Earlier this month, the Internal Revenue Service (IRS) and U.S. Department of Education Office of Federal Student Aid issued a joint statement announcing that they had removed the IRS Data Retrieval Tool.
This change could significantly impact millions of students. Individuals rely on the IRS Data Retrieval Tool when they complete the Free Application For Federal Student Aid (FAFSA) or an application for an income-driven repayment plan (IDR).
There is currently no date listed as to when the tool will be back online, according to the homepage for FAFSA pictured below.
What is the IRS Data Retrieval Tool?
When applying for FAFSA or an IDR plan, the government prompts you to enter your family income and assets. The forms need to be precise, so there’s no room for guesswork. Therefore, the information you enter must match your taxes exactly.
That’s where the IRS Data Retrieval Tool comes in. It makes the process a lot simpler and more precise by pulling your financial information directly from the tax returns you previously filed.
According to Jesse O’Connell, deputy director of finance and federal policy with the Lumina Foundation, the loss of this tool is a major imposition. Plus, it makes the process much more labor intensive.
For example, instead of being able to import their tax information directly into the FAFSA form, students now have to enter each field by hand.
“This also increases the likelihood that they’ll be selected for a secondary review step called verification,” O’Connell explains. “It’s when a college financial aid office is required to ask for additional documentation to confirm the information entered into the form.”
With the IRS Data Retrieval Tool out of commission, students and their families will likely find it more challenging to apply for financial aid without making any errors the first time around.
“This process can be confusing for some students and families and is yet another barrier between them and successful enrollment,” says O’Connell.
Why was the tool removed?
In their joint statement, the IRS and Department of Education cited concerns about data security and potential misuse from identity thieves. While they did not say how long it would be until they reinstated the tool, they said it could be several weeks.
The backlash has been significant. Members of Congress, including Sen. Lamar Alexander (R-TN), chairman of the Senate Committee on Health, Education, Labor, & Pensions, sent a public letter to Betsy DeVos, the new Secretary of Education about the situation.
In the letter, Congress members cited the impact the tool’s removal will have on students, particularly low-income individuals. They are requesting a briefing on the issue – and the Department of Education’s plans to fix it – by March 24.
How does this change affect those applying for FAFSA or IDR?
For some individuals, the IRS Data Retrieval Tool is an essential aid for completing FAFSA or an IDR application.
Without the tool, individuals have to use digital or paper versions of previous tax returns to complete their applications. If you did your taxes online with software such as TurboTax, it might not be a big deal. But if you filed using the paper forms and lost your return, you could be out of luck.
And students who can be claimed as dependents face additional difficulties. They have to hope their parents kept the forms handy–and that they have a good relationship with their family– or they will be unable to complete their applications.
What can students do instead?
If getting a paper or digital version of your tax returns is not an option, don’t wait for the IRS Data Retrieval Tool to return.
“Students should still pay attention to deadlines and get their FAFSA completed in a timely fashion,” says O’Connell.
It’s important to complete your FAFSA application as soon as possible. The earlier you submit your FAFSA, the better your chances are when it comes to receiving grants or loans for your education.
“Certain states or institutions have limited pools of grant funding and allocate it on a first-come, first-served basis,” O’Connell explains. “So filing the FAFSA later in the cycle could result in missing out on aid funding that a student might have otherwise received.”
If you cannot get your previous tax returns, you can get the necessary information with one of the following options:
1. Visit the IRS Get Transcript website.
With this service, you can register for an online account and view your tax return transcript. To get your transcript, you need the following information:
- Your Social Security Number
- Your date of birth
- The mailing address used to file your return
- Mobile phone number
- Credit card or car loan account number to verify your identity
2. Request a paper transcript.
If you do not have online access or do not have all the identifying information necessary for the web transcript, you can also ask the IRS to mail you your transcript. You can call 1-800-908-9946 and request a transcript.
With either option, you will not get a complete return. However, you will get enough information to complete your FAFSA or IDR application.
Applying for financial aid is still possible
While the loss of the IRS Data Retrieval Tool is a huge inconvenience, don’t let it derail your education plans or repayment options.
Pursue alternatives to get the necessary information and complete your forms as soon as possible to ensure you get the financial aid or relief you need.
For more information about getting financial aid, check out our complete guide on finishing your FAFSA on time.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.04% – 13.04%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.12% – 10.98%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|4.92% – 10.01%7||Undergraduate and Graduate|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|