Verification

1. Verification TASFAA 2011 ABC Workshop Consuela Mitchell Director of Student Financial Aid Services Tarrant County College-NE Campus 2011-2012 Application & Verification Guide (AVG) http://ifap.ed.gov/fsahandbook/1112FSAHandbookAVG.html

2. Verification Topics • Policies and procedures • Whose application must be verified • Quality Assurance Program requirements • Which data elements must be verified • Acceptable documentation • Data element corrections • Data element updates • Interim disbursements • Verification time frames • Changes beginning 2012-2013

3. Verification • Process of verifying accuracy of FAFSA data • Regulations define: • Whose application must be verified(AVG-80) • Data elements to be verified(AVG-82-83) • Documentation used to verify data elements(AVG-85) • Regardless of verification selection, must always resolve discrepancies and conflicting information

4. Verification Policies andProcedures Must: • Be written • Address school options where flexibility exists • Be made clear to all students • Be consistently applied (AVG-79)

5. Verification Policies and Procedures Must include: • Procedures for identifying and processing selected applications • Deadline for applicant to provide documentation • Consequences of failure to meet deadline • Procedures applicant must follow to correct application information • Method for notifying applicant of verification results and change in EFC and/or award • Procedures for referring overpayments to ED • Procedures for referring cases of suspected fraud or other criminal misconduct to ED Office of Inspector General (AVG-79)

6. Whose Application Must Be Verified? • Applicants selected by Central Processing System (CPS) • Applicants selected by institution

7. Programs to Which Verification Applies • Federal Pell Grant • Campus-based programs • Subsidized Direct Loan program

8. 30% Verification Option • 30% is cap, not minimum • Applications making up 30% must be CPS-selected • If more than 30% selected by CPS, may choose to verify more than 30% • Document files of CPS-selected applicants not verified • 30% option does not relieve institution of responsibility to resolve conflicting information *30% cap eliminated beginning 2012-2013* (AVG-80-81)

9. Institutionally-Selected Applications • Institution can select additional applications not selected by CPS • Selection may be based on such data elements as: • Estimated tax figures • Low family income levels • Large household size or number in college • Completion of certain FAFSA data elements • Other institutional criteria

10. Verification Exclusions • Certain types of applicants and data elements exempt from verification • Reason for verification exclusion should be documented in student’s file • Except for applicant who dies during the award year, if conflicting information or reason to believe application information is inaccurate, exclusions do not apply (AVG-81-82)

11. Verification Exclusions Exclusions include or are limited to: • Entire application—student and parent data • Applicant’s spousal data only • Certain data elements

12. Quality Assurance Program • Participation voluntary • ED provides guidelines, tools, and incentives for participation • Participating schools exempt from prescribed verification requirements • School sets verification parameters • School must reassess and self-correct verification process on ongoing basis • Every other year – Random Sample must be completed • Quality Assurance Website: http://ifap.ed.gov/qahome/Default.html (AVG-80)

13. Required Verification Data Elements • Household size • Number enrolled in college • Adjusted gross income (AGI) • U.S. income tax paid, and • Certain untaxed income and benefits *requiredelements also change beginning 2012-2013* (AVG-83)

14. Required Verification Data Elements Certain untaxed income and benefits • Child support • IRA/Keogh deductions, and • Interest on tax-free bonds (AVG-88)

15. Tax-exempt interest income Deductible IRA or Keogh payments Untaxed IRA distributions and pension or annuity payments Homebuyer tax credit Making Work Pay tax credit (AVG-19) Required Verification Data Elements Other untaxed income and benefits on the tax return

16. Items That May Be Verified Using the Tax Return • Adjusted gross income • U.S. income tax paid • IRA/Keogh deductions and payments • Untaxed portions of pension distributions • Untaxed IRA distributions • Interest on tax-free bonds (AVG-85)

17. Acceptable Tax Return Formats • Photocopy, facsimile, or digital image of original paper tax return • If original copied without signature, at least one filer must sign copy • Tax form completed to duplicate original return and signed by at least one filer • Other signed e-file documentation • Form 8453 is a signature form for e-filers and not acceptable • In lieu of return with filer signature, a return with tax preparer’s stamped, typed, signed, or printed name, and SSN, EIN, or PTIN (AVG 87-88)

18. Alternative Sources of Documentation • IRS tax transcript listing tax return information • Signed statement and W-2s from filer, if tax returnor tax transcript unavailable

19. Tax Filing Extensions • Collect W-2’s and one of following: • IRS Form 4868; or • Copy of IRS approval of extension beyond 4-month extension • Collect and review tax return when filed

20. Child Support Documentation Obtain verification worksheet or writtenstatement certifying amount of child support received for all children • Statement must be signed by applicant and at least one parent (if dependent) • Statement must be signed by applicant if independent • If support paid through government agency, statement from that agency is acceptable (AVG -88)

21. Child Support Documentation Request additional documentation if information provided appears inaccurate • Copy of separation agreement or divorce decree • Signed statement from parent providing support • Copies of canceled child support checks or money order receipts (AVG-88-89)

22. Number in Household & in College • Statement or verification worksheet listing each household member’s: • Name • Age • Relationship to applicant • Postsecondary school (if any) attending at least half-time in program leading to recognized educational credential • If institution doubts statement, it should obtain statement from each postsecondary institution listed by applicant (AVG -83-84)

23. Verification Corrections • Changes to data elements that were incorrect at time of application • If data correct as reported and valid ISIR/SAR: • Pay Federal Pell Grant, FSEOG, and Federal Perkins Loan • Employ students under FWS • Certify/originate and disburse/deliver Direct Subsidized Loans (AVG 89-91)

24. Tolerance Option $400 net error tolerance for all Title IV programs (also eliminated beginning 2012-2013) *note: No Tolerance to non-dollar items like HH & # in college* FAFSA Parent AGI + Student AGI + Parent Untaxed Income + Student Untaxed Income – Parent U.S. Taxes Paid – Student U.S. Taxes Paid = FAFSA data (uncorrected sum) Net Difference:  $400 Correct Parent AGI + Student AGI + Parent Untaxed Income + Student Untaxed Income – Parent U.S. Taxes Paid – Student U.S. Taxes Paid = Correct data (corrected sum)

25. Example: Tolerance Option FAFSA DataCorrect Data Parent AGI $15,800 $15,500 Parent Untaxed Income + 1,200 + 1,500 Student AGI + 9,200 + 9,200 Student Untaxed Income + 0 + 0 Parent U.S. Income Taxes Paid – 500 – 0 Student U.S. Income Taxes Paid – 200 – 300 = $25,500 = $25,900 Net difference: $25,500 – $25,900 = $400 (w/in tolerance so not req’d to submit corrections)

26. Recalculating EFC: Federal Pell Grant Program • If net error is greater than $400, • Recalculation of the EFC is necessary • If net error is less than or equal to $400, • No recalculation of the EFC is necessary (AVG-91)

27. Verification Updates • Changes to data elements that were correct at time of application but have since changed • Applicable only to 3 items: • Dependency status • Number in household • Number of household members enrolled in college (AVG 99)

28. Verification Updates Dependency status • All students must update dependency status if it changes at any time • Cannot be updated if it changes as result of change in student’s marital status (AVG-100-101)

29. Verification Updates Number in Household and Number in College • If selected, data must be accurate as of verification • If not selected, cannot update for changes occurring after original application filed • If not selected, not required to monitor data element change (AVG-101)

30. Verification Updates • Cannot update change in student’s marital status • Mustupdate household size if dependent student’s parent remarries after application, before verification

31. Professional Judgment • If using PJ authority to adjust data elements used to calculate EFC on a selected application, application must be verified first • If using projected-year income data to recalculate EFC, projected-year data do not need to be verified

32. Interim Disbursements In the absence of conflicting information or reason to believe information isinaccurate, institutions have the following disbursement options when verification still incomplete: • Federal Pell Grant and campus-based programs: • Withhold payment • Make 1 disbursement for 1st payment period • Employ applicant up to 60 days under FWS (AVG-89,91)

33. Interim Disbursements Direct Subsidized Loans: • Refuse to certify or originate loan; or • Certify or originate loan, but not disburse/deliver loan proceeds (AVG-91)

34. Interim Disbursements Verification not required for: • Direct Unsubsidized Loans • PLUS Loans • TEACH Grant • Nonfederal LEAP and SLEAP awards • Robert C. Byrd Honors Scholarships (AVG-81)

35. Interim Disbursements • If school makes interim disbursement and student later determined ineligible, or if verification not completed, award for which student is ineligible is an overpayment • Student with overpayment is ineligible for Title IV funds • School liable if overpayment not resolved (Chap. 5)

36. Verification Time Frames Institution determines when in award cycle to verify based on: • Institution’s resources and procedures • When verification process would be least disruptive to office and least problematic for students

37. Verification Time Frames Verification Deadlines • Campus-based and Direct Loans: • Institutionally-established deadline • Federal Pell Grant: • Institutionally-established deadline • Institution must have verification documents and valid SAR/ISIR by earlier of 120 days after last day of enrollment or deadline published annually by ED in Federal Register (expected to be September 24, 2012) (AVG-92)

38. Verification 2012-13 and Beyond Changes to the Verification process will become effective July 1, 2012. However, colleges should plan to implement these changes after January 1, 2012 for the 2012-13 award year. Several changes have been made. Specific data elements will be targeted, rather than requiring the same data to be verified for all applicants. Additional data elements beyond the five that have been historically targeted may be added in future years. These may include whether families have qualified for means tested benefits or certain categories of financial independence. The Secretary will publish a list each year of the data elements that will be included in the verification process 4-6 months prior to the start of the application processing cycle. Source: Final Federal Register October 29, 2010 Regulations: 668.51.61

39. Verification 2012-2013 and Beyond Source: Final Federal Register October 29, 2010 Regulations: 668.51.61 Schools must verify all cases selected. The 30% cap has been eliminated. Tolerance levels for dollar items has been eliminated. Instead, all changes must be submitted to the CPS for reprocessing if the change is $25 or more. All non-dollar item changes (e.g. household size/number in college) must also be submitted. The regulations now clarify that verification must be completed on selected applications (if selected by the CPS or the school) before a school may exercise Professional Judgment. The results of verification & PJ changes cannot be submitted on the same day. The changes impose new requirements for the recovery of Title IV funds if a school opts to use interim disbursements. Conflicting documentation -- regardless of verification -- must still be resolved.

40. Available Resources • Federal Student Aid Handbook • Application and Verification Guide http://ifap.ed.gov/fsahandbook/1112FSAHandbookAVG.html • Institutional Policies and Procedures • IRS Publication 17 found at www.irs.gov • Me! consuela.mitchell@tccd.edu 817-515-6792