FAFSA Data Sharing in the Context of Federal Tax Information (FTI): Perspectives on Implications of Statutory Changes to Data-Sharing Rules
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| Title: | FAFSA Data Sharing in the Context of Federal Tax Information (FTI): Perspectives on Implications of Statutory Changes to Data-Sharing Rules |
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| Language: | English |
| Authors: | National Association of Student Financial Aid Administrators (NASFAA) |
| Source: | National Association of Student Financial Aid Administrators. 2025. |
| Availability: | National Association of Student Financial Aid Administrators. 1101 Connecticut Avenue NW Suite 1100, Washington, DC 20036. Tel: 202-785-0453; Fax: 202-785-1487; e-mail: membership@NASFAA.org; Web site: http://www.nasfaa.org |
| Peer Reviewed: | N |
| Page Count: | 28 |
| Publication Date: | 2025 |
| Sponsoring Agency: | Gates Foundation |
| Document Type: | Reports - Research |
| Education Level: | Higher Education Postsecondary Education |
| Descriptors: | Educational Legislation, Data Use, Privacy, Information Security, Taxes, Student Financial Aid, Federal Aid, Financial Aid Applicants, Higher Education |
| Abstract: | In addition to helping millions of students access the financial aid they need to attend college, the Free Application for Federal Student Aid (FAFSA) has historically provided privacy-protected data that support student success efforts. Under rigorous privacy protocols, colleges, states, and the U.S. Department of Education (ED) could securely access and use applicants' financial data to understand and improve postsecondary experiences and outcomes as well as make aggregated data available in public tools. Financial data from the FAFSA are also used by practitioners to connect students to means-tested benefits to improve affordability and to support services that help students succeed. However, recent legislative changes intended to simplify the financial aid application process have had the unintended consequence of creating new limitations that have put these practices at risk. The FAFSA Simplification Act of 2020 leveraged the FUTURE Act of 2019 to permit the IRS to share federal tax information (FTI) directly with ED, removing the applicant's touch point in the transfer process. As a result, financial information on the FAFSA that is pulled from tax returns is now considered FTI, and is subject to FTI restrictions. While this new interagency data-sharing authority greatly contributed to a shorter and simpler FAFSA, the presence of FTI on the FAFSA--and the addition of other statutory changes to how non-FTI FAFSA data can be used and shared--introduced new restrictions. These restrictions limit how entities outside of the financial aid office can access and use the FAFSA data that had previously been available for administering non-Title IV aid programs, conducting research, and complying with federal and state reporting requirements. ED guidance surrounding this issue has come slowly (and remains incomplete as of this publication), forcing financial aid administrators to make challenging decisions with inadequate information as they reevaluate longstanding data-sharing arrangements to ensure compliance with the new rules. Recognizing that these limitations on the use of FTI data significantly impact stakeholders in student assistance and higher education research, NASFAA developed a survey of its member institutions and collaborated with stakeholder colleagues to learn how they are adapting to the new data-sharing rules and what new processes they have found to meet their needs. As described in this report, considerable confusion remains in several areas where legislative changes to FTI and non-FTI FAFSA data sharing have occurred. In many places where previous confusion has been resolved by ED guidance, overly strict interpretations of the statute have hindered--or in some cases eliminated--the ability of institutional staff outside of the financial aid office to administer the programs or conduct research that has historically relied on FAFSA data. |
| Abstractor: | ERIC |
| Entry Date: | 2026 |
| Accession Number: | ED680077 |
| Database: | ERIC |
| Abstract: | In addition to helping millions of students access the financial aid they need to attend college, the Free Application for Federal Student Aid (FAFSA) has historically provided privacy-protected data that support student success efforts. Under rigorous privacy protocols, colleges, states, and the U.S. Department of Education (ED) could securely access and use applicants' financial data to understand and improve postsecondary experiences and outcomes as well as make aggregated data available in public tools. Financial data from the FAFSA are also used by practitioners to connect students to means-tested benefits to improve affordability and to support services that help students succeed. However, recent legislative changes intended to simplify the financial aid application process have had the unintended consequence of creating new limitations that have put these practices at risk. The FAFSA Simplification Act of 2020 leveraged the FUTURE Act of 2019 to permit the IRS to share federal tax information (FTI) directly with ED, removing the applicant's touch point in the transfer process. As a result, financial information on the FAFSA that is pulled from tax returns is now considered FTI, and is subject to FTI restrictions. While this new interagency data-sharing authority greatly contributed to a shorter and simpler FAFSA, the presence of FTI on the FAFSA--and the addition of other statutory changes to how non-FTI FAFSA data can be used and shared--introduced new restrictions. These restrictions limit how entities outside of the financial aid office can access and use the FAFSA data that had previously been available for administering non-Title IV aid programs, conducting research, and complying with federal and state reporting requirements. ED guidance surrounding this issue has come slowly (and remains incomplete as of this publication), forcing financial aid administrators to make challenging decisions with inadequate information as they reevaluate longstanding data-sharing arrangements to ensure compliance with the new rules. Recognizing that these limitations on the use of FTI data significantly impact stakeholders in student assistance and higher education research, NASFAA developed a survey of its member institutions and collaborated with stakeholder colleagues to learn how they are adapting to the new data-sharing rules and what new processes they have found to meet their needs. As described in this report, considerable confusion remains in several areas where legislative changes to FTI and non-FTI FAFSA data sharing have occurred. In many places where previous confusion has been resolved by ED guidance, overly strict interpretations of the statute have hindered--or in some cases eliminated--the ability of institutional staff outside of the financial aid office to administer the programs or conduct research that has historically relied on FAFSA data. |
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