2012-2013 Verification Changes ANDWhat does the future hold?NJASFAA January 27, 2012

Howard Leslie, VP FA Berkeley College

Agenda

• Some Politics – what got us here?

• 2012-13 Verification Changes (the pain)

• 2012-13 IRS Data Retrieval Tool (be careful

what you ask for)

• Custom Verification (the end of the pain and a

whole new wonderful day)

2

Why Now – per DOE?

Last comprehensive look in 1985

Need analysis changes

IRS data retrieval

Operational improvements

Right money to the right people in the right way at

the right time

3

Why Now – my humble opinion?

Budget crisis

Explosion of Pell costs

Threats to eliminate DOE (as well as up to 4

other cabinet departments)

4

5

PELLAll other DS

2012-13 VERIFICATION

7

New Verification Regulations

Part of Program Integrity Package

Notice of Proposed Rulemaking (NPRM): June

18, 2010

Final regulations: October 29, 2010 – effective

July 1, 2012 which means…..

Effective for the 2012-13 Award Year

8

DOE communications for further reference

NPRM: June 18, 2010

Final regulations: October 29, 2010

Technical corrections: April 14, 2011

Federal Register notice: July 13, 2011

Dear Colleague letters GEN-11-03, February 2011 (IRS) GEN-11-13, July 2011 (Verification)

9

Major Changes

ELIMINATION OF 30 PERCENT OPTION

Major Changes

ELIMINATION OF $400 NET TOLERANCE

SINGLE DOLLAR ITEMS $25 TOLERANCE INTRODUCED

Major Changes

Removed the requirement to pay Pell Grant on the higher EFC

12

Major Changes

ALL CORRECTIONS MUST BE MADE

Even if there is no change to the EFC

Major Changes

NEW DATA ELEMENTS FOR VERIFICATION HAVE BEEN

INTRODUCED AND WILL CHANGE EVERY YEAR

(See DCL GEN-11-13 for the 2012-13 list)

Major Changes

COMPLETION OF VERICATION BEFORE PJ

Major Changes

EXCLUSIONS ADDED AND ELIMINATED

(refer to [668.54(b)]

Major Changes

UPDATING DEPENDENCY STATUS BASED ON

MARITAL STATUS

Major Changes

A MOMENT BEFORE WE CONTINUE

Let’s discuss what was supposed to happen vs. what has happened to verification 2012-13

Be careful what you ask for – you just might get it and regret it.

Effective 2012-13

Paper tax returns are no longer acceptable documentation (see DCL GEN-11-03)

2012-13 Verification Items

Annual Federal Register notice— Items to verify Acceptable documentation

Federal Register notice: July 13, 2011

DCL GEN-11-13, July 2011

19

2012-13 Verification Items

All Applicants— Number in Household – Not required if:

Dependent student household size reported is two and the parent is single, separated, divorced, or widowed; or three if the parent is married

Independent student household reported is one and the applicant is single, separated, divorced, or widowed; or two if the applicant is married

20

2012-13 Verification Items All Applicants — Number in College - Not required if reported is one Applicant must provide the name and age of each

household member who is or will be attending an eligible postsecondary educational institution as at least a half-time student in the 2012-13 award year and the name of the eligible institution(s) that each household member is or will be attending

21

2012-13 Verification Items

All Applicants — Food Stamps (SNAP), if receipt reported on

FAFSA— Documentation from the agency that issues

Food Stamps benefit or alternative documentation as determined by the institution to be sufficient to confirm that the applicant received Food Stamps in 2010 or 2011

22

2012-13 Verification Items

All Applicants — Child support paid if amount reported on FAFSA—

Statement signed by the applicant, spouse, or parent who paid child support certifying: Amount of child support paid Name of the person to who child support was paid The name of the children for who child support was paid

23

2012-13 Verification Items

Tax Filers — (From IRS Data Retrieval) Adjusted Gross Income (AGI) Taxes paid Specific untaxed income items from tax return -

Untaxed IRA distributions Untaxed pensions Education credits IRA deductions Tax exempt interest

24

2012-13 Verification ItemsNontax Filers— Copy of IRS Form W-2 for each source of employment

income received for tax year 2011 A signed statement certifying—

That the individual has not filed and is not required to file an income tax return for tax year 2011

The sources of income earned from work as reported on the FAFSA and amounts of income from each source for tax year 2011 that is not on W-2s

25

2012-13 Documentation

Comprehensive list in July 13, 2011 Federal Register notice IRS Data Retrieval Process IRS Transcript

Request Online Phone: 800-908-9946 Form 4506T-EZ

IRS Tax Return: Limited conditions

26

BEFORE WE GET INTO IRS Data Retrieval – Howard’s projection

ALL PELL ELIGIBLE STUDENTS WHO DO NOT USE THE IRS DR PROCESS – during the initial FOTW application process WILL BE CHOSEN FOR VERIFICATION.

27

IRS Data Retrieval

CPS will set flags and comment codes to indicate that the student and/or parent transferred IRS data into FOTW

Comment codes will appear in – FAA Information section of the ISIR Student Inquiry section of FAA Access

Flags and codes set based on certain conditions

28

Updated IRS Request Flags00 Student/ Parent was ineligible to use the IRS Data Retrieval Tool and was therefore not

presented with the option to use it in FAFSA on the Web

01 Student/ Parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web and elected to use it, but did not transfer IRS data into the FAFSA

02 IRS data for the student/ parent was transferred from the IRS and was not changed by the user prior to submission of an application or correction

03 IRS data for the student/ parent was transferred from the IRS and changed by the user prior to submission of an application or correction

04 IRS data for the student/ parent was transferred from the IRS and then changed by the user on a subsequent transaction

05 Student/ parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web, but did not elect to use it

06 IRS data for the student/ parent was transferred from the IRS, but a subsequent change made the student/ parent ineligible to use the IRS Data Retrieval Tool

blank IRS Data Retrieval Tool not available in the application method utilized by the student/ parent(i.e., paper FAFSA, EDE, or FAA Access)

29

IRS Data and Verification90%

10%

IRS Data Unchanged

IRS Data Changed

30

2011-12 Statistics

IRS DRT

• Tentative - February 1st deployment for 2012-13

• The IRS DRT process will be enhanced to more effectively encourage users to link to and transfer data from the IRS

• More applications will have more accurate data, which will contribute to increased accuracy in awarding aid

31

IRS DRT

Currently FOTW relies primarily on the applicant to determine whether the IRS DRT should be used2012-13 FOTW will include logic to make a more accurate decision for the applicant

32

IRS Data Retrieval Tool

Confirmation Page• Upon submission, reminds students that the IRS DRT

option is the preferred method of providing tax information and they can return when their application has been processed to use the tool

• Customized messaging displays when the student and/or parent was eligible to use the IRS DRT and didn’t, or the student and/or parent indicated “Will file taxes”

33

IRS Data Retrieval Tool

Income Estimator Notifications• Around March 15th, students and/or parents will

receive e-mail reminders to update the student’s FAFSA with filed tax information

• Messaging encourages the use of the IRS DRT if the option is available in FAFSA on the Web

34

IRS Data Retrieval Tool

IRS DRT Eligible Filer Notifications• Students and parents who were eligible to use the IRS DRT

but didn’t will receive an e-mail notification encouraging them to return to FAFSA on the Web and use the tool

• E-mails will be sent beginning on April 1, 2012, with subsequent messages sent every 45 days until mid-September, and then every 60 days until the end of the cycle

• E-mails will only be sent once per student/parent

35

What is Berkeley doing about all this?

• Three campaigns• Do your taxes early and

electronically• General FAFSA Campaign• Educating students/parents about the

correction option in order to perform IRS Data

36

37

Customized Verification

38

Verification Selection

I think we are all familiar with the current process – does anyone wish to discuss?

39

Future Verification

• In the future, the ISIR will indicate• Whether an applicant has been selected for verification,

and• Specific item or items that must be verified

• 2013-14 will• Serve as transition year• Be a “hybrid” of the current and future verification

selection processes

40

2013-14 Customized Verification

• Like current process, applicant data will be subjected to risk model on 01 transaction

• Three categories of selection• Targeted selection - data meets a risk criteria and record is

selected for “targeted” verification• Discretionary selection - data does not meet risk criteria for

targeted selection, but is selected to verify a non-targeted data element

• Combination of targeted and discretionary selection

41

Targeted Selection

• Using 2012-13 FAFSA data elements to be verified as an example, if applicant is selected for targeted verification, he/she would verify• Tax filers• AGI*• Taxes paid• Untaxed income reported on tax returns• Untaxed IRA distributions• Untaxed pensions• Education credits • IRA deductions• Tax exempt interest

• Family members*• Number in college*

* If eligible for Automatic Zero EFC 42

Targeted Selection

•Non-tax filers•Earned income•Family members•Number in college

43

Discretionary Selection

• If not selected for targeted verification, may be selected to verify discretionary data reported on the FAFSA

• Using 2012-13 as an example, data elements would include• Food stamps• Child support paid

• In 2013-14 and beyond, would probably not select all applicants who reported these items on their FAFSA (i.e., would use “n” value, at least initially)

44

Targeted and Discretionary

• Combination of targeted and discretionary verification selection

• Applicant met a targeted risk criteria

PLUS

• Was selected to verify one or more discretionary data elements from the FAFSA

45

The 2013-14 ISIR• The Institutional Student Information Record (ISIR) would include• Verification Flag (Y, N, *)• Fields for all FAFSA data elements subject to verification for a given

year (per FR notice)• Verification codes for each of those data elements indicating

verification selection statusY = Data element selected for verification

N = Data element not selected for verification

V = Data element selected for verification, but student transferred data using the IRS data retrieval tool and

did not change it

46

The 2013-14 ISIR

• The data elements selected for verification would be based on• Applicant’s dependency status• Whether applicant was selected for targeted verification,

discretionary verification, or both• Whether applicant/parent is a tax filer or non-tax filer• Whether applicant is eligible for Auto Zero EFC or not• Whether applicant must verify HHS and # in college

47

2013-14 Student Aid Report (SAR)

• The SAR will tell students that they were selected, but will not indicate the specific fields that need to be verified

48

Example 1 Dependent student, targeted selection only, parent and student both tax filers, not eligible for

Auto Zero EFC, did not use IRS Data Retrieval Tool, HHS = 4, # in College = 2

FAFSA Data Element Verification Indicator

Parent AGI Y

Parent Taxes Paid Y

Parent Untaxed Income (5 elements) Y

Parent Income Earned from Work N

Parent Household Size Y

Parent Number in College Y

Parent Food Stamps Received N

Parent Child Support Paid N

Student AGI Y

Student Taxes Paid Y

Student Untaxed Income (5 elements) Y

Student Income Earned from Work N

Student Household Size N

Student Number in College N

Student Food Stamps Received N

Student Child Support Paid N

49

Example 2 Dependent student, targeted selection only, parent and student both tax filers, not eligible for

Auto Zero EFC, used IRS Data Retrieval Tool, HHS = 2, # in College = 1

FAFSA Data Element Verification Indicator

Parent AGI V

Parent Taxes Paid V

Parent Untaxed Income (5 elements) V

Parent Income Earned from Work N

Parent Household Size N

Parent Number in College N

Parent Food Stamps Received N

Parent Child Support Paid N

Student AGI V

Student Taxes Paid V

Student Untaxed Income (5 elements) V

Student Income Earned from Work N

Student Household Size N

Student Number in College N

Student Food Stamps Received N

Student Child Support Paid N

50

Example 3

Dependent student, parent received food stamps, selected to verify a discretionary item only

FAFSA Data Element Verification Indicator

Parent AGI N

Parent Taxes Paid N

Parent Untaxed Income (5 elements) N

Parent Income Earned from Work N

Parent Household Size N

Parent Number in College N

Parent Food Stamps Received Y

Parent Child Support Paid N

Student AGI N

Student Taxes Paid N

Student Untaxed Income (5 elements) N

Student Income Earned from Work N

Student Household Size N

Student Number in College N

Student Food Stamps Received N

Student Child Support Paid N

51

Subsequent Transactions• Verification selection would generally occur on initial (01)

transactions only• Corrections that are processed after selection would continue

to be flagged as selected• If the student was not selected for verification on initial (01)

transaction, selection status would not change based on a correction, unless one of the following occurs• The student’s dependency status changes• Eligibility for Auto Zero EFC is lost

52

Subsequent Transactions

• If one of these conditions is met on a correction • CPS will apply risk model to corrected FAFSA information• If student hits a risk criteria, he/she will be selected for

verification on the resulting correction transaction• Verification flag set to Y• FAFSA data elements to be verified identified on ISIR

53

Subsequent Transaction

• In some cases, data elements subject to verification may change from one transaction to another if• Dependency status changes• Tax filing status changes• Student/Parent changes any of the items that came from the

IRS• Student becomes eligible or ineligible for an Automatic Zero

EFC

54

Subsequent Transactions

• In these cases –• Verification flag would remain Y• New verification tracking flag = R• Reset verification indicators for appropriate data

elements (Y, N, V)

55

56

So in Summary

• In 2012-13 we have none of the benefits of customized verification (ALL PAIN)• In 2013-14 we hope to have a hybrid

version (MAYBE MORE PAIN – MAYBE LESS)• Customized Verification (when ever it

actually does come) – BEST THING SINCE….

57

ANY QUESTIONS? 58