College & Workforce Readiness

Feds Announce FAFSA Security Changes, Sparking New Worries

By Catherine Gewertz — August 14, 2017 3 min read
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In response to a major security breach, federal officials have announced a change to the financial-aid application that some worry could discourage students from applying for the support they need to go to college.

In a memo released last week, the U.S. Department of Education’s office of Federal Student Aid said that when families use the Free Application for Federal Student Aid, or FAFSA, this fall, they can transfer tax data from the Internal Revenue Service, but they won’t be able to see it.

Related: Major Changes Come to the FAFSA

Families can still use the much-vaunted data-retrieval tool, which instantly imports their tax information into the FAFSA. But instead of seeing the actual numbers from their tax returns, they’ll see “transferred from the IRS” in each data field.

That encryption is designed to protect personal and tax information from hackers. Attempts to hack into the system prompted federal officials to disable the data-retrieval tool—known as the DRT—in March, putting a major wrench into the financial-aid application season. The Internal Revenue Service and U.S. Department of Education have promised the DRT will be up and running again in October.

At least one of the hackers was trying to use the links between the tax and financial-aid systems to get President Donald Trump’s tax returns, according to news reports based on court records. IRS officials said the breach could have compromised up to 100,000 taxpayers’ private information, but that they caught on in time to prevent that from happening.

The Federal Student Aid office said in its memo that the change was made “to enhance the security and privacy of the sensitive personal data transferred into the FAFSA form from the IRS.” But some professionals are worried that the change could deter families from applying for financial aid.

“I think this creates an enormous disincentive,” said Jeff Levy, a Santa Monica, Calif.-based independent counselor who helps families obtain financial aid for college. “How can you expect people to submit applications where they can’t even verify their numbers?”

The FSA guidance said the agency didn’t anticipate that families would need to make corrections “because the data came directly from the tax return filed by the applicant or parent.”

But Levy said mistakes can still happen. When he used the data-retrieval tool for his daughter’s college application, there were errors in the auto-populated tax information, and he had to input the correct data manually.

He said he will advise his clients to input their tax information manually, rather than import it from the IRS into the FAFSA and be unble to check the data. But the process is much more difficult, Levy said, and is a particular barrier for families who need assistance the most: first-generation college families.

IRS and FSA officials were not immediately available for comment about the impact of the changes to the FAFSA process.

The data-retrieval tool was hailed as a powerful way to simplify the process of financial aid, since lack of aid is a key stumbling block on the road to college. That, together with a new rule that let families use tax information from two years ago, rather than just one year ago, were intended to boost financial-aid rates.

Masking families’ tax information on the FAFSA could work against that goal, said Megan McClean Coval, the vice president for public policy and federal relations for the National Association of Student Financial Aid Administrators.

“It could potentially have an impact if fewer people use it because they’re uncomfortable with not seeing their [tax] data on the application,” she said.

If families skip the data-retrieval tool because they’re uneasy with the masked data, they’ll have to type in their tax information manually, which carries a greater risk of mistakes, and of having to go through subsequent verification process with the education department farther down the line, Coval said.

Coval said NASFAA encourages the IRS to find a more permanent solution to the security problem that doesn’t involve masking families tax information in the FAFSA form. “We’d like them to find a fix that strengthens security without creating more barriers,” she said.

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A version of this news article first appeared in the High School & Beyond blog.