Approximately 30% of students who submit a FAFSA are selected by the U.S. Department of Education for a process called Verification. In most cases, applicants are selected by the U.S. Department of Education. However, an institution may also select a student.
At some schools almost all students are selected for verification, but this doesn’t mean there’s an error. It means the students wanting or receiving federal aid were selected for verification of certain information. Students selected for verification are notified on what is known as a Student Aid Report (SAR), which is generated from the Department of Education after a FAFSA is submitted. Typically, students are also notified by the institution and additional documentation and/or substantiation may be required in order to complete the financial aid application.
When a student is selected for verification, institutions typically compare information from the student’s FAFSA with student/parent financial aid documentation and, possibly, related tax documents. Institutions maintain the right to make inquiries about this information when verification requirements occur. Differences between application information and substantiation may require further research, which may delay the financial aid process significantly. This, in turn, could delay the much needed financial aid for students for current and upcoming terms.
An institution should focus on the quality of their processes of verification, but there might be the slight, one-off instance where a student/parent is not responding in a timely, positive or professional manner. This could be an indication of misrepresentation. Note that students must provide complete and accurate information on all application forms. Misrepresentation or the falsification of information and/or statements on application forms for federal financial aid is a violation of law and can be considered a criminal offense subject to penalties under the U.S. Criminal Code.
Read my blog post, The Top 5 Verification Violations and What You Can Do About It, for the top 5 audit findings related to verification violations and what you can do about it.
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Stephen Bastardi, CPA, MBA, CGMA
Stephen Bastardi has more than 25 years of experience working with clients from a variety of industries and backgrounds. He has developed specialization in institutions of higher learning, closely held businesses, manufacturing, employee benefit plans, and non-profit organizations. Contact Steve at email@example.com or 714.990.1040.
Frazer LLP understands the unique needs of institutions of higher learning and the importance of maintaining accurate and reliable financial and compliance records. This is also true with respect to maintenance of your institution's accreditation. Our firm takes pride in maintaining continuous awareness of current legislation and industry changes that affect your institution.