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Navigating Federal Guidance on the Use and Disclosure of FAFSA Data and Federal Tax Information

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Title: Navigating Federal Guidance on the Use and Disclosure of FAFSA Data and Federal Tax Information
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: 26
Publication Date: 2025
Sponsoring Agency: Gates Foundation
Intended Audience: Administrators
Document Type: Reports - Descriptive
Education Level: Higher Education
Postsecondary Education
Descriptors: Data Use, Disclosure, Taxes, Federal Legislation, Educational Legislation, Higher Education, Privacy, Student Records, Public Agencies, Student Financial Aid, Financial Aid Applicants
Laws, Policies and Program Identifiers: Higher Education Act 1965, Family Educational Rights and Privacy Act 1974, Privacy Act 1974, Internal Revenue Code
Abstract: The FAFSA Simplification Act made significant changes to the FAFSA, including the addition of Federal Tax Information (FTI) to the information postsecondary institutions receive on the Institutional Student Information Record (ISIR). FTI is subject to stricter data privacy standards than FAFSA data, necessitating new data use and data-sharing guidance. The U.S. Department of Education (ED or Department) has issued a series of guidance documents related to the use and disclosure of data collected as a part of the FAFSA application process. The most recent Dear Colleague Letter (DCL) released on September 30, 2025, provided guidance on the use and disclosure of FAFSA data and FTI. The September 2025 guidance overturned prior ED guidance on the use and disclosure of FAFSA data that was issued as an Electronic Announcement (EA) in November 2024. This document is designed to help financial aid professionals, legal counsel, and others at postsecondary institutions understand the new changes in how FAFSA data and FTI can be used to support students and for the administration of financial aid programs by comparing the new September 2025 DCL to the prior November 2024 EA. This comparison is provided in the "Updated Data Use Guidance" section within this report. The authors also provide examples to support a better understanding of the requirements. While many allowable activities are described below, it is important to note that any individual or entity that receives access to FAFSA data or FTI can only use that data for the explicit allowable purposes -- whether that permission comes from Higher Education Act (HEA), Internal Revenue Code (IRC), or the applicant's consent -- and may not redisclose the data unless explicitly authorized to do so. The Department has issued no changes to NSLDS data use provisions. Section 485B(d)(2) of the HEA contains a provision that specifically prohibits the release of Personally Identifiable Information (PII) from NSLDS to nongovernmental researchers and policy analysts and also prohibits the use of NSLDS data for marketing purposes. These restrictions also apply to NSLDS data on the student's ISIR. There are several areas where Department guidance remains unclear. The authors have noted when that is the case and will update this document as they get further clarifications from the Department. The last part of this document outlines best practices for financial aid administrators at institutions. While written specifically for institutional staff, much is also applicable at the state level.
Abstractor: ERIC
Entry Date: 2026
Accession Number: ED680078
Database: ERIC
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  Data: Navigating Federal Guidance on the Use and Disclosure of FAFSA Data and Federal Tax Information
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  Data: 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
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  Data: The FAFSA Simplification Act made significant changes to the FAFSA, including the addition of Federal Tax Information (FTI) to the information postsecondary institutions receive on the Institutional Student Information Record (ISIR). FTI is subject to stricter data privacy standards than FAFSA data, necessitating new data use and data-sharing guidance. The U.S. Department of Education (ED or Department) has issued a series of guidance documents related to the use and disclosure of data collected as a part of the FAFSA application process. The most recent Dear Colleague Letter (DCL) released on September 30, 2025, provided guidance on the use and disclosure of FAFSA data and FTI. The September 2025 guidance overturned prior ED guidance on the use and disclosure of FAFSA data that was issued as an Electronic Announcement (EA) in November 2024. This document is designed to help financial aid professionals, legal counsel, and others at postsecondary institutions understand the new changes in how FAFSA data and FTI can be used to support students and for the administration of financial aid programs by comparing the new September 2025 DCL to the prior November 2024 EA. This comparison is provided in the "Updated Data Use Guidance" section within this report. The authors also provide examples to support a better understanding of the requirements. While many allowable activities are described below, it is important to note that any individual or entity that receives access to FAFSA data or FTI can only use that data for the explicit allowable purposes -- whether that permission comes from Higher Education Act (HEA), Internal Revenue Code (IRC), or the applicant's consent -- and may not redisclose the data unless explicitly authorized to do so. The Department has issued no changes to NSLDS data use provisions. Section 485B(d)(2) of the HEA contains a provision that specifically prohibits the release of Personally Identifiable Information (PII) from NSLDS to nongovernmental researchers and policy analysts and also prohibits the use of NSLDS data for marketing purposes. These restrictions also apply to NSLDS data on the student's ISIR. There are several areas where Department guidance remains unclear. The authors have noted when that is the case and will update this document as they get further clarifications from the Department. The last part of this document outlines best practices for financial aid administrators at institutions. While written specifically for institutional staff, much is also applicable at the state level.
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      – Text: English
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        PageCount: 26
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      – SubjectFull: Data Use
        Type: general
      – SubjectFull: Disclosure
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