Whos Afraid of Verification AGAIN

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Whos Afraid of VerificationAGAIN?

• Presented by Marykay Klara, Villanova University
• Bernard McCree, Kutztown University

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Verification

• Because students sometimes make errors on their
  application, colleges have procedures for
  verifying the reported information. The
  regulations include this verification as part of
  the FSA program requirements.
• Text taken from Information for Financial Aid
  Professionals, 2008-2009 Federal Student Aid
  Handbook, Application and Verification Guide, Ch.
  4, 34 CFR 668, Subpart E, Required policies 34
  CFR 668.56

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How Is Verification Determined?

• Applications are selected by the CPS or by the
  school.
• Schools must verify CPS selected, up to 30 of
  the schools total number of federal aid
  applicants.
• Schools can choose to verify 100 percent of all
  applicants.

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Verification Exclusions

• Incarceration
• Recent immigrant
• Parent/Spouse unavailable
• Death of student
• Verified by another school
• Pacific Island Resident
• Not a recipient of Federal student aid
• Unsubsidized Loan or PLUS Loan only

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Required Verification Items

• Household size
• Number in college
• Adjusted Gross Income (AGI)
• U.S. taxes paid
• Certain types of untaxed income
• Other items based on institutional policies

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Household Size Number in College

• Documentation
• U.S. Department of Education Verification
  Worksheet
• School verification worksheet
• Statement signed by student and one parent
• Documentation of enrollment from siblings school

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Adjusted Gross Income (AGI) U.S. Income Taxes
Paid

• Documentation
• Federal tax return with signature or preparers
  stamp or other official validation
• IRS tax transcript
• Signed other IRS forms with data
• Form W-2
• Form 1099
• Form 4868 (Application for Automatic Extension)

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Untaxed Income and Benefits

• Social Security benefits
• Child Support
• IRA/KEOGH deductions
• Foreign income exclusion
• Earned income credit
• Additional child tax credit
• Interest on tax-free bonds

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Untaxed Income, continued

• Untaxed portions of pension IRA distributions
• Credit for federal tax on special fuels
• Housing, food, and other living allowances paid
  to members of the military, clergy and others
• VA benefits
• Workers compensation, railroad retirement
  benefits, disability, etc.
• Students money received (e.g., non/custodial
  educational support)

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Documentation for Untaxed Income

• Social Security benefits
• SSA Form 1099
• Signed worksheet or statement
• Child support received
• Signed worksheet or statement
• May require copy of divorce decree or separation
  agreement or signed statement from parent
  providing support

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Documentation for Untaxed Income

• IRA and Keogh plans
• Signed tax return
• Interest on tax-free bonds
• Signed tax return
• Foreign income excluded from U.S. taxation
• IRS Form 2555
• Earned income credit (EIC)
• Signed tax return

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Documentation for Untaxed Income

• Additional child tax credit
• Signed tax return
• Credit for federal tax on special fuels
• IRS Form 4136
• Housing, food, and other living allowances
• IRS W-2 Form or signed statement from recipient

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Documentation for Untaxed Income

• VA benefits
• Statement from VA or signed statement from
  recipient
• Workers compensation, railroad retirement
  benefits, disability, etc.
• Statement from agency or signed statement from
  recipient
• Students money received
• Signed statement from recipient

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Documentation for Untaxed Income

• Other
• 401(k)
• 403(b)
• 408(k)(6)
• 457(b)
• 501c(18)(D)
• Employer Reduction Plan
• Documentation Federal W-2 Form

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W-2 Forms

• Schools are not required to review income listed
  in Box 14 of the IRSs W-2 form for the following
  reasons
• several items reported are captured already on
  the FAFSA
• employers could include nonelective pension plan
  contributions that should not be on the FAFSA
• employers are not required to provide information
  in this box so it will not be reported
  consistently
• However, if you are aware that an item in Box 14
  belongs on Worksheet B (clergy or military
  housing), you should include it

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Documentation for Untaxed Income Exclusions

• Education credits
• IRS tax return
• Child support paid
• Signed statement from payee
• Taxable earnings from need-based employment (FWS,
  fellowships, assistantships)
• Federal W-2 or 1099 Forms

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Documentation of Exclusions

• Student grant scholarship assistance reported
  to IRS in AGI
• Review students tuition account
• Americorps statement
• Federal W-2 and/or 1099 forms

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Verification Tolerance

• Due to minor errors that will not significantly
  affect students eligibility
• Total difference between incorrect and correct
  values must be less than 400
• Student can be awarded without submitting
  corrections or recalculating EFC
• Optional

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Professional Judgment

• Nothing in this part shall be interpreted as
  limiting the authority of the financial aid
  administrator.
• Reasonable decisions on a case-by-case basis only
• Reason must be documented
• Resolve inconsistent or conflicting information
  before using PJ
• Text taken from Information for Financial Aid
  Professionals, 2008-2009 Federal Student Aid
  Handbook, Application and Verification Guide, Ch.
  5, pp. 99-100

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Conflicting Information

• a school must have an adequate internal system
  to identify conflicting informationregardless of
  the source and regardless of whether the student
  is selected for verificationthat would affect a
  students eligibility
• If an institution has reason to believe that any
  informationused to calculate an EFC is
  inaccurate, it shall require the applicant to
  verify the information that itbelieves is
  inaccurate.
• Text taken from Information for Financial Aid
  Professionals, 2008-2009 Federal Student Aid
  Handbook, Application and Verification Guide, Ch.
  5, pp 100-101

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Types of Conflicting Information

• Filed the wrong tax return
• Married filing separately on tax return
• Both filed as Head of Household
• Large amount of interest income on tax return but
  no assets reported on FAFSA
• Student claimed self as exemption but so did
  parent
• Citizenship
• Others

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Let Verification Be Your Friend

• Get to know the Federal Student Aid Handbook,
  especially
• The Application and Verification Guide
• Chapter 2 Filling out the FAFSA
• Chapter 4 Verification
• Develop a Verification at a Glance Worksheet
  for yourself

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• Become familiar with IRS forms and publications,
  especially
• Publication 17, Your Federal Income Tax
• Publication 501, Exemptions, Standard Deduction,
  and Filing Information

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References

• Information for Financial Aid Professionals,
  2008-2009 Federal Student Aid Handbook,
  Application and Verification Guide, Ch. 4, 34 CFR
  668, Subpart E, Required policies 34 CFR 668.53
• Publication 17, Your Federal Income Tax
• Publication 501, Exemptions, Standard Deduction,
  and Filing Information

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Questions?

• Marykay Klara Bernard McCree
• Associate Director of Financial
  Assistance Director of Financial Aid
• Villanova University Kutztown University
• Mary.klara_at_villanova.edu mccree_at_kutztown.edu