People Are Worried Applying For College Financial Aid Could Be A Total Mess This Year
Students will have to manually enter some information into the FAFSA, raising concerns that errors will make people ineligible for aid.
Students applying for federal financial aid should be wary of new problems that could arise from changes to 2018 tax forms, warned a group of US senators as the Oct. 1 rollout date for the 2020–21 Free Application for Federal Student Aid approached.
Here's the background: The IRS changed the 1040 tax form — the standard federal income tax form — as part of the Trump administration's efforts to simplify filing taxes. “The new, postcard-size Form 1040 is designed to simplify and expedite filing tax returns, providing much-needed relief to hardworking taxpayers,” Treasury Secretary Steven Mnuchin said last year.
The form was redesigned to be the size of a large postcard. That sounded great at first but ended up being extremely complicated, creating "a mess" for tax professionals. The instructions for filling out the new tax form got longer, and some of the information that was previously on the old 1040 just got moved to new(!) tax forms. "The administration is using these gimmicks to try to tell an overly-simplified simplification story," according to a blog by the Tax Policy Center.
These updates to a supremely boring (but important!) tax form will impact students applying for financial aid. According to New Hampshire Democratic Sen. Maggie Hassan, "these changes disrupted functions of the IRS Data Retrieval Tool, which allows students to automatically and accurately fill in their family’s tax information on their FAFSA form for student aid."
Some data that is no longer on the 1040, but information found on one of the other forms — such as capital gains, unemployment pay, prize money, gambling winnings, student loan interest deduction, self-employment tax, and educator expenses — won't be automatically exported to the FAFSA and will have to be manually inputted.
All this is bad because, honestly, who really understands their tax forms?
A letter Hassan signed in August with nine other senators including candidate for the Democratic nomination for president Bernie Sanders asked the Department of Education and the IRS to find a solution. "This will not only further complicate the FAFSA completion process for many families," it read, "but will likely result in the submission of incomplete and inaccurate information regarding some applicants' financial aid eligibility."
Hassan said in a statement to BuzzFeed News, “Given the administration’s apparent lack of action to address this issue, I’ll continue working with my colleagues to push the Department of Education to provide guidance to try to mitigate issues for students and their families when they submit their FAFSA forms.”
Charlie Javice, CEO of Frank — a company that helps people file the FAFSA for free — said, "We should expect lower FAFSA completion rates across the board." She expects more applicants to go through FAFSA verification — essentially an audit by schools — which is a problem since 60% of students never get through verification, Javice said. "This is a big step backward when it comes to college access."
A Department of Education spokesperson said they did not anticipate any problems with FAFSA applications as a result of changes to tax forms. The IRS declined to comment.
With an increased risk of error this year, Javice said, the earlier students complete their FAFSAs, the better. "It will give you time to get your questions answers and qualify for the most amount of aid available at the state and school level if you file earlier." Applicants also should be extra careful and review their tax math and remain calm if they are selected for FAFSA verification.
"It’s OK if you realize info is different during your verification process. Be upfront about it and the school will change the info to reflect the discrepancy," she said.