FAFSA now aided by IRS Data Retrieval

Filling out a Free Application for Federal Student Aid (FAFSA) could now take as little as 10 minutes.

The new IRS Data Retrieval process, which has been available since Feb. 5, allows students to instantly enter both the parents' and the student's tax information into the FAFSA, avoiding a lengthy process of acquiring tax information and waiting to turn in tax transcripts to the University of Northern Iowa.

"Now, we've come to the point where you can basically transfer your tax documents into each of the fields with the click of a button," said Tim Bakula, associate director of financial aid at UNI.

He said groups such as the Department of Education and Federal Student Aid have worked to make the FAFSA easy to file.

"Doing the FAFSA ... seemed like a more daunting task for families in the past where they'd have to go and have their actual taxes on file or use an estimate," Bakula said. "It just prevented a lot of people from continuing on and pursuing the FAFSA, especially either first-generation or low-income students or just students who were intimidated by the process."

While the national average for filling out a FAFSA is 23 minutes, Bakula has seen students who worked in the Office of Student Financial Aid in the past complete their entire FAFSA in 10 minutes.

"(Parents and students) don't realize how quick it is now," Bakula said. "Especially with (the IRS Data Retrieval), this should always bring down that average next year when they report back on it."

The IRS Data Retrieval process requires a few basic steps.

Students who file their taxes electronically must wait two to three weeks before they can use the IRS Data Retrieval on their FAFSA. Those who file a paper copy must wait six to eight weeks. The same is true for parents and their taxes.

If a student has indicated on their FAFSA that they or their parents have filed or will file their taxes, they will see an option that prompts them to upload IRS tax data. If the student clicks on this option, they will be redirected to a separate IRS page. They will be able to log in and upload their tax numbers directly into the FAFSA. The same information can be accessed for parent taxes.    

"It's not an official requirement — it just makes life easier," Bakula said.

According to Bakula, using IRS Data Retrieval can also save time later in the FAFSA process.

One in three students at UNI will be asked to verify their tax information. The federal government requires this of all schools that offer federal financial aid to their students. It allows the university to verify the tax information given by students on the FAFSA and students' real tax results.

If a student is chosen for verification of next year's FAFSA information, they must request and turn in a tax transcript, instead of their 1040 tax form as in previous years. If a student fills out a FAFSA using IRS Data Retrieval, this step can be skipped.

"One of the big benefits is, if you are selected for verification, and it sees that you did Data Retrieval, you don't have to turn in anything other than (an additional required) worksheet that the school gives you," Bakula said.

Even though it is not difficult to acquire a tax transcript, it can take a while to receive. The tax transcript can be requested via phone, online or by mail.

"Transcripts shouldn't take too long to receive, but there is some trepidation on whether or not this will cause delays because someone has to now order a transcript," Bakula said.

However, Bakula also said this wait time should not cause problems in awarding financial aid for students at UNI.

According to a February 2011 letter written by William Taggart, the chief operating officer for federal student aid at the U.S. Department of Education, students may run into problems if they do not use Data Retrieval. If students do not use Data Retrieval or receive data from the IRS and then change that information, they will be asked to explain to their school why the updated data is more accurate than the IRS data.

Bakula said students won't get to appeal their reason for changing the data; they will only be able to provide a transcript or go back and use the Data Retrieval.

According to Taggart, the Data Retrieval process "will improve the administration and integrity of the Federal Pell Grant." In other words, the process will help distribute the correct amount of grant money to qualified students.

This semester, 3,800 UNI students have already turned in their FAFSA. A third of these students have already been selected for verification. These students can go back into their FAFSA and do their data retrieval now by using the "Correct a Completed FAFSA" tab to override their previous tax estimates.

Students who did not use the IRS Data Retrieval will also be notified throughout the spring semester of the opportunity to go back to their FAFSA and utilize the function.

Students who are not able to use the retrieval will be told during the data transfer process whether or not they are eligible by an alert in the system.

"We (UNI), along with the Department of Education and FAFSA, would like to see as many students utilize (the IRS Data Retrieval) as possible," Bakula said.