An online resource that makes it easier for millions of students to apply for college scholarships, grants and loans will be out of commission until next year, putting them at risk of losing out on financial aid.
Families filling out the Free Application for Federal Student Aid (FAFSA), the form the government and colleges use to determine financial aid, have come to rely on the Internal Revenue Service Data Retrieval Tool to speed up the process. The web-based resource lets people upload tax-return information and eliminate tedious paperwork, but the IRS and Education Department disabled the tool this month, citing suspicious activity by hackers.
On Thursday, the federal agencies issued a joint statement, saying the tool will remain offline until October as extra security protections are put in place. The IRS shutdown the data retrieval tool after identity thieves tried to use personal information from it to file fraudulent tax returns. The agency has grown more cautious after a 2015 cyberattack in which identity thieves breached 330,000 taxpayer accounts and tried to break into an additional 280,000 accounts.
“While this tool provides an important convenience for applicants, we cannot risk the safety of taxpayer data,” IRS Commissioner John Koskinen said in a statement. “Protecting taxpayer data has to be the highest priority.”
Koskinen’s statement “betrays a disheartening lack of understanding about how vital this tool has become in streamlining the financial-aid application process,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators (NASFAA). The government, he said, has ignored a petition from financial aid administrators, admissions officers and guidance counselors to ease application demands that could lead to delays and backlogs for students during the outage.
James W. Runcie, who heads the Federal Student Aid office at the Education Department, said the agency has “heard from students, parents and the financial-aid community that applying for aid is harder” without the tax tool, and pledged to help families successfully submit applications.
Applicants can fill out the paper FAFSA form or still use the online version and manually enter tax return data. But student advocates worry that both of those options will lead to errors. And those errors may result in students being asked to verify information with additional documents, a time-consuming process that could take them out of the running for aid awarded on a first-come, first-serve basis.
Advocacy groups and members of Congress have pleaded with states to push back their financial aid deadlines in light of the shutdown, since most jurisdictions rely on the FAFSA to dispense grants. Colleges and universities also want the application by March to divvy up their own institutional dollars.
Because the window for submitting the form opened in October — two months earlier than usual — high school seniors completed 603,000 more FAFSA applications by mid-February than they did a year earlier, according to the National College Access Network. But the organization fears that low-income students without the proper guidance from parents or counselors are still wading through the application process, and the outage could discourage completion.
The consequences of disabling the tax tool extend beyond financial aid. People enrolled in income-driven repayment plans must update their tax information every year for the government to cap their monthly student-loan bill to a percentage of their earnings. The IRS tool streamlines that certification process, but without it, people may take longer to complete the form and miss their deadline. And that could increase the amount of money they pay per month.
“You incur higher costs and you face potentially unaffordable payments until you can get your information in,” said Lauren Asher, president of the Institute for College Access and Success (TICAS), an education nonprofit organization. “Everything that makes the process harder makes it less likely that people are going to make it all the way through.”
Colleges, consumer groups and lawmakers have been critical of the IRS and Education Department’s handling of the shutdown. The agencies waited a week after taking the the tool offline to inform the public and offered little explanation. The House and Senate education committees have requested a briefing on the cause of outage and urged Education Secretary Betsy DeVos to do more to get the word out to students and borrowers.
There is no mention of the outage on the government website, studentloans.gov, where people apply for income-driven plans, and only a small alert on the FAFSA homepage. Draeger said students filling out the FAFSA complain of still being directed to the disabled IRS tool and having trouble returning to their application.
The retrieval tool has been in operation for nine years and used by millions of families to shave time off the application process. The federal government offers more than $150 billion in grants, loans and work-study funding for college, but has struggled to get students to apply — a feat some worry will only get harder now that the tax tool is down.
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