October 02, 2019

BuzzFeed: People Are Worried Applying For College Financial Aid Could Be A Total Mess This Year

Article Highlights Sen. Hassan's Oversight Efforts in Response to Tax Form Changes That Could Jeopardize Students' Financial Aid

WASHINGTON -- In case you missed it, BuzzFeed News published a piece this week discussing how changes tied to the 2017 tax law could jeopardize students’ federal financial aid.  

 

In a failed attempt to make good on Congressional Republicans’ promise to simplify tax filing for families, the Treasury Department used a “postcard” gimmick that instead made the fax filing process more complicated for many. One consequence of this gimmick is that it could lead to students missing out on federal student aid that they are eligible for.

 

The piece discusses Senator Hassan's efforts to push the Department of Education to mitigate the effect on students. This summer, Senator Hassan led a letter from 10 senators urging the Education Department and the IRS to fix the problems. Senator Hassan previously raised concerns about this issue during a Senate Finance Committee hearing, questioning IRS Commissioner Charles Rettig about the tax form changes.

 

Excerpts from the BuzzFeed piece are below, and you can read the full piece here. 

 

BuzzFeed: People Are Worried Applying For College Financial Aid Could Be A Total Mess This Year

 

Students applying for federal financial aid should be wary of new problems that could arise from changes to 2018 tax forms, warned a group of US senators as the Oct. 1 rollout date for the 2020–21 Free Application for Federal Student Aid approached.

 

Here's the background: The IRS changed the 1040 tax form — the standard federal income tax form — as part of the Trump administration's efforts to simplify filing taxes. “The new, postcard-size Form 1040 is designed to simplify and expedite filing tax returns, providing much-needed relief to hardworking taxpayers,” Treasury Secretary Steven Mnuchin said last year.

 

The form was redesigned to be the size of a large postcard. That sounded great at first but ended up being extremely complicated, creating "a mess" for tax professionals. The instructions for filling out the new tax form got longer, and some of the information that was previously on the old 1040 just got moved to new(!) tax forms. "The administration is using these gimmicks to try to tell an overly-simplified simplification story," according to a blog by the Tax Policy Center.?

 

These updates to a supremely boring (but important!) tax form will impact students applying for financial aid. According to New Hampshire Democratic Sen. Maggie Hassan, "these changes disrupted functions of the IRS Data Retrieval Tool, which allows students to automatically and accurately fill in their family’s tax information on their FAFSA form for student aid."

 

Some data that is no longer on the 1040, but information found on one of the other forms — such as capital gains, unemployment pay, prize money, gambling winnings, student loan interest deduction, self-employment tax, and educator expenses — won't be automatically exported to the FAFSA and will have to be manually inputted.

 

All this is bad because, honestly, who really understands their tax forms?

 

letter Hassan signed in August with nine other senators including candidate for the Democratic nomination for president Bernie Sanders asked the Department of Education and the IRS to find a solution. "This will not only further complicate the FAFSA completion process for many families," it read, "but will likely result in the submission of incomplete and inaccurate information regarding some applicants' financial aid eligibility."

 

Hassan said in a statement to BuzzFeed News, “Given the administration’s apparent lack of action to address this issue, I’ll continue working with my colleagues to push the Department of Education to provide guidance to try to mitigate issues for students and their families when they submit their FAFSA forms.”?? […]

 

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