By Catherine Brown, Senior Director, Policy and Advocacy
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As many National College Attainment Network (NCAN) members know, the rules around sharing data submitted through the Free Application for Federal Student Aid (FAFSA) changed with the implementation of FAFSA Simplification several years ago. Once the Office of Federal Student Aid (FSA) began importing most applicants’ Federal
Tax Information (FTI) directly from the Internal Revenue Service (IRS), greater privacy protections kicked into place, limiting the ability of colleges and universities to share student data with scholarship providers, college access and success nonprofit
organizations, and even student support functions within the same institution of higher education (IHE).
While FSA has released guidance detailing
what data can be shared and for what purpose, the rules are confusing. According to a National Association of Student Financial Aid Administrators (NASFAA)
survey only 58% of respondents reported
being willing to share federal tax information even with student consent.
We know many NCAN members that are scholarship providers have relied on student data, such as adjusted gross income (AGI), Pell status, and Student Aid Index (SAI) to award need-based grants in the past. To continue this practice, some adjustments may
be needed, and relatively minor workarounds may make it easier to determine who qualifies for scholarships and how to select recipients. To that end, NCAN recommends scholarship programs:
Require applicants to provide their FAFSA Submission Summary as part of their scholarship application: FAFSA Submission Summaries include students’ estimated SAI, which is a useful indication of financial need. Students with an SAI
below 6,655 are eligible to receive a Pell Grant, and the lower the SAI, the greater financial need the student has. SAIs can be as low as -1,500, and students with SAIs of 0 are eligible to receive the maximum Pell Grant award. FAFSA Submission
Summaries are available to everyone who completes a FAFSA within 24 to 48 hours. Students are notified when their FAFSA has been processed and receive a link to their summary in their fsa.gov account. By requiring students to include their submission
summaries with their scholarship applications, providers may be able to avoid the need to obtain FTI completely.
Migrate to using SAI instead of AGI or unmet need when determining scholarship awards: Because IHEs may only provide students’ AGI when students have given explicit consent (and even then, schools may not be willing to provide this
sensitive information), we recommend that scholarship providers stop relying on AGI for the awarding of scholarships. SAI is a strong approximation of financial need, and much easier for scholarship providers to obtain than AGI.
Create a form that students can use to provide consent for IHEs to share their FTI: If a scholarship provider wants to use AGI or any other piece of FTI, we recommend that they create a simple template that:
Allows students to indicate the name of the college or university and check a box that says their FTI may be shared with the scholarship provider;
States the purpose for which the information is being disclosed (applying for a scholarship);
States that the information may only be used for the specific purpose noted and no other purposes; and
Allows the student to sign the form and instructs them to submit it to the IHEs that they plan to attend.
Some IHEs may require students to complete a form that is unique to their institution, but scholarship providers may be able
to accelerate the process of data-sharing by creating a ready-made plug and play form that students can proactively bring to financial aid administrators.
Going forward, FSA is considering making two improvements that could make it easier for scholarship providers to receive the information they need. First, the agency is considering implementing real-time FAFSA processing. This means that almost immediately
after submitting a FAFSA, students would receive a final (not estimated) summary of the federal student aid to which they are entitled, eliminating the 24-to-48-hour period. Students could then download and share this summary with scholarship providers
without having to log back into their studentaid.gov account. Second, FSA is considering adding a “Send my FAFSA” button to the FAFSA form that would allow students to indicate directly on the FAFSA that they want their data to be sent to organizations
beyond IHEs. Both improvements are on FSA’s to-do list, and we will let our members know as soon as they have been implemented.
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