At the stroke of midnight ending December 21, 2018, (i.e., early Saturday morning, December 22, 2018) the U.S. Government entered a partial shutdown due to budget funding not being finalized, and requisite appropriations not being authorized, for all departments and agencies of the government.  The U.S. Department of Education (ED) already received its budget and funding approval back in September 2018, for the full 2018-2019 award year, through September 30, 2019.  Accordingly, it would seem that there should be no impact on institutions and students processing for Federal Student Aid Programs.

Yet, there are still some Departments of the U.S. Government that have not received budgets and funding for the current fiscal year.  Those non-funded departments and agencies were required to shut down “non-essential services.”  Thus, this may result in some indirect impact on students’ financial aid applications being fully processed, and on institutions’ ability to process students’ Institutional Student Information Reports (ISIR) generated from students having submitted a Free Application for Federal Student Aid (FAFSA).  So what are some potential implications or effects?

 

Probable Impact on Processing

Naturally, in the route that a student’s FAFSA navigates, part of that journey includes the multitude of database matches that confirm a student meets specified eligibility requirements.  Some of these, of course, are citizenship matches with the U.S. Department of Homeland Security (DHS).  There are also the database matches with the Selective Service System (SSS), the Social Security Administration (SSA), as well as the Department of Justice (DOJ), the Department of Veterans’ Affairs (VA), and Department of Defense (DOD), etc.  Since some of these entities have not yet been funded, it is quite likely that some database matches will be incomplete or unavailable.

Some institutions are noticing that a student’s ISIR comes in with an ISIR code of 390.  Per the 2018-2019 Student Aid Report (SAR) Comment Code and Text Guide, this comment code’s message reads as follows:

We were unable to verify your eligibility for federal student aid with one or more other federal agencies through computer matching programs.  Your school will contact you if additional information is needed.

Additionally, the 2018-2019 Student Aid Report (SAR) Comment Code and Text Guide phrases the “action needed” for this comment code as:

 

Resolution may be required.

One or more federal agency matches were not performed.  Determine which match based on the recent Electronic Announcement posted on the IFAP Web site, and/or the Pmessage sent through your SAIG mailbox.

The action that “may” be required is indicated to be conditional upon the requirements as will be specified in an Electronic Announcement to be posted on IFAP.

Further, it is likely that some students may be delayed in obtaining or unable to obtain IRS tax transcripts or Verification of Non-Filing statements from the IRS during the government shutdown.  (See the “NOTE” below.)

The bottom line for students and institutions is that there may be a delay in the distribution of student financial aid awards, and as a result, also a delay in the appropriate disbursement of applicable funds.

 

Plan for Processing Completion

As mentioned in the comment code guidance, ED should be informing the financial aid community of the steps necessary to resolve the comment code 390.  Since this is likely to be a widespread prevalence of the comment code 390 this processing year due to the partial government shutdown, it may very well be that ED will determine that for all ISIRs generated during the shutdown, that it will simply run them through the database matches again once the shutdown is ended.

ED’s only written guidance (as of this writing) was issued in an Electronic Announcement late Thursday, January 3, 2019.  It states:

As the community is aware, some of our systems and processes depend on information from—and actions taken by—other federal agencies, several of which are currently closed.  We are evaluating what impact these closures may have on FSA, including the impact on database matches conducted by the Central Processing System (CPS), and are working to limit the impact on our partners.  We will issue guidance to the community as soon as possible, as needed.

Therefore, there are no direct steps that ED is requiring of institutions to resolve the comment code 390, at this point.  However, as the above referenced Electronic Announcement further states:

Please monitor the Information for Financial Aid Professionals (IFAP) website for further guidance, as we complete our identification and analysis of potential issues related to the partial government shutdown.

 

Processing Action During Shutdown

Absent specific guidance from ED at this point, institutions should plan for tracking the students’ ISIRs that have the comment code 390 to ensure which students “may” need further processing once the government is fully operational again.  In the meantime, the institution may do some individual determination on some items, for example, the Selective Service System (SSS) website is still accessible and a student’s registration confirmation may be checked at www.sss.gov.  (It should be noted, however, that if the individual for whom information is being sought was not up to date as of the date of the shutdown, the information obtained directly from the SSS website may not be current if the student submitted a registration online after the shutdown commenced.)

NOTE:  Regarding income tax transcripts and verification of non-filing documentation from the IRS during the shutdown, we have been asked if institutions can begin to accept paper tax returns and written statements affirming an individual’s non-filing status, based upon a verbal comment made at the 2018 Federal Student Aid (FSA) Conference the last week in November that indicated changes in acceptable documentation would be coming.  While we anticipate ED to make some changes to allow certain instances of accepting copies of paper tax returns and written verification of non-filing statements, ED did specify in the verbal comments at the FSA Conference that ED’s official written guidance would be forthcoming about this potential change in documentation requirements.  (It is likely that there will be certain conditions and caveats given if and when ED does make changes to the current documentation specifications.)  The statement was made that schools should not alter their documentation controls until ED provides specific written guidance about potential changes in documentation obligations.  That is, until ED provides written guidance otherwise, institutions should still follow the prior written guidance given for 2018-2019 and 2019-2020 applications related to income and tax filing status documentation.

One piece of information we did just learn on Friday, January 4, 2019, is that the IRS, although still closed currently, was scheduled to begin processing requests for tax transcript information made through the Income Verification Express Service (IVES) program as of Monday, January 7, 2019.  If an institution utilizes this service either through direct enrollment with the IRS or through a servicer e.g., via Veri-Tax, etc., the institution should still keep in mind that there may yet be some delay until the IRS gets the backlog caught up.

 

Prepare Your Campus Operationally and Informationally

It would be good to communicate to your affected students about the potential impact on their applications for Title IV student financial assistance during the shutdown.  Likewise, it would be good practice to notify your affected offices at your institution, e.g., Business Office, Admissions Office, etc., of the potential effect on processing of students’ awards, and to potentially allow for some grace in students making payments otherwise anticipated, etc.

Once ED provides more specific written guidance about the impact of the partial shutdown and/or when the shutdown is over (hopefully soon!), we will let you know of any additional information.  At the same time, stay alert to any information ED posts on IFAP.

Should you have any questions regarding the information in this edition of our DYK, please feel free to contact FAME Customer Service through the Client Solution Center.

__________________________________________________

This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.