Since March, the IRS Data Retrieval Tool has been unavailable to students. An essential tool for people completing the Free Application for Federal Student Aid (FAFSA) or applying for an income-driven repayment (IDR) plan, its absence has affected millions of students.
Although the government reinstated the tool for IDR plan applications June 2, it has remained unavailable for FAFSA applications. However, the U.S. Department of Education announced the IRS Data Retrieval Tool will go live Oct. 1 for the 2018-2019 FAFSA application.
Its reappearance can help you get the federal financial aid to which you’re entitled, but there are some big changes you need to know about.
What is the IRS Data Retrieval Tool?
When you apply for financial aid on the Federal Student Aid (FSA) website, you’re asked to enter your family’s income and assets. The amount you enter must match your family’s tax return exactly. If you estimate or give a ballpark figure, the FSA can deny your application.
The IRS Data Retrieval Tool eliminated the need to dig up paperwork and last year’s returns. Instead, it automatically pulled your information and entered your income and assets on the form. Without the tool, you must enter the data by hand, increasing the risk of errors.
Why was it removed?
The IRS and FSA disabled the tool because of privacy and security concerns. Both organizations feared computer hackers and identity thieves could use it to access personal information and tax returns. In a statement, the IRS and FSA said the tool had to be removed until they could bolster the system’s security.
Criminals could start a FAFSA application and allow the IRS Data Retrieval Tool to enter the corresponding information, which gave them the family’s adjusted gross income. They could use that data to access tax returns and then file false returns to get tax refunds.
The backlash was significant. Members of Congress sent a public letter to Betsy DeVos, the secretary of education. Schools and nonprofit organizations also decried the removal, stating it would make getting financial aid more difficult, especially for low-income and first-generation students.
How will it affect your FAFSA application?
To address the security concerns, the FSA and IRS implemented changes. The new version of the IRS Data Retrieval Tool will limit the information applicants can see. The system will encrypt sensitive data and hide the information from the user’s view on the FAFSA site and in the IRS Data Retrieval Tool.
Both the FSA and IRS acknowledged this change could be uncomfortable for some users. Because the data surrounding income isn’t visible, applicants have no way to verify the amounts or make corrections. For now, this drawback is considered necessary to prevent criminal activity. The FSA and IRS might make more updates in the future.
What if I need to verify my information?
If the idea of not being able to see and correct information is uncomfortable for you, there are some alternatives. No one is required to use the IRS Data Retrieval Tool. Instead, you can use the following methods:
- Use digital or paper tax returns: If you have access to your family’s tax return, either online or as a hard copy, you can use it to find the necessary information. The return will list your adjusted gross income, which you can enter on the FAFSA.
- Request a tax return transcript: If you don’t have access to your tax return, you can request a tax return transcript. The transcript isn’t a full return, but it does include enough information to complete your FAFSA manually.
Applying for federal student aid
Although the changes to the IRS Data Retrieval Tool might not be ideal, you should complete the FAFSA as soon as possible to get the financial aid you need. You can use alternative methods to enter your information if necessary, but applying early ensures schools will consider you for grants and other aid.
For more information about getting financial aid, our complete guide on finishing your FAFSA on time can help.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|