The IRS Data Retrieval Tool is Down Until October – What the Department of Education Should Be Doing Now

This post was updated on 4/24/17 to reflect changes from the Department of Education.

The IRS Data Retrieval Tool (DRT) allows students to automatically transfer their tax information into the online FAFSA or application for income-driven repayment (IDR) plans, instead of having to manually enter detailed tax return information. Millions of students each year rely on this streamlined online process to apply for federal student financial aid and to keep student loan payments affordable. Unfortunately, the DRT was abruptly taken down several weeks ago due to security concerns.

This week, a bipartisan group of 43 lawmakers from the House and Senate wrote a joint letter expressing concern about the DRT outage and recommending that the Department of Education and IRS take specific actions to improve communications and reduce the impact on students affected by the outage. Earlier this month, we joined a similar letter with national associations of financial aid professionals, college admissions counselors, and college access professionals.

Just today, the Department of Education announced that the DRT will be offline until the start of the next FAFSA season, which is expected to be October 1, 2017. This extended outage has very troubling implications for students applying for aid and borrowers trying to manage their student debt. The Department must take immediate steps to better communicate with and help students apply for the financial aid they need to get to and through college, as well as help borrowers access affordable loan payments that can keep them out of default. The Department should quickly move to:

• Improve online communications about the DRT outage on all relevant federal websites and social media accounts, and engage in direct outreach to borrowers. Those communications should make clear that the DRT is currently down and provide specific guidance on what students, families, and borrowers should do in the meantime.
  • For example, prominent notices and guidance should be posted on:
    • The FAFSA homepage: As shown below, the FAFSA homepage includes an outage notice in the announcements, but it is not immediately clear what the outage means for students and users must scroll down for any guidance.

• StudentAid.gov: On StudentAid.gov, the outage notice is one of several rotating items in the announcements bar at the bottom of the page, which can be easily missed.

• StudentLoans.gov: There is currently no notice or announcement about the DRT outage on StudentLoans.gov, where borrowers go to apply for IDR plans and annually update their information to keep their payments tied to income.
• The IDR application itself. There is currently no mention of the DRT outage on the online IDR application on StudentLoans.gov. As shown below, there are instructions within the application for how to proceed without the DRT, but borrowers may still start the form thinking that they can use the DRT, as they may have in previous years. Without the DRT, those borrowers cannot complete the application process online, but will have to print out the pre-filled application and mail it to their loan servicer, along with their paper tax return. (Update: The Department of Education has added a notice about the DRT outage to the IDR application.)

• The Department’s Facebook and Twitter pages: Although it’s helpful that DRT outage notices are “pinned” at the top of both pages, the Department should regularly post those announcements so the public will see them in their feeds.

• Additionally, the Department should directly email all borrowers in IDR plans who are approaching their annual deadlines to update their income information, informing them about the outage, telling them what they’ll need to do, and encouraging them to submit their paperwork early, since it may take loan servicers extra time to process their documentation without the DRT.

• If students’ likelihood of being selected for verification is based on their use of the DRT, the Department should revise its verification selection criteria to prevent increases in the number of students who have to go through that complex extra process.
• For FAFSA applicants selected for verification, the Department should allow signed copies of tax returns to satisfy documentation requirements. Students and parents used to be able to use the DRT for this, and the process of requesting an official tax transcript can be very burdensome (as documented by the National College Access Network). (Update: The Department of Education announced on 04/24/17 that it is making this change.)
• The Department should adjust its criteria for requiring colleges to resolve conflicting information between the 2016-17 and 2017-18 FAFSAs, which are both based on income during calendar year 2015. This will help ensure that students get the aid they need and avoid disruptions in the middle of the year.
• The Department should urge loan servicers to give borrowers in IDR more time to turn in their updated income documentation. Borrowers who miss their annual deadlines can face unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as result in interest capitalization that can add substantial costs. Under current regulations, loan servicers have some flexibility in setting their deadlines; instead of setting deadlines 35 days before the end of the borrower’s annual payment period, they can set them closer to the end of the payment period. As long as borrowers submit documentation before their servicer’s deadline, they are not penalized, even if their paperwork is not fully processed before their next payment period starts.
• The Department should ensure that its loan servicers and Federal Student Aid Call Center employees are well-equipped to help students, families, and borrowers navigate financial aid processes in the absence of the DRT

It is also crucial that while the Department and IRS work together to restore access to the DRT as soon as possible, they prioritize finding a way to maintain the security of the tool without creating barriers to access. We urge them to avoid requiring complicated financial or personal information that the low-income students who rely on the tool are unlikely to be able to provide.  ​