IRS Data Share program to simplify FAFSA

In an effort to persuade more students to fill out the Free Application for Federal Student Aid (FAFSA), the U.S. Department of Education (DOE) and Internal Revenue Service (IRS) are working to simplify the FAFSA.

One effort is to implement a program known as IRS Data Share, said Billie Jo Hamilton, USF director of financial aid.

IRS Data Share is an online program that will allow students to request their relevant IRS tax information instantly during the FAFSA filing process. Students can electronically request the information to be entered into the FAFSA form, Hamilton said.

The purpose of IRS Data Share is to decrease the amount of work for students to make the FAFSA less confusing, Hamilton said.

“If you don’t know what you’re doing, the FAFSA can take a long time to complete,” said Chesarae Kyer, a junior majoring in child psychology.

Kyer said she would use the IRS Data Share to retrieve tax information to complete the FAFSA.

“Most people are lazy and don’t want to take the time to file,” she said. “It’s one less step to finishing the FAFSA, so more people might actually file now.”

A test run of the IRS Data Share using a smaller population of students to see how well it really works, Hamilton said.

Students who file the FAFSA late for the 2009-10 academic year will be the test population for the IRS Data Share program, said Haley Chitty, director of communications at the National Association of Student Financial Aid Administrators (NASFAA).

Hamilton said in order for significant changes in FAFSA simplification to occur, Congress will have to make changes to the FAFSA formula through legislation.

“The program will be more widely implemented in the 2010-11 academic year for all students that file the FAFSA in July 2010 or later,” Chitty said.

Chitty said the biggest obstacle involving the IRS Data Share was the privacy and security issues involved with releasing IRS data to other departments. The IRS is resistant to sharing information between departments, he said.

To get around the security issues of sharing data, the IRS will release data directly to the applicant, who can import the information into the FAFSA application, Chitty said.

“This will be most helpful to the students who do not alter the data from the IRS,” he said.

If an applicant alters data from the IRS, they will have to submit a tax return to their school’s financial aid department to verify the altered information, Chitty said.

Chitty said students with recent changes in certain situations will not be helped by the IRS Data Share because their information must be verified as well.

“In the situation where a family has experienced a significant loss of income, (financial aid) can handle that on an individual, one-on-one case basis,” Hamilton said.

Hamilton said financial aid already has the experience and authority to re-evaluate the student’s income information and make adjustments to the projected family income.

The student would need to fill out a “change of circumstance” form in order to apply for re-evaluation on income, Hamilton said.