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Summary: Notifications to 2006-07 Applicants Reminding Them to Update Estimated Income Information

Publication Date: April 7, 2006

Author: G. Kay Jacks, General Manager, FSA Application, School Eligibility and Delivery Services

Summary: Notifications to 2006-07 Applicants Reminding Them to Update Estimated Income Information

Posted on 04-07-2006

Many applicants provide estimated income information on their Free Application for Federal Student Aid (FAFSA). For the 2004-05 and 2005-06 application years, we sent notifications to selected applicants reminding them to update estimated income and tax information reported on their FAFSA. The goal of this notification initiative was to get students and their families to correct FAFSA data after they completed their tax returns, so that accurate information is used when determining a student's eligibility for aid. In many cases, the corrections that resulted from these notifications had a significant impact on the student's Expected Family Contribution (EFC). We plan to send notifications to students and parents again for the 2006-07 year, with some slight modifications.

On or about April 28, 2006, we will send notifications to selected 2006-07 FAFSA filers who indicated, or whose parent(s) indicated, that they completed the FAFSA using estimated income information. We will ask applicants and their parents to compare their Student Aid Report (SAR) with information from their recently completed 2005 tax returns, and to make corrections as necessary.

** Notification Schedule **

A file of all applicants who meet the selection criteria described below will be created after April 17, 2006, which is the IRS tax filing deadline for most taxpayers. We will send the notifications to applicants and parents beginning on or about April 28, 2006. We will not send follow-up notifications nor will we send notifications to students who file a FAFSA after the date the file was created.

** Selection Criteria **

Notifications will be sent to all 2006-07 FAFSA filers whose highest Central Processing System (CPS) transaction indicates that the student applicant's or parent's income data is based upon estimated income and who meet all of the following:

  • The student's transaction has not been selected for verification;
  • The student's Expected Family Contribution (EFC) is 6000 or less;
  • The student is not a graduate student; and
  • A school did not perform an FAA Adjustment (professional judgment) on the last transaction.

For dependent students and their parent(s), notifications will be sent to both the student and the parent if either the student or parent indicated they completed the FAFSA using estimated income information.

As was the case last year, a small sample of applicants who meet these conditions will not receive notifications. This will allow us to study the variances in correction activity between those applicants who receive notifications and those who do not.

In addition, notifications will once again be sent to a small sample of applicants who indicated, and whose parent(s) indicated, that they completed the FAFSA using a completed tax return. We will use this second sample to see if there are any variances in correction activity between those who used estimated income information and those who stated that they used completed returns to fill out their FAFSA.

** Notification Format **

If the student provided an e-mail address on a paper or electronic FAFSA, we will e-mail the notification to that address. The e-mail will contain a link to Corrections on the Web so that students can easily correct their application information online. If the student is dependent, and we have an e-mail address for the student's parent, we will send an e-mail notification to the parent as well. Parents of dependent students will receive e-mail notifications only. If the parent did not provide an e-mail address, they will not receive a separate notification.

If the student did not provide an e-mail address, or if the e-mail notification is undeliverable, we will mail information to the student. Students who filed a paper FAFSA will receive a full paper SAR and cover letter. Students who filed electronically will not receive a paper SAR, but will receive a letter describing how to make corrections on the Web.

** Notification Text **

We have strengthened our instructions to the applicant so it is clear that all necessary corrections should be made. We also instruct the applicant to change their answer to the tax return status question (FAFSA question #32 for the student, question #70 for the parent) from "will file" to "already completed" if corrections are made based upon a completed tax return, and to avoid making any updates to household size and number in college.

As we did last year, we will tell applicants who have been asked by their school to submit copies of their 2005 federal tax returns not to submit corrections to the CPS, unless instructed to do so by their school.

There will be three versions of the e-mail notification: one for independent students, one for dependent students, and one for the parents of dependent students. There will also be three versions of the paper cover letter (sent to applicants who did not provide an e-mail address): one for dependent and independent students who filed a paper FAFSA and who will receive a SAR with the letter, one for independent students who filed on the Web and who will only receive the letter, and one for dependent students who filed on the Web and who will only receive the letter. As stated earlier, parents of dependent students will only receive an e-mail notification.

** The School's Responsibility **

We hope you agree that in order to maintain the integrity and public trust of our student aid programs, it is critical that we take all reasonable steps to ensure that federal student aid is awarded based on the most accurate information available.

Financial aid administrators (FAAs) should note that the failure of an applicant to update their income and tax data after receiving a notification does not result in "conflicting information" nor does it, by itself, trigger the need to verify applicant data. FAAs are not responsible for ensuring that updates or corrections are submitted, except under regular verification requirements or when issues of conflicting information arise.

In most instances conflicting information exists when income and tax information on a subsequent ISIR transaction differs from information on an earlier transaction. However, updating the tax return status field from "will file" to "already completed," is considered resolution of the conflicting information for such applicants. As noted above, for 2006-07 the notification text has been strengthened to instruct all applicants who make income or tax corrections to also correct the tax return status field to "already completed." If the applicant does NOT update the tax return status field to "already completed," and the EFC on the new transaction is not the same as the EFC on the earlier transaction, the FAA must take action to confirm that the new income and tax information reflects information from a completed return.

We thank you for your support of this initiative. If you have questions, please contact the Federal Research and Customer Care Center (RCCC) at 800/433-7327.

Last Modified: 04/06/2006