Verification

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Verification Professional Judgment Must Dos,
Can Dos, Should Dos Dont Dos

• Presented by
• Kent McGowan
• Director, Financial Aid
• Buffalo State College

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Agenda

• Verification
• Conflicting Information
• Dependency Overrides
• Other Professional Judgment Adjustments

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Verification
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Verification Must Dos

• Unless you are a QA school you must verify
• in family
• in college
• AGI
• Taxes paid
• Untaxed income (selected items)
• Social Security benefits
• child support
• IRA/Keogh
• foreign income exclusion
• earned income credit
• Interest on tax-free bonds

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Verification Must Dos

• You must verify everyone ED selects with limited
  exception
• Must collect information on federal tax form
  (1040/A/EZ)
• Must collect information contained on
  verification worksheet
• Must have tax forms and Verification WS signed

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Verification Can Dos

• Develop own Verification Worksheet
• Verify other items e.g. assets, 401k
• Require additional documents e.g. W-2s, schedule
  E or C, SSI statement
• Not disburse aid until they comply

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Verification Should Dos

• Verify students who claim orphan/ward of court
• Verify older sibling/relative can be in in
  family
• Require W-2s to verify income from work and
  other untaxed income
• Should require tax transcript if suspect lie
• Make IRS Form 4506-T readily available

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Verification Dont Dos

• Dont verify those who have income and are
  independent because claim child as dependent
• Accept the NY state W-2s

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Conflicting Information
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Conflicting Information Must Dos

• A school must have an adequate internal system to
  identify conflicting information that would
  affect a students eligibility regardless of the
  source of that information and regardless of
  whether the student is selected for verification.

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Conflicting Information Must Dos

• 668.54(a)(3) If an institution has reason to
  believe that any information on an application
  used to calculate an EFC is inaccurate, it shall
  require the applicant to verify the information
  that it has reason to believe is inaccurate.

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Conflicting Information Must Dos

• You must
• Follow up on statements made by student, family
  or others that would lead you to believe there is
  a discrepancy
• Have a system to resolve apparent discrepancies
  that appear on forms in the file e.g. tax forms
• Have a system to check information available
  elsewhere on campus, e.g. admissions application,
  Veterans office

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Conflicting Information Must Dos

• You must be familiar with basic tax law
• Whether a person is required to file
• What the correct filing status for a person
  should be
• That an individual cant be claimed by two people
• Help at www.irs.gov, Publication 17

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Conflicting Information Must Dos

• You must review all ISIR transactions even if
  they have already been verified.
• If the EFC does change but it either doesnt
  affect the amount and type of aid or the data
  elements that changed were already verified, no
  action is required. But if the EFC changes and
  the pertinent data elements were not verified,
  then you must investigate.
• 06-07 Student Aid Handbook

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Conflicting Information Can Dos

• You can
• Grow prematurely grey trying to resolve issues of
  conflicting information
• Waste a lot of man hours trying to force
  compliance
• Use the IRS guidelines to determine if an
  individual provides 50 support

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Conflicting Information

• Examples
• Married parents both claim head of household
• Parents separated on FAFSA but living at same
  address
• Earned income above the threshold for which
  filing taxes is required e.g. above 5000 for
  dependent student

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Conflicting Information

• Examples
• Amounts on W-2 dont match income reported on
  1040
• Large interest/dividend income with no
  corresponding asset on FAFSA
• No income reported for parents of a dependent
  student or for independent student with
  dependent/spouse

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Conflicting Information

• Examples
• Guardian reported on verification worksheet
• Independent because reported Grad student on
  FAFSA but enrolled in 2nd BA or
  post-baccalaureate teacher certification program
• Admitted as new freshman but have used TAP points

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Conflicting Information

• Examples of non-conflicting information
• Exemptions dont match in family or those on
  Verification Worksheet
• Estimated data on the FAFSA
• Info updated to actual on 1040 but didnt
  change status from will file
• Conflict auto resolved
• Changed FAFSA data where now report 1040
  completed rather than will file

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Conflicting Information Should Dos

• You should
• Develop automated ways of identifying conflicting
  info where possible
• e.g. reported taxes paid 18 of AGI
• Report cases where fraud is suspected to the
  Office of Inspector General (OIG)

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Conflicting Information Dont Dos

• Dont
• Ignore these requirements
• Report cases of tax fraud to the IRS
• Disburse aid until conflict is resolved

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Dependency Overrides
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Dependency Overrides Must Dos

• The student must
• have an unusual circumstance
• You must
• document your decision
• review the circumstance annually
• review students granted an override by another
  school

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Dependency Overrides Can Dos

• You can
• Request copies of court documents, death
  certificates
• Deny the request outright if inquiry is made by
  the parent
• Rescind an override, even during the award year
  you granted it

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Dependency Overrides Should Dos

• You should
• Require details and keep confidential
• Get supporting documentation from disinterested
  third party
• Review by committee
• Grant the override for cases of documented abuse
  or abandonment

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Dependency Overrides Dont Dos

• Dont grant override solely because
• Parent refuses to financially support student
• Parent refuses to provide signature or tax
  information
• Parent doesnt claim child on taxes
• Student is self-sufficient

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Other Professional Judgment Adjustments
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PJ Adjustments Must Dos

• You must
• Review requests on a case by case basis
• Document the grounds for your decision
• Resolve inconsistent or conflicting information
  before adjusting
• Be reasonable

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PJ Adjustments Can Dos

• You can
• Adjust the Cost of Attendance
• Adjust individual FAFSA data elements
• Use a 12 month time period other than calendar
  year for income adjustments, i.e. use projected
  income from July 1, 2006 June 30, 2007.
• Choose to make limited adjustments or no
  adjustments whatsoever

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PJ Adjustments Should Dos

• You should
• Make adjustments
• Have policy on what general conditions will be
  considered and how adjustment will be made
• Stand behind your policy/decision (cant appeal
  to ED, shouldnt appeal elsewhere on campus)
• Take into account the Income Protection Allowance
  (IPA) (11 for medical expenses)

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PJ Adjustments Dont Dos

• Dont
• Directly change the EFC
• Modify the EFC formula or formula tables
• Dont circumvent intent of regulations
• Dont waive general requirements

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PJ Adjustments

• Examples
• Childcare expenses
• Expenses associated with disability
• Costly supplies (art supplies, camera, aviation
  maintenance tools)
• Purchase of computer
• Parent in college

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PJ Adjustments

• Examples
• Loss of income e.g. retired, unemployed
• Loss of benefit e.g. SSI, child support
• Lump sum distribution e.g. capital gains,
  liquidated IRA, inheritance
• Private elementary/secondary school tuition
• Excessive medical expenses

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PJ Adjustments

• Examples of illegitimate adjustments
• Increase COA for costs of family members e.g.
  mortgage payment, food for family
• Adjust income for recurring costs, e.g. tithe,
  vacations, standards of living
• Adjust income from S Corp solely because its an
  S Corp (or other such pass through)
• Remove trust as asset unless court mandated for
  future medical expenses
• Adjust income for purchase of a vehicle.

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Questions?