4 reasons the IRS tool outage hurts community college students the most

When the Department of Education and the Internal Revenue Service (IRS) temporarily suspended an online data-retrieval tool in March, analysts expected the change to make completing the Free Application for Federal Student Aid (FAFSA) even more cumbersome for students.

And not only has it done just that—but it's been particularly challenging for community college students, Beckie Supiano writes for the Chronicle of Higher Education. She identifies four reasons why:

1. Their decision timeline is different

While applicants to four-year institutions typically need to make their college decision and complete the FAFSA by May 1st, the timeline for current community college students can vary, Supiano writes. Financial aid offices at community colleges traditionally see a surge in filings during the summer months. In May, many community college students are still deciding whether to attend college at all.

At Anne Arundel Community College in Maryland, 70% of incoming students apply for admission in July and August. There's not much reason for them to apply earlier unless they qualify for a grant program offered by the state, says Rich Heath, financial aid director at the school.

2. They need financial aid just as much, if not more, than four-year university students

There is a stereotype that community college is cheap, but it is not as affordable for students as people think it is, says Helen Faith, director of financial aid and interim dean of enrollment and veteran services at Lane Community College in Oregon. She shares that approximately 60% of students in degree or certificate programs at her school receive financial aid.

Some students can rely on the support of parents or a partner, but the students who do receive aid depend on it, Faith says.

3. Giving students guidance on FAFSA has become more difficult

Many financial aid offices at community colleges hold workshops to help students complete their FAFSA, Supiano reports. However, now that the data retrieval tool is unavailable, students cannot get very far unless they retrieve their old tax paperwork.

Mount Wachusett Community College, in Massachusetts, hosted workshops for students. But the school found that the workshop could only offer limited help if the family could not find its records, says Kelly Morrissey, director of financial aid at the school.

4. There may be additional steps beyond completing FAFSA

After completing their FAFSA, some students are selected for verification, which means they need to provide additional documentation of their financial records. Selected students will not be rewarded aid until they finish the verification process.

Students who use the data retrieval tool are less likely to be selected for verification. Entering tax data manually leaves more room for error, which could make students more likely to be targeted for a verification audit from the IRS.

This can be a barrier to completing the FAFSA for many students. Only 58% of aid applicants who were selected for verification at Mount Wachusett Community College last year actually completed the process, Morrissey says.

The timeline of the restoration of the data retrieval tool is "leaving out of the picture the students who are most vulnerable," she says.

In addition to the impact students entering community college, the loss of the IRS Data Retrieval Tool likely will also have a negative effect on continuing students, according to John Nelson, an EAB expert on financial aid.

“From the continuing student perspective, a tool they likely used last year has suddenly disappeared just as they’re reapplying for financial aid. They're going to have to learn a whole new process. It will feel to these students as if they are going through the financial aid application process for the first time, which elevates the risk of errors and FAFSA non-completion,” says Nelson.

According to Nelson, this means continuing students will behave more like incoming students, with the same challenges like securing tax transcripts and completing verification that add processing burden to community college staff. Nelson explains that financial aid staff at any college have limited capacity; any additional hour spent on processing is less time spent providing financial counseling to students and families. “This feedback cycle just reinforces the pernicious effect of losing the [IRS] data retrieval tool," he says (Supiano, Chronicle of Higher Education, 5/22).

How you can "nudge" students to complete their FAFSA forms

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