U.S. Department of Education Announces Temporary Changes to the Federal Aid Verification Process

US Department of Education

WASHINGTON, D.C. — The U.S. Department of Education (Department) announced temporary changes to the federal student aid verification process for the 2021–22 award year.

The temporary changes will provide relief to millions of students and colleges facing challenges as a result of the COVID-19 pandemic. The Department will focus aid verification on identity theft and fraud for the 2021–22 application cycle, significantly reducing other barriers that have prevented students most in need, from accessing critical financial aid funds. The action is part of the Department’s broader efforts to provide relief to students and borrowers impacted by the pandemic, and address inequities made worse by COVID-19.

While the challenges students experience with verification extend beyond the pandemic, data from the National Student Clearinghouse show college undergraduate enrollment rates fell 4.9 percent in Spring 2021 as a result of the COVID-19 emergency. For students of color and students from low-income backgrounds, those declines were even steeper. These enrollment declines have also been sharpest at community colleges, which saw a 9.5 percent decrease in enrollment and are already significantly resource-constrained due to the economic impacts of the pandemic. Department research shows that targeting verification this aid cycle, can help approximately 200,000 more students from low-income backgrounds and students of color enroll in college and continue on the path to a degree.

“This has been an exceptionally tough year,” said Richard Cordray, Chief Operating Officer of Federal Student Aid (FSA). “We need to ensure students have the most straightforward path to acquiring the financial aid they need to enroll in college and continue their path to a degree. Targeting verification to focus on identity theft and fraud this aid cycle, ensures we address immediate student needs, continue to protect the integrity of the Federal Pell Grant Program, and reduce barriers to access for underserved students. We will continue to evaluate what improvements can be done longer-term to make the verification process more equitable while still preventing fraud.”

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Verification is an administrative process by which the Department requires a subset of federal student aid applicants who are eligible for Pell Grants to submit additional documentation, such as transcripts of tax returns, to verify their income and other information reported on the Free Application for Federal Student Aid (FAFSA) form. Non-Pell-eligible applicants are not selected for income verification. As a result, the verification process disproportionately burdens students from low-income backgrounds and students of color. The process can be extremely challenging for students, particularly because at least 20 percent of Pell-eligible applicants are exempt from tax filing due to their low-income levels. This prevents them from using the automated Data Retrieval Tool to easily import verified income data from the IRS onto their FAFSA form, and can impose difficulties in acquiring the necessary documentation to prove their income.

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Typically, more than three million potential Pell Grant recipients are selected for verification each year. Unfortunately, due to the challenges they face in acquiring the required documentation, some students never complete verification, and thus do not receive the financial aid they need to enroll. Targeting verification for the 2021–22 FAFSA cycle will make it easier for millions of students from low-income backgrounds to access federal financial aid. It will also alleviate some of the burden faced by financial aid administrators, allowing them to focus their time and resources on administering emergency relief funds, getting students into and through higher education, including by updating FAFSA information for students who have lost their jobs due to the pandemic, and by helping students learn about and access emergency financial aid grants provided under the Higher Education Emergency Relief Fund.

This temporary verification process accompanies the many tools and oversight measures the Department uses to monitor suspicious activity, mitigate fraud, and identify over- and under-awards of Pell Grant funds. Current tools and oversight measures include the following:

  • FSA works with the Department’s Office of Inspector General (OIG) to constantly monitor for fraudulent activity among groups of FAFSA filers.
  • FSA conducts compliance reviews of colleges and universities. These compliance reviews ensure that fraud is not occurring at the campus level and that improper payments are not being made.
  • FSA’s Ombudsman receives complaints of cases of potential fraud through the Feedback Center. Such reports of suspicious activity are further examined by FSA and the OIG.
  • FSA encourages the use of the IRS Data Retrieval Tool that FAFSA filers can use to automatically import their tax data directly into the FAFSA form. About 52 percent of filers use this tool, which eliminates the need to further verify their income.
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The agency states its announcement builds upon the Biden Administration’s commitment to addressing inequities exacerbated by the COVID-19 pandemic and targeting resources and relief efforts toward the colleges and communities that need it most. Under the American Rescue Plan, the Coronavirus Response and Relief Supplemental Appropriations Act, and the Coronavirus Aid, Relief, and Economic Security Act, the Department has provided $76 billion in economic relief for students and colleges impacted by the pandemic.

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