FAFSA gets big change for new filing year

IRS tool prevents users from seeing their own tax return data in effort to make process more secure

Students and families seeking financial help for college will notice some possibly confusing changes this fall when they fill out an important federal form known as the FAFSA.

The Free Application for Federal Student Aid is the main portal to federal financial help for college students, including grants and low-cost student loans. States and many colleges also use the FAFSA to screen students for their own financial aid.

Many students and parents fill out and file the FAFSA online because that allows them to automatically transfer income information into the form using the Internal Revenue Service’s Data Retrieval Tool. The tool had been unavailable for FAFSA filing since March, after the IRS suspended out of of security concerns.

This week, the federal Department of Education said the tool had been returned to service for the 2018-19 FAFSA filing season, which began last week.

The IRS tool now has “extra security and privacy protections to safeguard sensitive taxpayer data,” the department said in a news release.

In practice, that means the online form will look different to filers as they fill it in, said Carrie Warick, director for policy and advocacy at the National College Access Network. Specifically, applicants transferring financial information using the retrieval tool cannot see the actual tax return data in their online FAFSA.

According to the Education Department, instead of the transferred numbers, “applicants and parents will see the words ‘Transferred from the IRS’ in the data entry fields throughout the online FAFSA form.”

The upside is the data should be more secure; previously, officials worried that criminals could skim income data from the online forms and use it to file fraudulent tax returns to collect illegal refunds.

The downside is that because students and their families cannot see their imported tax data, they can’t make any changes or corrections to the information. The Education Department, however, said in guidance to financial aid professionals, “Because the data came directly from the tax return filed by the applicant or parent and because income and tax items cannot be updated, we do not expect that there will be a need to make many corrections to these items.”

If any changes are needed — if, for instance, a family’s income has changed drastically since the tax return was filed — students must contact the financial aid administrator at the college to which they are applying.

Justin Draeger, president and chief executive of the National Association of Student Financial Aid Administrators, said that while the situation wasn’t ideal, having masked data was better than not having the retrieval tool at all. That’s because the information transferred from the IRS is generally accurate, he said.

Students and their families should know that financial aid administrators are aware that families may have questions about the form, Draeger said, and that they are expecting increased calls.

“They will always do whatever they can,” he said, “to help students apply for financial aid.”