By: Tiffany Motyka, Ed.D., FAS Senior Consultant
In the last few years, many legislative agendas have made updates to the Higher Education Act of 1965 (HEA) to improve the federal financial aid process.
These Higher Education Act updates were the result of:
- Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act) of December 2019
- FAFSA Simplification Act in December 2020
- The Consolidated Appropriations Act of 2021
- The Consolidated Appropriations Act of 2022
- FAFSA Simplification Act Technical Corrections Act (FSATCA) of March 2022
These legislative agenda items have paved the way for a better FAFSA user experience and more protection to family income data. To ensure the student application experience is safe and seamless, the federal tax information (FTI) supplied by the Internal Revenue Service (IRS) to the FAFSA was designated as Controlled Unclassified Information/Specified Tax (CUI//SP-TAX). This means all information with this designation falls under the Internal Revenue Code (IRC) confidentiality protections.
Due to this protective designation of the Federal Tax Information data an applicant would have to provide active, annual consent for the information to be used for awarding purposes. According to FSA Electronic Announcement General-23-24, “To provide approval and consent, FAFSA contributors (including parent(s) or spouse) must agree to:
- the Department’s use and disclosure of their information (e.g., name and Social Security number) to match with the IRS;
- the disclosure of their FTI by the IRS to the Department;
- the use of their FTI by a Department official to determine an applicant’s eligibility for federal student aid and the amount for which they are eligible; and
- the redisclosure of FTI by the Department to an eligible institution, state higher education agency, or a designated scholarship organization (e.g., institutional or state financial aid).”
The submitted Federal Tax Information (FTI) is held in the FTI Module (FTIM) which was created to ensure broader security for the data received. This means each eligible institution of higher education would need access to a second Student Aid Internet Gateway (SAIG) Mailbox. This mailbox is the tool that allows colleges to securely exchange batch data with FSA Application Systems, which includes FAFSA data and FTI. According to Federal Student Aid, “The new SAIG agreements will require compliance with the protection of the FTI provided to our partners by the Department, including return information obtained in support of the administration of the federal student aid programs, and an acknowledgement of the criminal and civil penalties for the unauthorized inspection or disclosure of FTI.”
For more information on FTI and how this applies to the 2024-25 Award Year financial aid processes, please refer to:
- Electronic Announcement GENERAL-23-34, APP-22-26, and GENERAL-23-09
- IRS Publication 1075 – Tax Information Security Guidelines
- Guidance on the Use of Financial Aid Information for Program Evaluation and Research
Are you facing challenges at your institution?
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Financial Aid Services (FAS) has served higher education for over 30 years. Located in Atlanta, Georgia, FAS provides consulting, staffing, processing, and assessment services to assist institutions with improving operational efficiency, student satisfaction, and regulatory compliance in financial aid and student business services. FAS’ accomplished team averages 28 years of experience and has a combined 1,600 years of higher education experience. With clients in 49 states, FAS has successfully served over 1,800 institutions nationwide. The Company’s extensive experience combined with industry-leading expertise and focus on superior client outcomes, enables FAS to deliver lasting results to its clients and the students they serve. Visit www.FinancialAidServices.org for more information.