During verification, the college financial aid administrator will ask the applicant to supply copies of documentation, such as income tax returns, W-2 statements and 1099 forms, to verify the data that was submitted on the Free Application for Federal Student Aid (FAFSA).
Verification is intended to improve the accuracy of the information submitted on the FAFSA. It is not intended to function like a forensic audit. But the college financial aid office may not process requests for professional judgment or disburse federal student aid until the verification process is complete.
Financial aid administrators have the right to ask for any documentation they feel is necessary to complete verification. If the family refuses to supply this documentation, the college is prohibited from disbursing federal student aid to the student.
Starting with the 2012-13 award year, the US Department of Education is transitioning to a targeted verification system.
Previously colleges were required to verify a standard set of five verification items for 30% of their FAFSAs, with some colleges voluntary verifying 100% of their student's FAFSAs.
With the switch to targeted verification, the federal processor will use a risk model to identify FAFSA data elements that are prone to error, which appear anomalous or which seem inconsistent. Only those FAFSA data elements flagged by the federal processor will be subjected to verification. The federal processor is likely to flag fewer than five data elements for most applicants, but some may have more than five data elements flagged. Most colleges that previously verified only 30% of their student's FAFSAs will end up verifying more FAFSAs but fewer total data elements.
The set of data elements potentially subject to verification has been significantly expanded and may change from one year to the next. Data elements currently subject to verification include household size, number in college, receipt of food stamps, child support paid, adjusted gross income, taxes paid and several untaxed income items (untaxed IRA distributions, untaxed pensions, education credits, IRA deductions, and tax exempt interest).
The data elements selected for verification may depend on the applicant's dependency status, whether the applicant or applicant's parents file or do not file federal income tax returns and whether the applicant is eligible for auto zero EFC or not, among other criteria. The US Department of Education has data from previous year's FAFSAs on what data elements were modified during verification and can use this data to create a sophisticated model for predicting the situations in which particular data elements are likely to be changed during verification.
The previous $400 verification tolerance has been replaced with a tighter $25 verification tolerance to improve the accuracy of expected family contribution (EFC) calculations.
If an applicant uses the IRS Data Retrieval Tool to transfer federal income tax return data to the FAFSA without modification, the unmodified data elements will not be subject to verification. Accordingly, applicants who use the IRS Data Retrieval Tool are less likely to be selected for verification. College and university financial aid administrators are strongly encouraging students to use the IRS Data Retrieval Tool.
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