Last week, the leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee introduced a bipartisan bill that takes a big step forward in simplifying the FAFSA filing process. The Faster Access to Federal Student Aid (FAFSA) Act would make it easier to transfer tax information, decrease the burden of verification, improve the income-driven repayment plan application process, and make data transfer safer.
Lead sponsor and committee chair Sen. Lamar Alexander (R-TN) is joined by ranking member Sen. Patty Murray (D-WA) as well as Sens. Cory Gardner (R-CO) and Sheldon Whitehouse (D-RI) in sponsoring this bill.
“This bill achieves one of NCAN’s longtime FAFSA simplification goals of enhanced data-sharing among federal agencies,” says Kim Cook, executive director of NCAN. “The FAFSA Act’s transfer of tax return information to the Department of Education from the Department of the Treasury, including verification of non-filing, would significantly reduce a currently burdensome process that is a major barrier to FAFSA completion for many of our students and families.”
This bill is not the end of the quest to simplify the financial aid application, but it is a big step forward. For that reason, NCAN supports this bill and asks our members to do the same. Sen. Alexander has stated he’d like to see the bill pass through Congress in the coming weeks. The most likely scenario for that to happen would be for this bill to be attached to must-pass legislation — such as one of the remaining appropriations bills — that this Congress must vote on before the new Congress begins in January.
Here are some additional details about what exactly the bill would do:
Make It Easier to Transfer Tax Information
The FAFSA Act calls for a change in the Internal Revenue Code (IRC) Section 6103(I) to allow for direct transfer of tax information from the Department of Treasury to the Department of Education (ED).
In the current FAFSA process, filers may transfer their own data using the IRS Data Retrieval Tool. But the DRT is not available to all FAFSA filers, depending on their tax filing status. Other filers have difficulty logging into the DRT because of the stringent login requirements. Most crucially, the 37 percent of FAFSA filers who are not required to file income tax returns are unable to use the DRT to confirm their non-filing status.
The new transfer process created by the FAFSA Act would greatly expand the access to already-verified IRS data and remove the need to complete several financial fields for many FAFSA filers.
Decrease the Burden of Verification
Verification is the audit-like process that requires students to supplement the large swaths of information they submitted on the FAFSA with additional proof of their low-income status. It has deterred too many Pell-eligible students from receiving the aid for which they appear to qualify, including many Florida students. For example, as FCAN reported in October, UCF student Brenda Ilojiole — who ironically had recently worked in Valencia College’s financial aid office as a work-study student — wasn’t able to enroll in the 12-week Summer C session as she’d planned after being flagged for verification.
Under the FAFSA Act, nearly all applicants would have their tax information transferred to the FAFSA, which should significantly reduce the need for verification. Perhaps most crucially, Treasury will also be able to identify for ED which students and families are non-tax filers, which means these individuals would no longer have to complete the Verification of Non-Filer (VONF) process.
Improve Income-Driven Repayment Process
Under the FAFSA Act, individuals enrolled in an income-driven student loan repayment plan would no longer have to certify their income every year.
The current process requires annual recertification. The paperwork for this process can be confusing, which causes many borrowers to make mistakes or miss the deadline, lose IDR eligibility, and return to a standard repayment plan that makes it harder to stay on top of their loans.
If the FAFSA Act becomes law, borrowers would have less paperwork, and there would potentially be a reduction in defaults and delinquencies. These outcomes are wins for both borrowers and taxpayers.
Make Data Transfer Safer
This new bill will enhance the security of the tax information transferred between the Departments of Treasury and Education while also improving the standards of data security at ED. Further, the bill ensures protections allowing ED to transfer the data to states and institutions to use for their financial aid disbursement.