Verification, Subsequent ISIRs and Conflicting Information
It is important to be familiar with the following verification changes and be reminded of the requirements for subsequent ISIRs and conflicting information. FAME is enhancing our financial aid software products to assist schools with these requirements and schools will be notified of any changes in product release announcements.
Beginning with 2016–2017, a student may move from Verification Tracking Group V1, V4, or V6 to group V5 based on corrections made to their CPS record or on other information available to the U.S. Department of Education. If verification was already completed for the previous group, the student is only required to verify the V5 information that was not already verified. If verification was not completed for the previous group, the student only needs to verify the V5 information. No disbursements of Title IV aid may be made until the V5 verification is satisfactorily completed. If the applicant does not complete verification, the school is not liable for any Title IV aid it disbursed prior to receiving the group V5 ISIR. The student is liable for the full amount because without verification there is no evidence the student was eligible for that aid.
New for 2017-2018 award year only, a “C” flag and Comment Code 399 is assigned when the student or parent reported different 2015 income and tax information on their 2017-2018 FAFSA than what was reported on their 2016-2017 FAFSA. The institution must compare all of the 2015 income and tax related items from both years’ ISIRs to determine which income or tax item(s) are in conflict. If, for either year, the institution had verified the conflicting information item(s), or the student or parent had transferred information into the FAFSA using the IRS DRT and had not changed any of the transferred information (ISIR Fields for student and parent with a value of ‘02’), the institution can assume that the verified or IRS DRT transferred values are correct and must, therefore, submit corrections to the other ISIR year’s values. There is an exception if the institution is aware that, subsequent to verification or to the use of the IRS DRT, an amended 2015 tax return was filed with the IRS, the institution must ensure that both years’ EFCs were calculated using amounts from the amended tax return, regardless of whether verification was completed or the IRS DRT was used.
The institution will likely need to contact the student to determine why information that was reported on one FAFSA differs from what was supposed to be the same (tax/calendar year 2015 information) on the other FAFSA. It is likely that corrections will need to be submitted for at least one of the years.
Until the conflicting information issue has been resolved, the institution may not disburse any additional 2016-2017 or any 2017-2018 Title IV aid. In cases in which the institution is unable to resolve the conflicting information, the institution must consider the student to be in an overaward status for any need-based 2016-2017 Title IV aid (Title IV grants, Federal Perkins Loans, and Direct Subsidized Loans) that was disbursed. Monies earned by a student employed under the Federal Work-Study (FWS) Program never need to be repaid, however you must immediately cease paying the student with FWS funds.
When the conflicting information results in a Title IV grant or Perkins Loan overaward that cannot be resolved by adjusting subsequent disbursements, the student must repay the portion of the 2016-2017 disbursed funds for which the student is no longer eligible. Although the calculation of such an overpayment may have included funds that were used to pay institutional charges as well as funds provided directly to the student, the institution is not financially liable for any repayment based upon the resolution of conflicting information. The normal procedures for handling Title IV overpayments must be followed.
You are generally required to review all subsequent transactions for a student for the entire processing year even if you verified an earlier transaction. First determine if the EFC or the “C” flag has changed, or if there are new comments or NSLDS information that impact eligibility for aid. Also, check any updates or corrections or whether the verification tracking group has changed. If the EFC has not changed and there are no changes in the “C” flag, tracking group, or NSLDS information, no action is generally required. If the EFC does change, but it either doesn’t affect the amount and type of aid received, or the data elements that changed were already verified, no action is required. But if the EFC changes and the pertinent data elements were not verified, then you must investigate. Of course, any time the “C” flag changes or NSLDS data have been modified, you must resolve any conflicts.
Resolution of conflicting information
You may not disburse aid until you have resolved conflicting information, which you must do for any student as long as the student is at your school. Even if the conflict concerns a previous award year, you must still investigate it. You have resolved the matter when you have determined which data are correct; this might simply be confirming that an earlier determination was the right one. Of course, you must document your findings and explain why your decision is justified.
(2016-2017 FSA Handbook, AVG, Chapter 4 & 5)
(DCL GEN-16-14, August 3, 2016, U.S. Department of Education)
This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.