IRS Data Retrieval Tool is Down
If you are in the process of completing your FAFSA for the first time, making corrections to the income tax information, or securing tax documentation to complete the verification process, please note that the IRS has temporarily taken down the IRS Data Retrieval Tool over security concerns. Current information is that “students and families should plan for the tool to be offline until the start of the next FAFSA season,” In the meantime, if you need the IRS data for verification, you are limited to submitting the Tax RETURN Transcript until further notice.
Big Changes Coming to the 2017-18 FAFSA
On October 1, 2016, the FAFSA application process will see the implementation of two significant changes, its most dramatic change since the birth of the FAFSA in 1992.
The first change moves the FAFSA availability up from its long standing January 1 launch date to October 1. This means the 2017-18 FAFSA will be available for students and families to complete less than one month after starting fall semester, 2016.
The second change moves the calendar year’s income to be reported on the FAFSA. The current process requires you to provide the income as reported on the prior year’s income tax return. Beginning with the 2017-18 FAFSA, you will be required to provide the prior, prior year’s (PPY) income tax information – in this case, 2015. In this implementation year, this means 2015’s income will be reported for both the 2016-17 and the 2017-18 FAFSA. Thereafter, PPY will roll forward annually – 2016’s income will be asked for on the 2018-19 FAFSA, 2017’s income on the 2019-20 FAFSA and so forth.
Since the vast majority of tax payers will have submitted their 2015 tax returns in the spring of 2016, use of the IRS Data Retrieval Tool (DRT) on the FAFSA should be generally available to almost all tax filers. Even applicants using the full November 1 extension to file their tax return can submit actual tax return information by filing their FAFSA after November 1.
Direct Loan Origination Fees Adjusted by Sequestration
As a result of the ongoing Sequestration, loan origination fees on the Federal Direct Student and Parent Loan programs will see a slight increase to its origination fees, beginning with loans disbursed on or after October 1, 2016. Origination fees are deducted from the loan prior to disbursement. The current Direct loan origination fee is 1.068%, and 4.272% on PLUS loans. 2016-17 Direct Loans not disbursed prior to October 1, 2016 will have origination fees of 1.069% and 4.276% on PLUS loans deducted.
Direct Loan Interest rates for 2017-18
With the signing of The Bipartisan Student Loan Certainty Act of 2013, the annual interest rates on the Federal Direct Loan programs were tied to the 10 year Treasury Bill rate and re-set each July 1. The interest rate for undergraduate students for the 2017-18 academic year was increased from 3.76% to 4.45% for both the subsidized and unsubsidized loans, while interest on the Unsubsidized Direct Loan for graduate students went from 5.31% to 6%. The Federal Direct PLUS Loan for both parents and graduate/professional students also saw an interest rate increase from 6.31% to 7%.