Simplifying the FAFSA: Executive Summary (continued)

• Cut colleges’ paperwork burden. Currently, colleges and universities must verify the data that students and parents entered on the FAFSA, which requires gathering copies of actual tax forms and checking to see that information was transcribed and calculated correctly from the 1040. This administrative burden, estimated to cost colleges more than $400 million a year, would be dramatically reduced by using income data from the IRS, which does not require further verification by colleges.

• Protect data privacy. Millions of paper copies of families’ tax forms, with social security numbers and other personal information about every family member, are currently filed and piled in offices at thousands of colleges, universities, and trade schools across the country because they have to verify income data on the FAFSA. This privacy hazard would be all but eliminated if the information came directly from the tax form in the first place, and financial aid offices no longer had to keep copies of applicants’ tax forms.

Simplification Can Begin Now

Using tax data to simplify the FAFSA is both practical and feasible. At the IRS and the Department of Education, income data is already processed and stored electronically. Taxpayers can already ask the IRS to send their tax records to any third party, including another federal agency. With something as simple as a check-box on the FAFSA, aid applicants could have the Department draw the necessary income information directly from the IRS. The result: a significantly shorter, easier, and more accurate financial aid application process. We recommend that the Treasury and Education Departments immediately begin developing a plan for sharing FAFSA-required income data with aid applicants’ consent. This plan should focus on simplifying the process for students and parents, and doing it in the most efficient and secure way possible. Most of the adjustments to the aid application and verification process can be made administratively. However, if there are any procedural obstacles requiring changes in statute, Congress should act quickly to remove them. It is time to simplify the FAFSA by going to the source.