In a perfect world, all financial aid would be awarded and disbursed before classes begin (when applicable) and then we could all go on a well-deserved vacation. Unfortunately, the world of financial aid is far from perfect and typically our most challenging situations come up when a speedy resolution is required for the student to remain enrolled. Verification is a complicated process already. When the student has extenuating circumstances and classes have already begun, it moves to a whole new level. Luckily, the Department of Education (ED) has provided a very in-depth resource for all things verification. Presented in a helpful, Q and A format, this resource covers everything from the mundane to the obscure. Here are some of our favorites:
Q: How can a non-tax filer document they are a non-filer if they don’t have a social security number, an employer identification number, or tax identification number?
A: Each contributor that meets this condition may submit a signed statement containing the following information:
- Certifying that the individual(s) does not have a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number; and
- Listing the sources and amounts of earnings, other income, and resources that supported the individual(s) for the appropriate tax year; and
- If applicable, a copy of IRS Form W–2 for each source of employment income received for the appropriate tax year or an equivalent document. If the contributor can supply W-2 copies and these documents contain a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number, the school must require documentation of non-filing status from the IRS directly. Also, if the total of earnings reported exceed the threshold for filing taxes, the school must require the contributor to file a tax return before aid can be disbursed.
Q: Can an institution delay or waive verification if the student (parent/spouse) has received an extension by the IRS to file the applicable tax return?
A: While it’s unlikely that an extension would be granted for a long enough period to impact the verification process, the answer is no. In lieu of receiving the IRS data in an ISIR or collecting an IRS tax transcript, the school must collect a copy of the IRS extension request (form 4868) and other documentation applicable to the FAFSA fields being verified. For example, employer-issued W2 forms can be used to document earned income. The school is allowed to disburse funds based on completion of the above process but may choose to have the student (parent/spouse) update their FAFSA once the tax return has been filed or provide an IRS tax transcript with the filing details.
Q: How is IRS identity theft defined for the purpose of allowing alternative verification documents?
A: The IRS refers to identity theft that affects a filer’s tax records as Tax Administration identity theft. The most common situation is when the filer’s identifiers are used to fraudulently receive a tax refund. This is the only status that is recognized in the verification process. However, there is also a Non-Tax Administration identity theft designation which signifies a potential exposure of the filer’s identifiers due to a privacy breach. This designation is not sufficient to receive accommodation in the verification process.
Q: Does a school have to complete verification for students in V4 and V5 verification groups receiving only unsubsidized Stafford loan?
A: An institution should verify identity and statement of educational purpose for students in these verification groups regardless of what type of aid is awarded. Other items under V5 do not need to be verified, however. The purpose is to ensure only eligible students are receiving Title IV aid and improve program integrity, not to confirm the financials reported in the FAFSA.
Q: Can a school disburse Title IV funds for a student selected for verification who has submitted federally required documents, but not those required by the college?
A: It depends. If the missing documentation is to verify an item or items that will not impact a student’s Title IV eligibility, an institution MAY NOT delay the disbursement of Title IV financial aid. Here’s an example: a college uses institutional methodology to award its own need-based scholarship and requires students (or more likely parents) to document certain asset values that are not collected in the FAFSA, like primary home or retirement accounts. If these are the only missing documents and all the required FAFSA responses have been verified, funds must be disbursed.
Q: Can a school waive the verification requirement for a student who is eligible for both subsidized and unsubsidized Stafford loan, but has only accepted the unsubsidized portion?
A: No. The student cannot avoid the verification process by electing only the unsubsidized portion of their loan. However, the school can, on a case-by-case basis, decide to disburse the unsubsidized portion of the loan if they believe the student will complete the verification process and is just experiencing a delay.
Q: If a student received only an unsubsidized Stafford loan in one semester or term and then subsequently becomes eligible for need-based financial aid in another semester or term in the same award year and was selected for verification during the first semester or term, does a college have to complete verification before disbursing the need-based financial aid?
A: In short, yes. This would be a situation where the student has an eligibility change during the award year. It could be due to a change in enrollment or a Professional Judgement adjustment or any number of other factors. The school should complete the normal verification process before disbursing the need-based funds.
Q: Is it OK to have a policy of not awarding federal college work-study to graduate students, so they never have to be verified?
A: No, federal college work-study must be made available to all eligible students regardless of program.
Q: If a student is selected in verification group V4 or V5 for the 2025-2026 award year when the school has not yet fully disbursed the 2024-2025 awards, does the school have to wait for verification to be completed before disbursing the remaining 2024-2025 aid?
A: The identity component of V4 or V5 must be completed before disbursing aid for either award year. Identity verification relates not just to the award year in which the student was selected, but all award years for which the student has or will receive financial aid.
This is a relatively small selection of guidance for the more obscure situations that may come up during your verification and disbursement process. You can find more scenarios here.
If you are feeling overwhelmed at this time of year, it’s understandable. The Higher Education Group has experienced consultants to help you catch up with your late verifications or anything else you’re having trouble managing. Check out our Interim staffing solutions or email info@heag.us for more information.
