Protect against student aid fraud
Filling out the Free Application for Federal Student Aid — known as FAFSA for short — for financial aid is always a headache, but things got worse this year after ID thieves forced the Internal Revenue Service to shut down an online tax tool that made it easier for families to report their income.
Now, the question remains: What happens next?
The time to tackle the paperwork for financial aid for the 2018-19 school year begins Oct. 1.
The good news is that filling out the Free Application for Federal Student Aid should be less stressful once the IRS Data Retrieval Tool returns Oct. 1. The IRS suspended access in March after realizing that the tool was too useful to ID thieves engaging in tax refund fraud.
Some key changes are being made to address security issues. Under the new system, some families will need to make certain adjustments, particularly if they’re a dual-income married couple, if they filed an amended tax return or the family had a direct IRA rollover into another retirement account.
“Last year, we had a real mess on our hands when the IRS shut down the data exchange,” said Pam Fowler, executive director of financial aid at the University of Michigan.
The IRS retrieval tool was designed to make it easy to shift income-tax data to the FAFSA form and to forms involving applications for income-driven repayment plans. One needs to file a FAFSA to obtain federal student loans and other aid.
Parents and students who filed their FAFSA before the IRS problems were able to breeze through parts of the process.
But other parents and students ran into roadblocks when the tool was no longer available. Some ended up rushing to obtain an IRS tax return transcript or a verification of nonfiling status for those not required to file a return.
Fowler said the IRS was not prepared for the onslaught of such requests and many families were unable to get the forms before a school’s deadline, often at the end of March or April.
Students who meet the deadline are assured of getting aid for which they are eligible. But after the deadline, some aid, such as federal work-study, could be depleted.
“The fact that the IRS Data Retrieval Tool is coming back up Oct. 1 is going to be a big help for students and families trying to complete their financial aid applications,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators.
Families can use the online tool to import data from their 2016 tax return when applying for aid for the 2018-19 school year.
Internal Revenue Commissioner John Koskinen testified before the Senate Finance Committee in April that information for up to 100,000 taxpayers may have been put at risk as hackers posing as students used the online tool to apply for financial aid.
The ID thieves would start a financial aid application and then give the IRS permission to automatically fill out the aid form with tax information.
Armed with someone’s AGI, the thieves would be able to unlock more information about a filer’s previous tax return. Then they would use the information to file a better-crafted fraudulent return.
Koskinen said then that about 8,000 fraudulent refunds were issued relating to such security breaches connected to the retrieval tool, totaling $30 million. But thousands of other illegal refunds were stopped before being issued.
Want to drive a 1937 Packard for a weekend? A 1973 VW van? A 1931 Model A? DriveShare has your car. The new company, modeling itself as the “Airbnb of vintage cars,” is now offering a peer-topeer rental service.
Using a database of more than 1 million vehicles insured by parent company Hagerty, the country’s leader in vintage vehicle insurance, the just-launched DriveShare already has a menu of 300 tasty offerings.
Costing from $99 a day for a Porsche Boxster in Roanoke, Va., to $3,300 a day for a Lamborghini Aventador in Los Angeles, the vehicles are meant to appeal to vintage car buffs. And the opportunity to make money by renting out one’s vehicle can soften the cost of vintage-car ownership.
“We think this might be the future of the vintage-car world,” Hagerty Chief Executive McKeel Hagerty said. “This is an entry point for the next generation, who may not be familiar with vintage cars, and it’s also an entry point for a prospective owner who can’t quite afford the cost of a vintage vehicle.”
Hagerty opened DriveShare in partnership with the regional rental company Classics&Exotics, whose founder, Peter Zawadzki, has joined the insurance giant as director of DriveShare.
Classics&Exotics, a privately funded Massachusetts startup that Zawadzki launched in 2015, began to interest Hagerty after he received multiple queries.
“I kept bumping into people who would mention Classics&Exotics and ask me, ‘Could this work?’” Hagerty said. “I finally realized, yes, it could, if we got behind it.”
Overseen by Zawadzki and Hagerty, the new company handled 50 transactions in its beta state. Zawadzki said four of those transactions resulted in vintage-car purchases — after the renter fell in love with the classic-car experience.
As an example, Zawadzki described how a New Yorker who wanted a quintessential California vacation driving experience rented a BMW 2002 from an owner in Los Angeles. The renter enjoyed the car so much, he returned to New York and bought an older BMW for himself.
DriveShare joins a small group of peer-to-peer car rental services. Best known are two San Francisco-based ventures: Turo, which oversees a network of 160,000 privately owned cars in 5,000 cities, and Getaround, which operates in eight U.S. cities and allows for rental on an hourly basis.
The median DriveShare transaction rate is $275 a day, with prices based on the age, rarity and condition of each vehicle. The transactions are insured by DriveShare, with the cost of insurance folded into the daily rental rate.
Potential renters are screened during the process of signing up for the service. DriveShare accepts or rejects them based on their driving records and what Zawadzki called “a full background check.” Anyone with more than two major traffic tickets in the last two years, or with a DUI, need not apply.
Cars are screened for safety and drivability.
The database is searchable by geographic location, category of car (hot rod, classic car or muscle car, for example), price and special features.
The service is available nationwide, except in New York, where insurance rental regulations prevent DriveShare from operating.
The most-rented car so far, Zawadzki said, is that 1937 Packard.
The two men who cooked up DriveShare are serious about vintage cars. Hagerty spent part of his time at the recently concluded Pebble Beach car activities tooling around in an 1967 Porsche he got as a teenager and has just finished restoring. Zawadzki has in his garage a 1958 MGA, a 1984 Porsche 911 and a 1984 Ferrari 308.
“This is our passion,” Hagerty said. “We want to remove all the barriers we can to vintage-car ownership for the next generation of drivers.”