Each semester, thousands of U.S. undergraduates and soon-to-be college students log onto the Free Application for Federal Student Aid (FAFSA) in hopes that their economic status will bring them some financial relief from the ever-increasing cost of tuition. What is already a complicated process just got harder after students were met with a notice saying that the Internal Revenue Service’s (IRS) Data Retrieval Tool would be down.
The service, which transfers tax information into a student’s FAFSA application, significantly streamlines the financial aid process and reduces the need for additional paperwork. The tool went offline in early March due to security concerns, according to a statement issued by the IRS and U.S. Department of Education. The statement did not specify an exact timeline for the service’s return, but estimated that it will be down for several weeks.
The change could not come at a more inconvenient time for students and parents who depend on FAFSA to subsidize school expenses. Perhaps the most frustrating part of tool’s removal is that it came with little warning.
Applying for financial aid is a pain in general, but the tool’s absence disproportionately affects low-income and first-generation households. A 2016 study by Ideas42, a non-profit behavioral economics firm, found that 52 percent of students from the bottom income quintile enroll in postsecondary schooling compared to top income quintile students, who are 30 percent more likely to apply than their lower-income counterparts. The gap between these two numbers are indicative of the underlying obstacles facing low-income individuals in affording a college education. And while not necessarily synonymous with the bottom income quintile, first-generation students also receive a blow from the data retrieval tool’s suspension. Both groups are the most likely to ask for federal financial assistance but are the least likely to have college-educated family members who know how to fill out the FAFSA.
The tool’s removal has repercussions for many students on campus — regardless of whether they are first-generation or low-income individuals. Nearly 93 percent of Baylor students receive financial assistance, according to the university’s website. It should be noted that a number of students receive aid in the form of academic awards that are not necessarily tied to income. This aside, most grants, scholarships and loans use income as a factor in financial assistance.
The tool’s absence may bring additional requests for tax transcripts. Currently, FAFSA requires households to submit records from 2015, which can be accessed as digital or print copies at www.irs.gov/transcript. Once copies are attained, a student may have to send a transcript to the university. The transcript requests are nothing new, but the system outage does increase a student’s chance of having to file more paperwork.
To put the situation in perspective, say we have two students named Sally and Ben. Last year, they filled out the FAFSA using the data retrieval tool. This year, the students manually insert their tax information onto the form. Within a few weeks, Sally gets a request from her university to provide a copy of her tax transcripts. This notice stems from a mistake made within her form. Ben, who did the form correctly, does not get asked for additional information. Before this year, both individuals never had to submit their transcripts because the data retrieval tool left little room for error. Manually inserting information, however, does.
“If they [students] input it manually, there’s room for typos and mistakes to be made,” said Baylor student financial services associate director of counseling Amine Qourzal.
Qourzal said the department has been proactive about sending out notices to current students concerning this year’s FAFSA procedure and wants the issue resolved before the fall semester. For now, students still have time to send their financial information before the end of June.
While securing information should be a priority for the IRS, we are critical of the department’s decision because it shows a lack of foresight in the implications of the tool’s absence. The IRS and Department of Education said they feared identity theft and tax fraud among data retrieval tool users, so we criticize the groups for their method, not their intent.
