This key college aid process just got more onerous
For anyone applying for college financial aid, the Free Application for Federal Student Aid (FAFSA) is the key that can open the door to thousands of dollars. Most colleges require that you file this form before they even consider doling out assistance.
A convenient aspect about the FAFSA was embedded software called a “Data Retrieval Tool” (DRT) that let parents quickly download their tax returns directly from the IRS. Last week, however, tax agency shut down the DRT, citing an “ongoing effort at the IRS to protect the security of data.” That means you now must manually key in tax return numbers into the FAFSA.
Yes, doing so is a tedious process. But if you’re well prepared, you can finish off the form in maybe a half-hour. In any case, you’ll have no choice -- it’s necessary to get an aid offer, and I’ll offer some helpful tips to ease the pain.
But first: Why did the IRS shut down the tax return link? It’s not entirely clear. When asked if a data breach had occurred, a U.S. Department of Education (DE) spokesman wouldn’t comment beyond the joint statement both departments posted on March 9.
“Tthe IRS decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves,” according to the statement.
Data thieves covet tax returns because they can steal your personal identification data and file false returns, open credit card accounts and perform other forms of financial chicanery.
As a victim of identity theft -- someone stole my wife’s tax information and filed a bogus return -- I can tell you it’s a real pain. To its credit, though, the IRS has been proactive in warning taxpayers about tax scams and is trying to ramp up cybersecurity, which is a 24/7 issue these days.
“At this point, we believe the issue is relatively isolated, and no additional action is needed by taxpayers or people using these applications,” the joint statement read, noting the government is “actively working on a way to further strengthen the security of information provided by the DRT.”
I’m not sure what “relatively isolated” means, and neither agency would elaborate. Is a serious security problem involved? Taxpayers need better assurances than this statement. The government wouldn’t say when the DRT would be up again.
In the interim, filling out the FAFSA without the DRT isn’t a big deal. You’ll need your tax forms in front of you when you key in the numbers manually on the FAFSA site. It just takes more time.
If you don’t have your tax information, you can order a transcript from the IRS. By the way, always keep paper copies of your filings in a safe place.
Fred Amrein, a financial adviser who’s an expert on college financing, said not having the DRT isn’t necessarily a major setback. Here’s what applicants should do:
“They need to submit the FAFSA manually using their 2015 form 1040 and W2s. In the FAFSA, you hit the ‘skip’ or ‘No thanks’ button and key in the information. The DRT is only important for the verification process once the student has committed to the college.”
If you’re flummoxed by the FAFSA, don’t despair. Plenty of online aids will walk you through it. The DE offers this site. Edvisors provides this free ebook. You could also check Finaid, which is also a good source for tracking down outside scholarships.
Keep in mind that schools are mainly interested in how much disposable income and savings your family has to pay for college. They also want to know how many siblings will be attending college simultaneously, parental status and any changes in your family’s financial situation.
The key to garnering the most nonloan aid is honesty about your family’s financial status. Is a single parent paying most of the bills? Did a spouse lose a job? Do you expect any significant reductions to income in the coming year?
While the FAFSA will tell only some of your financial story, write to a college’s aid department and tell them what’s going on. Many can boost their offer if you can demonstrate financial need.
Although colleges are loath to say which families qualify for the most aid, you won’t know unless you fill out the FAFSA. You’ll also need to communicate directly with the colleges of your choice to improve assistance if you don’t like what they’re offering.
