Verification, Updates, and Corrections

Because students sometimes make errors on their application, there is a process for verifying applications and making corrections. The Central Processing System (CPS) selects which applications are to be verified, but you also have the authority to verify additional students.

You must verify applications selected by the CPS of students who will receive or have received subsidized student financial assistance, as defined below. Verification is not required for students who are only eligible for unsubsidized student financial assistance (however, see Verification exclusions later in this chapter for an important caveat). While graduate students are ineligible for most types of subsidized Title IV aid, they are eligible for Federal Work Study and would need to complete verification if they are selected and receive that aid. Students who are eligible for both subsidized and unsubsidized Title IV aid may not avoid verification by accepting only unsubsidized aid; they must complete verification to receive any Title IV aid (see the “Disbursing unsubsidized aid” section later in this chapter for more information).

Title IV programs for which eligibility is determined by the EFC: the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Direct Subsidized Loan programs.

Title IV programs for which eligibility is not based on the EFC: the Teacher Education Assistance for College and Higher Education (TEACH) Grant, Direct Unsubsidized Loan, and Direct PLUS Loan programs.

The Iraq and Afghanistan Service Grant is a non-need-based grant and is not subject to verification.

Required Policies and Procedures

Your school must have written policies about

the method you use to notify students if their expected family contribution (EFC) and Title IV aid amounts change,

the procedure you follow to refer a student to the Office of Inspector General (OIG) (see Chapter 5).

Your school must provide, in a timely manner, students selected for verification a clear explanation of their role, including what documents to submit, deadlines they must meet, and the consequences of failing to meet them.

The FSA Assessments, located in the Knowledge Center under the “Resource Type” subpart of the Library section, includes various verification activities under the verification assessment that you can use to help you evaluate your verification process. In addition, the Department has a list of questions and answers about verification located within our Program Integrity Q & A website.

Verification selection and professional judgement (PJ)

You must complete verification for a selected student before you exercise professional judgment (PJ) to adjust any values used to calculate the EFC. But a PJ adjustment does not require you to verify an application not selected.

Once the Department selects a FAFSA application for verification, every subsequent transaction for that award year, even one resulting from PJ, will indicate that the student is selected for verification.

If a FAFSA that is not selected for verification is later corrected, that can result in the application being selected. However, when PJ is used (and coded correctly) to adjust an application that is not selected for verification, the CPS prevents the subsequent transaction from being selected for verification.

Applications and Information to be Verified

The Department’s long-term goal is for a customized approach to verification. A menu of potential verification items for each award year will be published in the Federal Register, and the items to verify for a given application will be selected from that menu and indicated on the SAR/ISIR. Those output documents will continue to include only one verification flag to show students who were selected, and they will need to verify all the FAFSA items below that apply to them.

See the September 1, 2021, Federal Register for the verification items for 2022–2023. Please note that all of the verification items are the same as last year’s items except high school completion status has been removed:

The verification flag will have a value of “Y,” and next to the EFC will be an asterisk referring to a comment in the student section of the SAR that tells applicants they will be asked by their schools to provide documentation. A verification tracking flag will be set on the applicant’s Institutional Student Information Record (ISIR) to indicate placement in one of the 2022–2023 verification tracking groups.

School-selected verification

In some cases you, not the CPS, will select a student for verification. You must verify any information you have reason to believe is incorrect on an application. Also, you may at your discretion require a student to verify any FAFSA information and provide reasonable documentation according to consistently applied school policies. In either case you may, but are not required to, include any of the CPS verification items not already included. Whether you do that or not, students with these applications are considered selected for verification and, as with CPS-selected applications, all other verification requirements, such as deadlines, allowable tolerances, and interim disbursement rules, apply.

When schools choose to verify an item other than those the Department selects, they may delay disbursing Title IV aid until verification is completed if the school-selected item can affect the student’s Title IV eligibility, such as an item about dependency status. But schools cannot delay disbursing Title IV funds when the item has no bearing on Title IV aid, for example, if the school is verifying home equity to determine student eligibility for school or state aid.

Verification tracking groups

Students who are selected for verification will be placed in one of the following groups to determine which FAFSA information must be verified.

V1—Standard Verification Group. Students in this group must verify the following if they are tax filers:

Students who are not tax filers must verify the following:

V4—Custom Verification Group. Students must verify identity/statement of educational purpose (SEP).

V5—Aggregate Verification Group. Students must verify identity/SEP in addition to the items in the Standard Verification Group (V1).

Groups V2, V3, and V6 are reserved for future use by the Department.

For more information related to the removal of the high school completion status starting in 2022–2023, please see GEN-21-06.

Changing tracking groups

A student may move from Verification Tracking Group V1 or V4 to group V5 based on corrections made to his or her CPS record or on other information available to the Department. If verification was already completed for the previous group, the student is only required to verify the V5 information that was not already verified. If verification was not completed for the previous group, the student needs to verify all of the V5 information.

No disbursements of Title IV aid may be made until the V5 verification is satisfactorily completed. If the student doesn’t complete verification, the school is not liable for any Title IV aid it disbursed prior to receiving the group V5 ISIR. The student is liable for the full amount because without verification there is no evidence he or she was eligible for that aid. See the October 31, 2016, announcement for more information about disbursements and potential return of funds when students are selected for verification.

Reporting results for groups V4 and V5

You must report the verification results of identity for any student for whom you (1) receive an ISIR with tracking flag V4 or V5—as selected by the CPS, not your school—and (2) request verification documentation. You report this information on the FAA Access to CPS Online website: select the Identity Verification Results option from the main menu, enter your school identifiers, the award year, and the student identifiers. For the 2022–2023 award year, you will then enter one of the following numeric codes that most applies:

3-Verification attempted, issues found with identity. (You did not receive acceptable documentation for the SEP or identity.)

4-No longer valid – do not use for 2022–2023 and beyond. (Value used prior to 2022–2023 award year to identify when high school completion status issues existed but there were no issues with identity.)

6-No longer valid – do not use for 2022–2023 and beyond. (Value used prior to 2022–2023 award year to identify when both high school completion status and identity issues existed.)

For more information regarding the implementation of the removal of high school completion status from the 2022–2023 verification process, please see the September 1, 2021 electronic announcement.

You are required to report results no more than 60 days following your first request to the student for documentation of identity. Inaccurate and untimely reporting may subject your school to findings as a result of your annual compliance audit or a program review. If there is a change in a result you have already submitted, you can submit the new code using the above process, and must make that change within 30 days of becoming aware that a change occurred. The most recent submission will supplant prior award year submissions. Because the FAA Access website does not store a list of these verification results for you to retrieve, we recommend you print and keep the confirmation page for your records.

Instead of using this individual method, you can submit verification results by uploading a flat file with the data for up to 2,000 students. Each record must contain only the nine-digit SSN, the two-character name ID, and the appropriate numeric result code from above. Each line of data must contain only one record. Do not use hyphens, empty lines, or spaces (unless the student does not have a last name, in which case enter two spaces). This is an example of two records reported via the flat file:

Verification exclusions

There are times when you don’t need to verify a student’s application. Except in the case of the student’s death, however—or post-enrollment situations where the student also does not intend to reenroll—none of the exemptions excuse you from the requirement to resolve conflicting information (see Chapter 5). You should document the basis for an exclusion. Other information not excluded must still be verified according to all other requirements.

You don’t have to verify FAFSA information of a student in the following situations:

Death of the student. You don’t have to continue verification if you made an interim disbursement and the student died before verification was completed. You cannot make any additional disbursements, except for FWS funds already earned, to any of the student’s beneficiaries. You cannot originate or disburse his or her Direct Subsidized Loan or consider any interim disbursement you made of Pell or FSEOG funds or provisional FWS employment to be an overpayment.

Not an aid recipient. The student won’t receive Title IV aid for reasons other than a failure to complete verification. This includes being ineligible for that aid and withdrawing without receiving it.

The applicant is eligible to receive only unsubsidized student financial assistance. However, students selected for V4 or V5 verification should complete it in accord with the answer to DOC-Q18 on the verification Q and A page.

Applicant verified by another school. The student completed verification for the current award year at another school before transferring. His or her FAFSA data must be the same as it was at the previous school, and you must get a letter from that school stating that it verified the student's application and providing the transaction number of the pertinent valid ISIR.

Post enrollment. The student was selected for verification after ceasing to be enrolled at your school, he or she does not intend to reenroll for the award year, and no further (including late) disbursements will be made.

Unless you have reason to believe it is inaccurate, you don’t have to verify the reported FAFSA information of the parents of a dependent student if any of the following apply (including in cases where there is only one parent):

Unless you have reason to believe it is inaccurate, you don’t have to verify the reported FAFSA information of the spouse of an independent student if any of the following apply:

The spouse is residing in a country other than the United States and can’t be contacted by normal means.

The spouse can’t be located because the student does not have and cannot get his or her contact information.

Example: Ursula is attending Lem Community College, and her application is selected for verification. She provided her husband’s information on the application but now explains that he recently moved out and she can’t locate him. She also gives Lem documents to show that she’s tried to locate her husband. Lem determines that Ursula doesn’t need to verify her husband’s tax and income information. Of course, she still needs to verify her own information.

Verification following disasters

The Dear Colleague Letter (DCL) GEN-17-08 gives general guidance for awarding aid in federally declared disasters. It states that the Secretary will not enforce the verification requirements during the award year for applicants whose records were lost or destroyed because of a disaster as long as the school has tried to preserve and reconstruct any records. The school must document when it does not perform verification for this reason and use status code “S” when reporting the disbursement of Pell Grants to affected students. Also, the requirement for dependent students to submit a statement signed by a parent regarding household size and number in college is waived if the parents cannot provide the signature due to the disaster. The school must note why no parent was able to provide the statement.

Schools that experience a local disaster (rather than a federally declared one) that affects Title IV administration should consult their regional school participation division.

Refer to the resources for higher education institutions on the Department’s Coronavirus webpage for guidance pertaining to the on-going COVID-19 national emergency, including various verification flexibilities.

Higher Education Relief Opportunities for Students (HEROES) Act

The relief described in GEN-17-08 applies specifically to disasters and is separate from relief under the HEROES Act, which allows the Secretary to modify or waive some statutory and regulatory requirements for those who

are serving on active duty or performing qualifying National Guard duty during a war, other military operation, or national emergency;

reside or are employed in an area declared a disaster by a federal, state, or local official in connection with a national emergency; or

suffered economic hardship as a direct result of a war, other military operation, or national emergency, as determined by the Secretary.

Read the electronic announcement, and the Federal Register notice for the waivers and modifications due to expire on September 30, 2022.

Documentation

The September 1, 2021, Federal Register gives the documentation required for verifying 2022–2023 application data, which depends on the item verified, as explained in this section. The Department encourages students and parents to use the IRS Data Retrieval Tool (DRT) to import data from their tax return and not change it. It is the fastest, easiest, and most secure method of meeting verification requirements. In addition, the Department has developed suggested text that, if you choose, you can use to create a verification document and to verify non-tax items, such as household size and number in college. To review the suggested text for 2022-2023, please see GEN-21-06 (posted on September 1, 2021).

If you use a verification document, be sure that it is signed, that all required sections are completed, and that any relevant tax or alternative documents are attached. Copies are acceptable, and unless specifically noted in this chapter, a signature on a copy is as valid as an original signature (i.e., a handwritten or “wet” signature). If a copy of the tax return is used, the filer (or at least one of the filers of a joint return) must sign it or the tax preparer must provide his or her name and SSN, EIN, or PTIN.

The following chart shows the tax form line numbers for the most commonly reported items. This chart is a reference only; it is not a list of all the items the school must check on a tax return.

Line items from the 2020 1040 tax return

Income tax paid

22 minus Schedule 2 line 2

Deductible IRA/SEP

Schedule 1 line 15 plus 19

Tax-exempt interest income

Untaxed portions of IRA distributions and pensions (excluding rollovers)

(4a + 5a) minus (4b + 5b)

Education credits

Schedule 3 line 3

Documenting AGI, taxes paid, and other tax data with the DRT

As already noted, the importation of IRS tax data via the DRT is the best way to document that information. Students and parents do this either when initially filling out the FAFSA or later as a correction. For the retrieved data to be acceptable documentation of tax data, it is necessary that neither students nor parents change the data after it is transferred from the IRS—if the data was changed or if you have reason to believe the data transferred is incorrect, the student will need to provide a tax return transcript or a signed copy of the tax return. The IRS request field(s) on the ISIR will have a value of “02” when the data is unchanged. The following items are imported from IRS form 1040 to a student’s FAFSA form via the DRT:

In the following situations, the IRS DRT is not available in the FAFSA online or the myStudentAid mobile app (all apply to both students and parents unless otherwise noted):

The person answered married on the FAFSA form and filed the tax return either as head of household or married but filing a separate return.

Using a joint return to figure individual AGI and taxes paid

If the filer of a joint return has become widowed, divorced, or separated since filing the return, it may be necessary to determine the individual’s income and taxes paid using the joint return and W-2 forms. If a W-2 is not available (the filer is self-employed for example) or if a duplicate copy from the employer who issued the original W-2 is not available in a timely manner, the school may permit the filer to provide a signed statement that certifies the base year AGI and U.S. taxes paid. If he has divorced and married someone new (see “Parent remarriage after applying” section discussed later in this chapter if this occurred after completion of the application), then the new spouse’s income and assets would also need to be included.

Add the income amounts from the individual’s W-2 forms to any other income that can be extracted from the joint return. Any interest or business income earned on joint accounts or investments should be assessed at 50%. The same procedure should be used to divide business or farm losses. Also, if the AGI listed on the joint return was adjusted, you should reduce the individual’s AGI by the portion of the adjustment that applies solely to him or her. An AGI figure can be calculated for the individual filer. A signed statement from the filer certifying that the data from the joint return were accurately assessed is sufficient documentation for this method.

Use one of the following methods to figure the individual’s taxes paid:

Tax table (preferred method). Using the IRS Tax Table or Tax Rate Schedule for the appropriate year, calculate the amount of tax that would have been paid if a separate return had been filed. Use the deductions the individual could have claimed if he or she had filed a separate return. (If itemized deductions were taken, count only the portion of those deductions that could have been claimed on a separate tax return.)

Proportional distribution. Determine what percentage of the joint AGI was attributable to the individual, and then assess the joint taxes paid by that same percentage.

Example

Calculating the individual AGI from a joint return

Eddy’s application is selected for verification. He and his wife filed a joint return for 2020 and have since divorced. The AGI on Eddy’s FAFSA matches the AGI of $56,500 on the 2020 tax return, which means it’s wrong because it includes his wife’s income.

Eddy’s W-2 shows that his income for 2020 was $25,900, and the tax return shows $400 in interest. Because it was interest on a joint savings account, the aid administrator adds $200 of it to Eddy’s income and submits $26,100 as the corrected income via FAA Access.

Calculating the individual tax from a joint return

The aid administrator determines that Eddy’s part of the $56,500 AGI he and his wife reported is $26,100. If he had filed his tax return as single, his standard deduction would have been $12,400 (instead of $24,800 for married filers). Eddy’s income of $26,100 minus $12,400 for the standard deduction results in $13,700 in taxable income.

The aid administrator uses the tax table to determine how much tax Eddy would have paid on this amount, taking into account any applicable credits reported on the original return. With a taxable income of $13,700, the tax amount from the tax schedule is $1,450.

To use the proportional distribution method instead, the aid administrator figures out what percentage of the joint AGI Eddy’s income represents. The percentage is 46% (26,100 ÷ 56,500 is .4619). The aid administrator then multiplies the income tax paid as reported on the tax return ($3,412 for this example) by this percentage. Eddy’s income tax by using this method is $1,570 (.46 x $3,412).

Using the tax transcript

If students cannot or will not use the DRT, either at initial FAFSA filing or through online corrections, another way to document AGI, taxes paid, and untaxed income is by providing an IRS tax return transcript for the student and spouse or parents, as applicable. Before requesting a transcript, they should allow enough time to pass after filing the return; it takes the IRS 2 to 4 weeks to process returns filed electronically and 6 to 8 weeks for mailed returns. Tax transcripts submitted to your school for verification do not need to be signed by the tax filer (but it is encouraged) unless you have reason to doubt their authenticity.

There are a few ways to request a tax return transcript: online at www. irs.gov, by calling 1-800-908-9946, or by mailing the paper Form 4506TEZ, which can be printed out from the IRS website. To order a fiscal year tax transcript for verification, Form 4506-T must be used rather than Form 4506T-EZ. Phone requests are via an automated process instead of an IRS representative. With online requests, tax filers can get an electronic transcript (see below) or they can have the IRS mail them a paper transcript; nononline requests yield a mailed transcript. Schools can accept and copy transcripts originally obtained from the IRS.

The Get Transcript Online feature allows users to get the transcript in real time as a portable document format (PDF) file, which they can submit electronically to a school or print and submit as a hard copy. To use the Get Transcript Online tool, users must have (1) access to a valid email address, (2) a text-enabled mobile phone in their name, and (3) specific financial account numbers, such as a credit card number or an account number for a home mortgage or auto loan. The process will not cause charges to the card or the account. See the IRS.gov website for more information on the Get Transcript Service.

The IRS’s Income Verification Express Service (IVES) allows a third party to receive a tax filer’s transcript. The IVES participant submits a 4506-T or 4506T-EZ form, signed by the tax filer, and receives the transcript from the IRS, which charges a small fee for the service. Schools may apply to participate in IVES. They may also use a transcript from another IVES participant (which is not considered a third-party servicer in this case) for verification as long as they have no reason to doubt its authenticity. Schools may not, however, pass on the charge for using this service to the student.

To combat identity theft, the IRS masks much of the personally identifiable information on the transcript. For example, only the last four digits of any SSN or account or telephone number are displayed. The option on forms 4506-T and 4506T-EZ to designate a third-party recipient of the transcript has been eliminated. As noted above, schools can elect to participate in IVES as a way of receiving transcripts directly from the IRS. Taxpayers will be able to have a “customer file number” of their choosing appear on a requested transcript, which will facilitate identification. This can be something like a student’s college ID number or some other number (but not an SSN). See the October 4, 2018, announcement and the IRS news release for more.

Each year the Department provides a tax return transcript matrix to assist schools with reviewing tax data. Specifically, the tax return transcript matrix consists of a chart of the FAFSA and ISIR tax items used for verification and their corresponding line items from the various IRS tax returns and the tax transcript for the appropriate award year. At the time the 2022–2023 Application and Verification Guide was published, the 2022–2023 tax return transcript matrix had not been posted to FSA’s Knowledge Center. Please stay tuned to the electronic announcement section in the Knowledge Center for the latest information.

The tax return transcript may show a per computer amount for some tax data that is different from what the filer reported to the IRS. The per computer amount should be used because it corrects mathematical errors and is more accurate than what appears on the original return or was transferred via the DRT. This guidance still holds, but because the DRT reports per computer values for AGI, income tax paid, and education tax credits, there should not be many discrepancies between DRT data and the transcript. Also, if a transcript indicates “recomputed per computer,” that amount may be ignored for verification.

Schools may accept for verification any IRS tax transcript that includes all of the necessary information: adjusted gross income, U.S. income tax paid, untaxed IRA distributions, untaxed pensions, education credits, IRA deductions and tax-exempt interest. Because the record of account and the Return Transcript for Taxpayer (RTFTP) include all of the above information, either may be used for verification. The Information Returns Processing Transcript Request—Wages (IRPTR-W) only provides wage information and therefore can only be used in lieu of a W-2 form. See the February 23, 2017, announcement for information about the documents obtained from the IRS that are used for verification: the tax return transcript, the record of account, the account transcript, and the wage and income transcript. The announcement also explains Form 13873, which students or parents might receive when requesting documents from the IRS.

Rollovers and verification

Qualified rollovers from one retirement account to another are not taxable, and they should not be counted as untaxed income (as indicated in Chapter 2). Since neither the DRT nor a tax transcript identifies rollovers, you must get documentation from the tax filer. This could be a signed statement with the rollover amount or a notation by the filer on the tax transcript that includes the word “rollover” beside any applicable item, similar to the instruction the IRS gives for Form 1040. The annotation must be signed and dated by the filer. For those who used the DRT, a signed confirmation that the IRA or pension distribution included a rollover would suffice; a tax transcript would only be needed if other IRS tax information was changed. See VI-Q4 on the Q and A page.

Using the tax return

Although the DRT and tax transcript are preferable for completing verification, students can also submit a copy of the tax return and any applicable schedules. However, see the guidance under victims of identity theft later in this volume for an important caveat. The tax return will likely have been filed electronically with one of a variety of methods. These include do-it-yourself methods as well as completion by a tax preparer. Each method should permit printing of a paper copy of the return, though the e-file format might not contain every line item, showing instead only the data the tax filer provided. For example, if Item 2b, “Taxable interest,” does not appear on such a return, that means no taxable interest income was reported.

You can accept a paper or electronic copy of the return as long as it contains a signature. Acceptable examples would include, but are not limited to: