On August 3, the U.S. Department of Education (ED) released a Dear Colleague Letter intended to provide schools with clarification on issues that may arise during the implementation of the use of prior-prior year (PPY) tax information. The guidance addresses how to minimize the instances in which a school would be required to resolve possible conflicting information between FAFSAs filed by students for the 2016-17 school year and 2017-18 school year since both rely on the same year of income information. It provides more information on the use of the IRS Retrieval Tool in submitting FAFSA; how conflicting information will be flagged on the student’s Student Aid Report and Institutional Student Information Record (ISIR); institutional responsibility for resolving conflicting information; and how to submit corrected information. A summary of the highly technical guidance is available below, but school administrators should also read the letter for full details.
Background. Last year ED announced that starting in 2016 students will be able to report income and tax information from the prior-prior year. For example, on the FAFSA for the 2017-18 academic year, students will report their 2015 income information, rather than their 2016 income information. This same 2015 income information would have also been used on the 2016-17 FAFSA under the previous procedure. Concerns have arisen that during the transition to the new procedure, there may be conflicting tax information between the two FAFSAs that use 2015 income information.
Guidance. ED suggests that the best way to prevent conflicting information is for financial aid administrators to encourage applicants to use the IRS Data Retrieval Tool for both FAFSA years and make corrections using the FAFSA on the Web (FOTW) process. To assist with identifying potential conflicts during the transition year (in which the same 2015 income information will be reported on two FAFSAs), FOTW will warn applicants if the income or tax amounts they have input into their 2017-18 FAFSA differs from the amount(s) reported on their 2016-17 FAFSA. If the applicant does not correct the 2017-18 information, edit and comment codes will be included on the student’s Student Aid Report and Institutional Student Information Record (ISIR).
ED has also developed a process where its Central Processing System (CPS) will compare the applicant’s last 2016-17 ISIR transaction, if any, and the 2017-18 ISIR. This review will determine if there is conflicting income and/or tax information between the two ISIRs and if any of this conflicting information would, once resolved, produce a significant change in the student’s expected family contribution (EFC). If so, the CPS will flag the applicant’s 2017-18 ISIR as requiring institutional resolution of the conflicting information. Included in the guidance is a table that outlines the conditions under which an institution will receive Conflicting Information Comment Code, and whether a resolution is required. Note that there may be instances where the 2017-18 ISIR will not be flagged for institutional resolution, even if there is a significant change in the EFC. If an institution is unable to resolve the conflicting information, the student is considered to be in an over-award status for any need-based 2016-2017 Title IV aid (Title IV Grants, Federal Perkins Loans, and Direct Subsidized Loans) that was disbursed, and aid should be adjusted according to the procedures set forth in the guidance.