  filers signature

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Special Tax Filing Situations

• These include
• Electronic filers
• Non-filers
• Filing extensions
• Fiscal year tax returns
• Nonresident filers
• Foreign income
• Tax return not available
• Tax transcript

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Verifying Untaxed Income and Benefits

• Six specific types must be verified
• Social Security benefits
• Child support
• IRA/Keogh deductions
• Foreign Income Exclusion
• Earned income credit
• Interest on tax-free bonds

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Verifying Untaxed Income and Benefits

• In addition to these types of untaxed income and
  benefits, you must verify all other untaxed
  income reported on the U.S. individual income tax
  return (excluding schedules). (AVG-84)
• ANY untaxed income and benefits that must be
  reported on the FAFSA are subject to verification.

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Verifying Untaxed Income and Benefits

• Except for Social Security benefits and child
  support, the required items can be verified using
  the tax return or alternative tax documents.
• Non-filers should submit a signed statement
  confirming that they did not file a tax return
  and listing the amount and specific sources of
  untaxed income and benefits by name. (AVG-85)
• Untaxed income and benefits from any governmental
  source, granted on the basis of a financial need
  assessment, need not be verified.

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Verifying Social Security Benefits

• NOT required to be verified unless you believe
• Should have been reported, but werent
• Incorrectly reported
• To verify, you can accept
• Documentation from SSA
• Signed statement certifying amount on FAFSA is
  correct

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Verifying Child Support Received

• MUST verify if reported or you believe it was
  received but not reported
• Completed verification worksheet sufficient
• If questions, can request
• Copy of divorce decree/separation agreement
• Signed statement from the parent whos paying
• Copies of cancelled checks/money order receipts

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Verifying IRA/Keogh Deductions

• Verified using the tax return
• Applicable line items appear on page 1 of both
  Form 1040 and Form 1040A

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Verifying Foreign Income Exclusion

• Verified using Form 2555 or Form 2555EZ
• Must count both the income exclusion and the
  housing exclusion

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Verifying Earned Income Credit

• Verified using the tax return
• Applicable line items appear on page 2 of Form
  1040 and Form 1040A, and page 1 of Form 1040EZ

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Verifying Interest on Tax-Free Bonds

• Verified using the tax return
• Applicable line items appear on page 1 of both
  Form 1040 and Form 1040A

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Various and Sundry

• You can make interim disbursements of aid while
  verification is pending
• One disbursement of Pell/Perkins/FSEOG
• Up to 60 days employment for FWS
• Can certify Stafford/originate DL, but cant
  disburse
• A student can be selected for verification AFTER
  a disbursement has been made
• Caused by subsequent CPS transaction
• May cause repayment of previously disbursed aid

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Various and Sundry

• There is a verification tolerance of 400
• Allowance for minor errors that dont affect
  eligibility
• How to determine tolerance
• Do Add original (incorrect) AGI and untaxed
  income subtract original U.S. income tax paid
• the same for the correct values
• If original vs. corrected is 400 or less, no
  need to correct (but can )
• NO tolerance for non-dollar items (e.g., HH size)

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Various and Sundry

• A Pell applicant selected for verification must
  complete the process by the deadline published in
  the Federal Register. For 2006-2007 the
  deadline is expected to be September 24, 2007, or
  120 days after the last day of the students
  enrollment, whichever is earlier. Campus-based
  and Stafford Loan applicants must complete
  verification by the same deadline or by an
  earlier one established by your aid office.
  (AVG-89)

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Various and Sundry

• Late Disbursements
• Generally a student ceases to be eligible for
  aid once he has finished the term and is no
  longer enrolled. However, he may submit
  verification documentation and receive a late
  disbursement after that time if the Department
  processed a SAR or ISIR with an official EFC
  while he was still enrolled. (AVG-90)

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Correcting, Updating and Adjusting

• You can correct anything incorrectly reported on
  the original FAFSA submission
• Only a few answers from the FAFSA can be updated
  to reflect changes after the FAFSA was signed
• You can use your professional judgment to adjust
  reported information to account for special
  circumstances

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Correcting

• Three options with correcting
• Error doesnt affect eligibility
• Correction increases eligibility
• Correction decreases eligibility
• Guidance contained in AVG-95 and 96

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Updating

• Only three items can be updated
• Household size
• Must be updated to be correct at time of
  verification
• Can only be updated if selected for verification
• Number in college
• Must be updated to be correct at time of
  verification
• Can only be updated if selected for verification
• Dependency status
• Must update if this changes during award year
• CANNOT be updated if due to change in marital
  status
• Update must be performed even if not selected for
  verification

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Adjusting

• An aid administrator may use professional
  judgment (PJ), on a case-by-case basis only, to
  alter the data elements used to calculate the
  EFC. The alteration is valid only at the school
  making it. (AVG-99)
• CANNOT adjust the EFC as is
• Document, document, document!!

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Discrepant Tax Data

• FAAs must have a fundamental understanding of
  relevant tax issues that can considerably affect
  the need analysis. You are obligated to know (1)
  whether a person was required to file a tax
  return, (2) what the correct filing status for a
  person should be, and (3) that an individual
  cannot be claimed as an exemption by more than
  one person. (AVG-101)

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Reference

• 2006-07 Handbook of Federal Student Aid
• Application and Verification Guide
• Chapter 4 Verification
• Chapter 5 Corrections, Updates, and Adjustments