The Department of Education announced on Friday that approximately 20% of 2024-25 FAFSA applications were affected by the transmission of inconsistent tax data provided on the Institutional Student Information Records (ISIRs). Yesterday, federal officials released a breakdown of the known issues and invited stakeholders to two webinars to discuss how they will address impacted applications moving forward.
The first webinar is the 2024-25 FAFSA: Tax Data Discrepancy and School Support and will go over the inconsistencies in the tax data and what resources are available to institutions to identify impacted applications. The webinar will take place tomorrow, Wednesday, April 3, 2024 at 3 pm EST.
The second webinar is the 2024-25 FAFSA: Answers to Most Common Technical Questions Webinar and will focus on some of the most common technical questions the Department has received from schools, software developers, and states to date. That webinar will take place on Friday, April 5, 2024 at 3 EST. Information on how to join the webinars is available on ANN-24-06.
Announcement GENERAL-24-29 outlines the problems discovered. Below is an overview of the issues that the Department is addressing, how they intend to resolve them, and other important information that you should be aware of.
What are the main issues?
- The FA-DDX transferred inconsistent education tax credit data for FAFSA applications processed before March 30, 2024.
- For users who filed amended returns or made other adjustments, the FA-DDX transferred the updated AGI and tax filing status while maintaining the original values of the other fields.
- Data transferred from the IRS is inaccurate for applicants who manually entered their income taxes paid due to inconsistent written instructions on the FAFSA.
- The instructions in question directs users to “report 1040, line 22 minus Schedule 2 line 2 for income taxes paid”, which removed a refundable credit for qualified health plans
- As with income taxes paid, manually entered education tax credits do not match data transferred from the FA-DDX
- The instructions in question directs users to “report IRS Form 1040 Schedule 3: line 3 and the FA-DDX IRS will be providing data from Form 8863, line 8 plus line 19.”
How does the Department plan to resolve these challenges?
- Moving forward, the FA-DDX will include the actual education tax credit amounts that applicants report on the FAFSA from
- The IRS will reconfigure the FA-DDX so that it only transfers data consistent with the taxpayer’s original tax return
- This means that ISIRs will not contain amended or updated tax information
- 2024-25 ISIRs will not include a flag that normally indicates that the user filed an amended return
- FAFSA instructions will be updated by the Department of Education to ensure that data is consistent with values transferred by the FA-DDX.
- Manually enter data considered to be conflicting information by current federal standards will not be accepted until it is resolved or appropriate changes are made at the institution’s discretion.
- FSA has scheduled two webinars this week to provide additional guidance on these new issues and answer any questions that participants have about the aforementioned resolutions.
What else should I be aware of?
- The Department of Education only plans to reprocess FAFSA applications impacted by these issues when the changes will most likely reduce the student’s SAI and increase their financial aid eligibility; this policy also applies to ISIRs that were impacted by the student asset miscalculation several weeks ago
- Institutions may use their professional judgment to decide, on a case by case basis, whether to proceed with the current ISIRs for FAFSAs when reprocessing is expected to increase students’ SAI and reduce aid eligibility, or to request that the Department generate an updated ISIR transaction for one or more of those FAFSAs.
- The Department expects institutions to request for FAFSA applications to be reprocessed, otherwise they will assume that schools intend to use the current ISIR in their evaluations.
- The Department expects that schools can move forward with packaging aid offers for over 80% of previously-submitted FAFSA applications – as those records are not affected by the previously-described issues.
- As soon as possible, the Department will release a list of Universally Unique Identification Numbers (UUIDs) corresponding to the FAFSAs that it does not intend to automatically reprocess. These records are unaffected by the issues described in this letter or other issues summarized in the Technical Frequently Asked Questions and Known Issues documentation.
- The Department will also identify ISIRs that are affected by the issues described above, but does not plan to reprocess, because doing so would result in lower financial aid eligibly for students.
- More information about how to request ISIR reprocessing will be published in the coming weeks
- Daily updates will be provided on the Department’s new blog, 2024-25 FAFSA Fast News
SOURCES:
- (GENERAL-24-28) Potential Issue Alert – Reports Concerning Tax Data and 2024-25 FAFSA Form (Updated April 1, 2024)
- (ANN-24-06) Live Internet Webinars – 2024-25 FAFSA: Tax Data Discrepancy and School Support and Answers to Most Common Technical Questions
- (GENERAL-24-29) Update on Tax Data Received from the FA-DDX and Manually Entered Information