The access and use of federal tax information (FTI) under the FAFSA® Simplification program (to be fully implemented for the 2024-2025 award year) has been in the news lately, so we thought we’d try to answer some of the most common questions about what it entails and how it may impact your campus.
Question: How does this change how students, their parents or spouses complete the FAFSA?
Answer: The current data retrieval tool (DRT) allows the filer to authorize the release of data to the FAFSA, then the filer is providing the FTI to Federal Student Aid (FSA) and ultimately the institutions awarding financial aid. The new process will allow the filer to authorize FSA to conduct a match to the IRS, which cuts out a step in that process.
Question: Will this change the way FSA processes FAFSAs?
Answer: Yes, quite a bit. The IRS standards for protecting FTI required the Department to create a new system called the FTI Module (FTIM). The Central Processing System (CPS) will become the FAFSA Processing System (FPS). The FPS will send the FAFSA data to the FTIM, which will calculate the Student Aid Index or SAI (another new thing for 2024-25) and send it back to the FPS. So, any information from a tax return provided by the IRS will be stored separately from the rest of the student-reported FAFSA data.
Question: How will we be able to tell the difference between the process above and one where the student reports the FTI?
Answer: First, there will be one of the following codes in the ISIR:
- Tax filer and FTI provided to FTIM
- Not found at the IRS
- Found and a non-filer
- Found but IRS not able to provide information
Also, FTI obtained from the IRS will be labeled with CUI//SP-TAX at the beginning and end of the section on the ISIR.
Question: What changes will my institution have to make to support this new process?
Answer: To continue to receive ISIR data, institutions are required to enroll for an FTI SAIG mailbox, sign an updated SAIG enrollment agreement
, and install upgraded SAIG software. The revised SAIG agreements are anticipated release in fall of 2023 and must be completed prior to the launch of the 2024-25 FAFSA.
While colleges and universities will not be subject to IRS tax information security guidelines, FSA encourages partners to use IRS Publication 1075 as a guide when developing information security protocols.
This is only one of the major changes in store for the 2024-2025 award year. Luckily, FSA has plenty of resources to help you get ready, including training this summer. And, you can also follow the Higher Education Assistance Group blog to take a deep dive into each facet of the FASFA simplification program.
Change is hard, so if you have any concerns about transitioning your institution, email us at email@example.com to speak with one of our expert consultants.