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Senate Passes Bipartisan Legislation Cosponsored by Senator Hassan to Simplify Process for Granite State Students Applying for Federal Financial Aid

WASHINGTON – The Senate unanimously passed this week bipartisan legislation cosponsored by Senator Maggie Hassan, a member of the Senate Health, Education, Labor, and Pensions Committee, that would simplify the process for Granite State students applying for federal financial aid. The bipartisan Faster Access to Federal Student Aid (FAFSA) Act would make it easier for students in New Hampshire and across the country to file their Free Application for Federal Student Aid (FAFSA) by having the Internal Revenue Service (IRS) securely send the Department of Education their federal tax information with one click. In addition to simplifying the process for filing the FAFSA, the legislation would also make the process for some student loan borrowers to pay back their loans more efficient. The legislation now heads to the U.S. House of Representatives.

“Students trying to get a higher education should not have to face the burdensome, complex web of red-tape that comes with applying for federal financial aid, and this bill will help simplify that process,” Senator Hassan said. “By streamlining coordination and data sharing between federal agencies in charge of student aid programs, this bipartisan legislation will help ease the burden so many students face when applying for federal financial aid. I am glad that the Senate passed this commonsense legislation, and I urge the House to pass this bill without delay in order to support students across the country who are trying to build a brighter future for themselves.”

The Faster Access to Federal Student Aid (FAFSA) Act will make FAFSA completion easier and more secure for nearly 20 million students by:

·       Improving and securing the way individuals’ IRS tax information is sent to the Department of Education.

·       Turning a 7-click process into a single click process to transfer IRS tax filling data to the Department of Education.

·       Allowing 8 to 9 million more FAFSA filers to use their existing IRS tax filing information.

·       Reducing the burdensome verification processes for students and parents filing for aid.

·       Automating the annual process for 7 million borrowers in income driven repayment to recertify their income and remain in their repayment plan.

Background on FAFSA:

  • Currently 54% of FAFSAs are filed with information received from the IRS by parents or students using the Data Retrieval Tool to request and transfer tax information from the IRS to the Department of Education.
  • The current process for students or parents to transfer tax information to the FAFSA requires the applicant to give direct permission to the IRS to send tax information to ED.  This requires the applicant to jump from FAFSA website to IRS website and back to ED website which takes a total of 7 clicks.
  • For 37% of FAFSAs, either the student or the parent does not file taxes. The new process will allow the IRS to confirm that those students or parents have not filed.

Background on Income Driven Repayment:

  • Almost a third of borrowers in repayment on federal student loans are in an income-driven repayment program.
  • These programs require that borrowers certify their income on an annual basis. If borrowers fail to complete this process, they are automatically reentered into standard 10 year repayment.
  • Each year 19 percent of borrowers in IDR fail to recertify their income on-time, resulting in payment spikes and interest capitalization for approximately 1.3 million borrowers.