Click of a Button: Making the FAFSA Almost Painless

The federal government has been trying for years to make the Free Application for Federal Student Aid less complicated.

It should get kudos for the effort, but millions of parents still mess up when tackling this financial aid form. But bless its heart, the federal government is trying, in what might be it’s biggest push ever, to make completing the FAFSA far less painless for the vast majority of families who wrestle with it.

What We’ve Been Waiting For

Here’s the big development, which has been years in the making: After you’ve filed your federal income taxes you can retrieve the tax information through something called the IRS Data Retrieval tool. Actually this tool was available a couple of years ago, but for reasons not worth getting into, most families weren’t eligible to use it.

With advances in IRS technology, this data retrieval tool should now be extremely helpful to most tax filers. With the click of a button, the tool will allow you to transfer your IRS tax return information to the FAFSA website to complete your financial aid form. The data retrieval feature is scheduled to be available beginning Feb. 1.

The Benefit of the New Tool

Completing the FAFSA with data directly from your IRS tax form is expected to not only make the process easier, but also cut down on errors, which should lead to more accurate financial aid awards.

If you aren’t already electronically filing your tax returns this will give you motivation to do so. That’s because once you file your tax return, the numbers in the return should be available for FAFSA purposes in one-to-two weeks. If you file a paper tax return, the data won’t be available for six-to-eight weeks.

For the first time, applicants, who indicate that they have already filed a federal tax return, will be directed to use the IRS tool. Applicants who haven’t filed yet, will be asked to use the tool once they have completed their 2011 federal tax return. The same goes for families who want to correct or update their filed FAFSA

This won’t be convenient for families who won’t get their taxes done until closer to the April 15 deadline. Unfortunately, parents typically can’t wait that long because schools often impose earlier deadlines for financial aid, as do many state aid programs.

If you file the FAFSA long before you complete your taxes, you can estimate the  FAFSA figures that require your tax return. Applicants, who estimate their taxes for the FAFSA must use the tool after they file their returns to update the financial aid application.

Who Is Eligible To Use the Tool

Here are the three criteria for using the tool:

• You must have a Social Security number
• You must have filed your 2011 federal tax return
• You must not have changed our marital status since Dec. 31, 2011

If you are married, but file separate taxes, you can’t use the data retrieval tool.

Some schools are requiring that families use the data retrieval system or are strongly recommending it.

I found a nifty tutorial on the Data Retrieval Tool on a California State University website, which I think you’ll find helpful.

Let’s hope this new tool will make everybody’s FAFSA experience a less stressful one this year!

More from The College Solution:

Measuring the Generosity of Colleges

How Does Financial Aid Work When You Are Divorced?

Financial Aid: Bait and Switch