Ed. Note: This article first appeared in MarketWatch
Financial experts, policy makers and parents express a lot of angst over the possibility that college students are taking on too much debt. Nolan Fein is doing his best to avoid that outcome, but lately he’s been getting thwarted by the breakdown of a government financial aid tool, Fafsa.
Last week Fein, a 24-year-old junior at the University of Pittsburgh, began attempting to fill out his Free Application for Federal Financial Aid, or Fafsa, the gateway form to receive most types of financial aid.
He uncovered that the tool, which pulls applicants’ tax information directly from the IRS, known as the IRS data retrieval tool, was down.
Fein figured it was temporary and so he logged on for several days to check back in hopes that it would be fixed. Now he’s coming to terms with the reality that the tool is down indefinitely and so he’s beginning to worry.
Fein is one of millions of students and families experts estimate are affected by the tool’s shutdown.
The IRS and the Department of Education said in a joint statement last week that they would be taking the tool offline at least for the next several weeks over concerns the tool could be “misused by identity thieves.” A bipartisan group of legislators has written to the Department of Education asking for more information about the tool’s outage.
But both the Department of Education and the IRS declined to comment about the Fafsa outage beyond the statement issued last week.
“It’s nearing the time where the longer I wait the less money I’m going to get,” said Fein, who owes about $54,000 in student loans already, despite taking pains to avoid a ballooning debt load, like starting school at a community college.
“I’m afraid I’m going to have to take out a huge loan and I’m not going to be able to pay it off.”
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The IRS data retrieval tool is of crucial importance to students clamoring for financial aid. Without it, families are required to manually input their tax information on the Fafsa, a tedious task that can delay or jeopardize their access to aid.
What’s more, adding any roadblocks to an already arduous process can deter students, particularly those who are the first in their family to apply to college, from seeking aid.
“Any small obstacle can throw them off course,” said Sarah Jensen, the director of college access and success at Commit!, a Dallas youth-focused nonprofit.
“If you’re already feeling like you’re not college material, just to run into something like ‘I can’t figure out how to fill out my Fafsa,’” pushes students to think, “’I must not be college material at all’ and they’ll just stop the process.”
There’s a particularly high risk for confusion and uncertainty to set in among students and families because the breakdown in the tool wasn’t communicated effectively, said Carrie Warick, the director of policy and advocacy at the National College Access Network, a nonprofit association of college counselors and college access professionals.
For the first several days the tool was down, there was almost no formal communication about it, she said. Even still, students and families see a cryptic message saying the service is down due to “system maintenance.”
“If you’re a parent or a student doing this at home with no support from the broader higher education field, the message makes it appear that this is a temporary problem,” she said.
Julia Seeberger knows that feeling. She estimates she tried to use the data retrieval tool about three times while filling out the form for her daughter’s financial aid before realizing it wasn’t going to be fixed any time soon.
Seeberger is an old hand at Fasfa filing, the one she started earlier this month was her 12th — she’s filled out the forms for all four years of her three children’s schooling, but she described this experience as the “biggest hassle.”
Luckily she was able to easily track down her own tax information, but getting it from her 20-year-old daughter was more of a challenge.
Ultimately a process that normally takes her about 15 minutes took several days in fits and starts as she collected the necessary documentation.
“If it’s not going to be working just say it and be upfront about it and that way people can collect all the documents they need before they start,” she said.
As Seeberger’s story illustrates, there are workarounds students and families can use to file their Fafsa without the data retrieval tool, but often those can cause delays, which are particularly frustrating this time of year with deadlines to apply for state and institutional aid looming.
Applying for aid manually is an arduous task
To input their tax information manually, applicants need to have a copy of their tax returns from 2015, something that not all families or students may have on hand.
If they don’t have a copy, they can request a tax transcript from the IRS, but getting one online requires proof of identity in the form of a mortgage, credit card, auto or other loan, something many low-income families don’t have.
If families want to request the transcript by mail, the process can take several days.
“If I’m going back to my 17-year-old self, I just don’t know what the hell I’d be doing right now to navigate all of this,” said Austin Buchan, the chief executive officer of College Forward, an Austin, Texas-based college coaching organization.
He likens it to a tax nightmare: “Imagine us, as adults waiting until April 14 to do our taxes and we’ve been using TurboTax for the last five years and all of the sudden their service goes down.”
What’s more, inputting the tax information manually increases the risk that a student will be flagged for verification, a process where schools require students to prove all of their information is correct.
Research indicates that low-income students are more likely to face verification and when they do, it’s another obstacle that can make them more likely to stop pursuing aid.
The data retrieval tool can even be crucial in the verification process.
When Marianna Lira, a freshman at San Francisco State University found out through a 1 a.m. email that her information was flagged for verification, she panicked and rushed to try to confirm her information by using the tool, but soon realized it was down.
“It’s been really stressful,” she said, adding that she’s been trying to navigate the arduous process of requesting a tax transcript between work and studying for midterms.
“When I got that email when I got home that night, I kind of panicked because without the financial aid there is no way I could go to school.”
In addition to creating hassles for current college students and college applicants, the data retrieval tool outage is posing challenges for student loan borrowers trying to better manage the repayment process.
Borrowers with federal student loans can pay back their debts according to their incomes, but first they need to prove what their incomes are.
Often borrowers use the data retrieval tool to do so — without it, borrowers may delay accessing a more affordable payment plan.
For some borrowers, these kinds of delays could be unsustainable.
In order to stay on an income driven repayment plan, borrowers need to recertify their income annually by a certain deadline or else their payments jump. More than half of borrowers missed their deadline in 2015, according to the Department of Education.
The absence of the data retrieval tool only increases that risk.
But the outage has implications beyond the individuals facing challenges using Fafsa. It’s turning back the clock by several decades on progress making the financial aid and loan repayment systems easier to navigate, said Faith Sandler, the executive director of the Scholarship Foundation of St. Louis.
Though the tool has only been around since 2009, students and families have grown accustomed to using it, and throwing a wrinkle in that routine with deadlines fast approaching can have a major impact, she said.
“It decreases people’s confidence in the process,” said Kevin Fudge, the ombudsman at American Student Assistance, a nonprofit focused on education finance.
“There’s bipartisan energy as well as energy from the higher education community to make the processes as streamlined and as simple as possible and it’s important to keep progress there on these initiatives.”
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