More than 700,000 Students May Have Incorrect FAFSA Data from IRS

On Tuesday, the White House's Office of Management and Budget (OMB) and the Education Department's Federal Student Aid (FSA) office, shared that approximately 700,000 students could have error-filled Free Application for Federal Student Aid (FAFSA) applications. This is all due to a flaw in a U.S. Internal Revenue Service (IRS) tool that communicates with the FAFSA platform.

The error refers to the 2022-23 FAFSA records submitted using the IRS Data Retrieval Tool (DRT) from October 1 to December 25, 2021. This tool helps pull tax return information from the IRS and paste it onto the financial aid application. However, the tool made mistakes when sharing information with FAFSA, which means the data students submitted may be incorrect.

The IRS and FSA have identified that this issue affected an estimated 4.8 million FAFSA records, but the number of students impacted is closer to 700,000. This takes into account that some students might have applied more than once.

The error revolves around reporting of the "Additional Financial Information" and the "Adjusted Gross Income"(AGI). The IRS DRT incorrectly included amounts in these fields, which inflated the income information for affected students.

This could potentially lead to fewer benefits for students who need financial aid. Higher earnings usually mean less need-based aid. Receiving less financial aid could make it difficult for students to afford their education costs.

The FSA and the IRS have noted that they're vigorously working to fix this issue. The departments plan to correct the data and recalibrate the aid eligibility determinations. Students who are affected will be contacted directly through mail with instructions on the next steps.

Weighing the importance of this issue, the OMB in a blog post stated, "Ensuring students receive the generous aid to which they are entitled is a top priority. The issue affecting a portion of FAFSA filers is being taken very seriously by the Administration." They've encouraged students and institutions to verify the accuracy of their information to receive the appropriate aid.

The FSA assured that they're committed to the process and aim to have the corrected data sent to schools by May of 2022. Their goal is to ensure that every student has an accurate understanding of the aid they're eligible to receive.

While this situation may cause some concern for students who are expecting financial aid, it's crucial to remember that assistance is on the way. The FSA and the IRS are working diligently to rectify this issue and format the gathered data accurately. By doing this, they hope to support every student in achieving their educational dreams.