Guidance on tax info for student aid applications

The U.S. Education Department (ED) on Wednesday issued guidelines that allow students to use paper tax returns as acceptable documentation for verification in student aid applications.

The guidance comes in response to queries from higher education organizations and institutions on how they should advise students who can’t access IRS documentation during the partial closure of the federal government. The IRS is among agencies currently closed.

Colleges also noted that accessing IRS’s online Data Retrieval Tool (DRT), which is another way to access required income data, is spotty because it’s been unavailable at times.

The changes to the verification requirement go into effect Jan. 9 and apply to both the 2018-19 and 2019-20 federal student aid application cycles.

Already in progress

Many community colleges and other higher education institutions already were advising students to make copies of their tax returns in anticipation of the guidance, noting that ED offered similar guidance in the past when IRS documentation was not available.

College of Southern Maryland (CSM), for example, was allowing students to provide alternative documentation so that the college could provide estimated awards to secure payment for spring registration. The college said it would accept signed 1040 tax returns in lieu of official tax transcripts so that it could continue processing financial aid applications. It will follow up with students once the government opens.

Tallahassee Community College in Florida also asked affected students to provide signed copies of 1040s. Students then signed an agreement to provide the required tax transcript as soon as they are available. If for any reason students do not qualify for aid, they will assume responsibility for all charges.

Anne Arundel Community College (Maryland) also was accepting paper IRS documentation such as tax returns and noted it would consider deferring students’ payments, as needed.

North Shore Community College in Massachusetts permitted affected students to register once they submitted a 4506-T, which is the IRS form to request a tax transcript.

New Jersey’s Middlesex Community College developed a landing page on its website with information and a form for students to complete, which is then routed internally to the college’s student accounts manager who works directly with all affected students to identify their best options.

At Wake Technical Community College in North Carolina, most of the affected students are late financial aid applicants and were required to pay tuition upfront or enroll in the payment plan while their financial aid application was processed. Tarrant County College in Texas also is dealing mostly with students who were recently selected for the verification process.

Other colleges, such as Massasoit Community College in Massachusetts, had previously set up systems that allowed students who filed a FAFSA (Free Application for Federal Student Aid) to enroll in and begin their courses until their financial aid is processed.

“Although the IRS is unable to provide verification or document matching, students who have filed a FAFSA, even if it is incomplete, are able to register and take their spring courses,” said spokesperson Sarah Yunits.

Offering other options

The government shutdown has affected college students in other ways, too, again with many colleges offering flexibility. For students not receiving financial aid, Anne Arundel is deferring payments upon request until Jan. 18, which is the day before the new term begins.

“It is our hope the federal government will open by then. If not, we’ll need to determine a new course of action,” spokesperson Jill Bennett told CC Daily.

CSM is also offering financial support to affected students to ensure that they can start the spring semester, which begins this month. The college has created two assistance options to help these students, on both the credit and non-credit sides. The first is a tuition payment plan with no money down or enrollment fee. Tuition payments will begin with new federal appropriations and when workers return to their jobs.

The second is emergency assistance through a one-time grant for students permanently affected by layoffs or who do not expect reimbursement of back pay from the government shutdown.

Four steps to follow

College of Western Idaho (CWI) developed a system to keep the application process moving until IRS documents were available. Staff such as one-stop representatives, who are often the first line of contact for students, were provided four steps to follow:

  1. Help students fill out the FAFSA as completely as possible and make sure to use the IRS Data Retrieval Tool when completing the application, which can help reduce
    the verification documents that may be requested.
  2. Help students get all other verification paperwork completed and turned into the financial aid office.
  3. Have students prepared to request a payment plan to put in place by the tuition due day until financial aid can be awarded.
  4. CWI has told students that if the only piece missing is those IRS documents, the college won’t drop them for non-payment nor will they be given any sort of late fee on their balance after the tuition due date.

“Telling the students about Step 4 has reassured them that our college does care about them as students and they trust us to do whatever we can do in our power to help,” said Jessa Walker, a one-stop representative at CWI.

About the Author

Matthew Dembicki
is editor of Community College Daily.