Dear Colleague:
On Sept. 19, 2023, we published a Federal Register notice (88 FR 64421) announcing the 2024–2025 Free Application for Federal Student Aid (FAFSA®) verification items for applicants selected by the U.S. Department of Education (Department), as well as the acceptable documentation for those items. In addition, the Electronic Announcement (EA) published on June 14, 2023, explains the time frames for the sunset of the COVID-19 waivers and flexibilities applicable to institutions and provides general guidance regarding the return to normal compliance with Title IV, Higher Education Act (HEA) requirements. On April 10, 2023, the federally declared national emergency related to the COVID-19 pandemic ended. Verification flexibilities expired at the end of the first payment period that began after April 10, 2023. Payment periods are defined in 34 CFR 668.4. In a program measured in standard terms, the payment period is the term, i.e., semester, trimester, or quarter. For example, a school has a semester-based calendar that is fall, spring, and summer. If April 10, 2023, fell within the school’s spring semester, then the verification flexibilities would end at the end of the summer semester.
This Dear Colleague Letter (DCL) summarizes and explains the changes in the verification process for the 2024-2025 award year resulting from the FAFSA Simplification Act and the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act. Additionally, at the end of this DCL, we have provided suggested text that an institution may use to fulfill its regulatory verification requirements.
Changes from the FUTURE Act
On Dec. 19, 2019, the President signed the FUTURE Act into law, which authorizes a direct data exchange (FA-DDX) between the Department and the Internal Revenue Service (IRS) to import most U.S income and tax information to the FAFSA form. The previous tool to transfer U.S income and tax information from the IRS, the IRS Data Retrieval Tool (DRT), where applicants initiated the electronic transfer of U.S federal tax return information into their FAFSA form, will no longer be used. Implementation of the FA-DDX eliminates the need for most applicants (as well as their spouse and parents) to self-report their income and tax information reported to the IRS. Also, when federal tax information (FTI) is transferred via the FA-DDX to the FAFSA, it is considered verified, while information not transferred from the IRS may be subject to verification. Unlike with the IRS-DRT, which applicants could agree to (or not) and still complete their FAFSA, they will now be required, as a condition of eligibility for federal student aid, to provide consent and approval for the Department to attempt to obtain FTI via the FA-DDX. Students, spouses, and parents, as appropriate, will be required to consent and approve to the new data transfer for federal student aid eligibility even if the applicant is aware that they did not file a federal tax return.
Note: There will be instances where manual entry of tax information will still be required, even if a federal tax return was filed with the IRS. Foreign earned income exclusion amounts, for example, will not be transferred via the FA-DDX and will need to be entered manually. In addition, individuals who were married and filed jointly with the IRS and are no longer married to that spouse on the applicable tax return, or who have married a different spouse, will also be required to manually enter their income and tax information. Individuals who only file foreign tax returns will also be unable to use the FA-DDX since it does not link to foreign tax authorities. They will instead need to manually input their income and tax data by converting foreign currency to U.S. dollars and entering the resulting amounts in the comparable fields from U.S. tax returns, such as adjusted gross income, income tax paid, and any untaxed income.
Changes from the FAFSA Simplification Act
On Dec. 21, 2020, the FAFSA Simplification Act was enacted into law as part of the Consolidated Appropriations Act, 2021, and amended by the Consolidated Appropriations Act, 2022. The FAFSA Simplification Act makes clear that institutions of higher education may not require (though they may ask for) additional forms or information beyond the FAFSA form prior to awarding or disbursing federal student aid to eligible students. The exception to this rule is if such additional information is required to complete verification, to document a professional judgment (PJ), or to determine independence.
Furthermore, “household size” has been replaced with “family size” and is defined in the FAFSA Simplification Act to align with the number of individuals included as dependents on either the applicant’s (if independent) or applicant’s parents’ (if dependent) U.S. tax return. The number of family members in college is no longer a factor in the need analysis, when calculating the new Student Aid Index (SAI), which replaces the Estimated Family Contribution (EFC), or Pell Grant eligibility. However, while schools may not change the SAI formula, they may use PJ to adjust data items related to cost of attendance or data items on the FAFSA used in the need analysis to account for the costs associated with additional family members enrolled in college.
For more information on changes for the 2024-2025 award year, please see: DCL GEN-23-11 at https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-08-04/fafsa-simplification-act-changes-implementation-2024-25 and our FAFSA Simplification Act Q&A webpage at https://www2.ed.gov/policy/highered/reg/hearulemaking/2009/fafsa-q-and-a.html.
Students Who Are Confined or Incarcerated
For students who are confined or incarcerated, the same verification requirements for the 2023-2024 award year will apply for the 2024-2025 award year. For the 2024-2025 award year, a confined or incarcerated applicant (as indicated through the new incarcerated applicant flag) will only be required to verify their identity and statement of educational purpose. This means applicants who are confined or incarcerated selected for Verification Tracking Group V4 and V5 will only be required to verify their identity (acceptable documentation includes official IDs issued by the correctional facility) and submit a statement of educational purpose. In addition, institutions are not required to verify a confined or incarcerated student selected under Verification Tracking Flag V1.
If a confined or incarcerated individual is selected for verification and unable to submit a signed and notarized Statement of Educational Purpose, a school may accept a signed statement from an authorized official that works for the correctional facility or authorized official that works for the oversight entity confirming to the school that the individual who completed the FAFSA and was selected for verification is the person signing the Statement of Educational Purpose.
For more information on Prison Education Programs please see: https://fsapartners.ed.gov/knowledge-center/topics/prison-education-programs.
Suggested Verification Text
In APPENDIX A, we provide the suggested text for each of the 2024–2025 verification items in the Sept. 19, 2023, Federal Register notice. While use of the suggested text fulfills the regulatory verification requirements, institutions are not required to use the Department’s suggested text and formats, except as noted below. Instead, institutions may develop and use their own text, forms, documents, statements, and certifications that are specific to the items required to be verified for a particular student or group of students. The one exception is that institutions must use the exact language in the "Statement of Educational Purpose" in APPENDIX A for students who are placed in Verification Tracking Groups V4 or V5.
We suggest that each page of an institutionally developed verification document include appropriate headings and numbering that identify the item(s) being verified. Institutions should ensure that the verification document collects the student’s name, ID number, and other identifying information, and that each page is identified as belonging to that student. Also, institutions may have difficulty matching the tax return documentation with the student because the last names may be different or because portions of the tax filer’s identifiers are redacted. Therefore, we recommend that institutions advise students to write their own name on the tax return document prior to submitting it to the institution. Verification documents should include any special instructions necessary so that students will know when and how documents are to be submitted to the institution. Institutions are reminded that documentation obtained as part of the verification process must be maintained at the institution for at least the required Title IV record retention period as outlined in Volume 2 of the Federal Student Aid Handbook.
We thank institutions for their cooperation and continued role in safeguarding the integrity of the Title IV programs and in preventing improper payments.
Sincerely,
Nasser H. Paydar
Assistant Secretary
Office of Postsecondary Education