On Monday, the Department of Education (DOE) announced more FAFSA issues that may delay award letters for this year’s entering college students. In addition to the FAFSA calculation changes, these issues could also impact some returning students’ packages.
As of 4/2/24, the DOE FAFSA Tracking Report has processed most of the backlog, with submitted FAFSAs totaling 6.7 million and processed 6.6 million. This means most schools have the FAFSA data in the format they need to process the award letter. This record format is called an ISIR (Institutional Student Information Record).
The problem is that the colleges have found errors in the ISIR records, affecting their confidence in all of the records received. Due to the delays, these records were received in a very short period, so they have not had time to discover all of the issues. As a result, award letters could be delayed even further.
Below is the list of error items, the DOE correction recommendation, and the impact of the award letter process.
FAFSA Issue 1: Educational Tax Credit did not always match the IRS reported number.
This affects about 15% of FAFSA applicants. The DOE has fixed this issue for FAFSAs submitted after 3/30. The DOE will reprocess only records where the credit was in error and reduce the students’ financial amount. It is estimated to impact only 5% of FAFSA submissions.
The problem is that the DOE has entrusted the school with the responsibility to identify the corrected FAFSA and use its professional judgement to resolve the issue. The DOE also stated that it would have more information in the coming weeks.
The colleges are legally responsible for following the financial need rules set by the DOE. Therefore, they have no confidence in the ISIR information to issue award letters with this error.
FAFSA ISSUE 2: Adjusted Gross Income (AGI) incorrectly transferred on the ISIR for people who filed amended returns.
The DDX (formerly DRT) system is how tax information is transferred from the IRS to the FAFSA. With the new integration, the amended AGI number was transferred, but the other tax information was based on the original tax filing, creating inconsistencies. Hence, there is an error in the SAI (Student Aid Index).
Under the reprocessing, the DOE will update the ISIR data with the original tax information. Under the old DRT system, a system flag was used to identify when amended returns were submitted. This amended flag will not be available for the 2024-25 FAFSA processing.
According to the DOE, the amended return problem affects about 2% of the FAFSA submissions. Again, the DOE will reprocess those whose SAI will be negatively affected. This leaves the college financial aid offices with more work to turn this around quickly and confidently.
FAFSA Issue 3: Inconsistence where manually submitted tax information was entered and did not match the tax information on file.
The DOE is still determining how many students this will affect, but it said it was small. Manual submissions were to be limited since FAFSA required all contributors to have an FSA ID. To obtain an FSA ID, you needed a Social Security number. For some students, this was a problem.
These FAFSA contributors were given Universally Unique Identification Numbers (UUIDs) in place of an FSA ID. The institution and states will be given a list of those contributors for their population. As in the error issues above, it will be up to the state or institution to identify and process the change.
FAFSA Issue 4: Ability to make FAFSA changes for both the student and college.
The ability to make changes to the FAFSA still needs to be made available. In a prior announcement, the correction functionality was planned to be available by the end of March. The DOE has pushed back this date for students until early April. No specific date was given.
For the institution, it will be after the students can make corrections. Again, no date was given.
The impact of this functionality is significant for schools to make adjustments in the appeal process.
FAFSA ISSUE Summary
This year’s FAFSA Simplification process is a disaster for students, parents, and colleges. The National Association of Student Financial Aid Administrators (NASFAA) President and CEO, Justin Draeger, made a statement. “But we must also emphatically reiterate that every day matters, and with hundreds of thousands of FAFSAs needing to be reprocessed, even more delays for students are coming. Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial aid offers out to students and families.”
The schools are also becoming concerned due to the lack of FAFSA submissions. Many financial aid officers are worried about sending award letters, considering all of the errors in the ISIRs and the fact that they are still being held accountable. They are in a difficult situation.
We understand your frustration and will try to keep you updated on the changes.
