The 2012-13 Free Application for Federal Student Aid (FAFSA) became available on January 1, 2012 at www.fafsa.gov. As you prepare to file your FAFSA for 2012-13, note these very important changes to the submission and application process.
While you can file your FAFSA using estimated tax information, ultimately your application will be easier and faster to process when your actual tax return information is pulled in by the IRS Data Retrieval Tool, which, allows the import of tax information directly from the Internal Revenue Service (IRS) into the FAFSA.
If you have not filed your taxes in time to use this feature and meet our priority filing date, you should still file the FAFSA so that you meet the March 1st deadline. Once you have filed your taxes you can go back to your FAFSA and use the IRS Data Retrieval Tool to update estimated information. Using the IRS data retrieval to correct estimated information will allow us to satisfy certain requirements if you are notified by our office that you have been selected for the verification process. Verification is a process mandated by the U.S. Department of Education that requires schools to gather additional documentation to check the accuracy of information submitted on the FAFSA.
-
IRS Data Retrieval Tool
FAFSA provides instructions to link to the IRS while completing the FAFSA. Certain data elements such as AGI and taxes paid will be entered for you on the FAFSA. The data is considered "verified" for FAFSA purposes.
To successfully use this option you must:
- Have a federal tax return filed with the IRS
- Have a valid Social Security Number
- Have a Federal Aid Personal Identification Number (PIN)
- Submit your address exactly as it appears on your tax return
You will not be able to use this option if:
- Your marital status changes after December 31 of the same tax year
- You filed married filing separately
- You filed an amended return
- You filed a foreign tax return
In order to use the IRS Data Retrieval Tool, the applicant and the applicant's parents (if the applicant is dependent) must have submitted a 2011 Federal Tax Return. The IRS Data Retrieval Tool can be used:
- approximately 10-14 days after your taxes were electronically submitted to the IRS
- approximately 4-6 weeks after your taxes were sent via regular mail to the IRS
When a student completes a FAFSA, the FAFSA may get selected for verification, which means the federal government wants the Office of Financial Aid to “verify” that the information provided on the FAFSA matches the student (and spouse, if applicable) and/or parents’ actual data on tax returns and other documents.
To help reduce the likelihood that your FAFSA is selected for verification, the U. S. Department of Education is encouraging all students and parents to use the IRS Data Retrieval Tool to answer the income information questions on the FAFSA. Families who do not use the IRS Data Retrieval Tool are highly likely to be selected for this process which requires applicants to submit an IRS Tax Transcript which is obtained directly from the IRS.
-
Verification Changes
If selected for verification, students will still be required to complete the Verification Worksheet. Documentation will be required if you indicated on your FAFSA that either you or your parents paid child support, which could include a signed statement from the recipient or official records. If you reported on your FAFSA that you or anyone in your household receives benefits from Food Stamps/SNAP (Supplemental Nutrition Assistance Program), you must provide written documentation from the issuing agency.
The Office of Financial Aid is now also required to verify filing status.
If you are selected for verification after you've completed a FAFSA and were not required to file a federal tax return, you will be required to submit W-2 statements (if applicable) and/or other documentation verifying your income.
-
Obtaining a Tax Transcript from the IRS
If your FAFSA is selected for verification, and you did not use the IRS Data Retrieval Tool option or you changed the IRS data, you will be required to request a tax transcript from the IRS and submit it to the Office of Student Financial Assistance. Personal copies of tax returns can no longer be accepted.
There are four ways to request your Tax Transcript: by phone, online, at your local IRS office, or by mail. Please make sure you request a Tax Transcript. DO NOT request a Tax Account Transcript or Record of Account because they cannot be used for financial aid verification purposes.
To order by phone:
Call the IRS at 1-800-829-1040, then select the following prompts:
- Option 2 (Personal Income Taxes)
- Option 1 (Tax History)
- Option 2 (Tax Return Transcript)
- Enter and verify Social Security number (if joint return both SSN’s required)
- Enter and verify number of street address
- Press 2 for Tax Transcript and indicate which year (i.e., 2011)
To order online:
Go to www.irs.gov, then select the following:
- Click Order a Tax Return or Account Transcript located in the left-hand column
- Click Order a Transcript under Step 3
- Enter your SSN, Date of Birth, Street Address, and Zip Code
- Click Continue
- Select Transcript for Tax Year (i.e., 2011)
- Click Continue
Pick up your tax transcript at your local IRS office:
You may pick up your tax transcript in person in the local Baltimore area at 31 Hopkins Plaza, Baltimore, MD 21201. The office is open Monday through Friday 8:30am to 4:30pm. Please call them at (410) 962-7969 prior to picking up your transcript to verify documents needed to retrieve your tax transcript.
If you're not in the Baltimore area, use this link to find your local IRS office.
A tax transcript can be ordered by mail:
Complete Form 4506-T (Request for Transcript of Tax Return). The mailing address is indicated on the form. Your transcript(s) will be mailed by the IRS within 5 to 10 days.
Historically graduate students have been eligible for both Subsidized and Unsubsidized Stafford Direct loans.
- Subsidized means that interest is paid by the Department of Education while a student is enrolled more than half-time, until after the grace period. In essence, the loan is interest-free to the student until graduation or withdrawal from school.
- Unsubsidized means that interest is charged to the student from the time of disbursement. If the student chooses to defer interest payments while in school, interest accrues and is added to the principal of the loan, thereby greatly increasing the total amount to be repaid.
-
Discontinuation of Subsidized Stafford loans for Graduate, Law, and APD students
Per the Budget Control Act of 2011 (the BCA), effective July 1, 2012, graduate, law, and APD students are no longer eligible for Federal Stafford Direct Subsidized loans. Loans received prior to July 1, 2012 are not affected by this change.
Graduate students may still receive Unsubsidized loans.
The annual Direct loan limit for graduate students remains unchanged at $20,500 per year, but will be limited to Unsubsidized loans only. Previously the limit was $8,500 in Subsidized loans and $12,000 in Unsubsidized loans.
The current interest rate on Subsidized and Unsubsidized loans is 3.4% and 6.8%, respectively. The effect of the new law is to increase interest students have to pay on the first $8,500 of Stafford loans received each year by 3.4%. The dollar amount is difficult to calculate, as it depends on many factors. Using the payment calculator on the FSA website for a 10-year repayment plan on an $8,500 loan, the total amount paid increases by $1,699. This amount can increase greatly if a student doesn’t pay the Unsubsidized interest while in school.