You don’t need me to join the chorus of financial aid administrators (FAAs) who are outraged by the Department of Education’s (ED’s) launch of the 2024‑2025 FAFSA. I’m outraged too. But what I want to do here is try to interpret their confusing April 1^st Announcement and their frustrating April 4^th Announcement to help FAAs figure out what is going on.

Note that I have no more information from the Department than you do. I’ve read the April 1^st Announcement many times and watched the April 3^rd webinar on the topic. The Department has not answered a single question I’ve submitted through the various portals since early in the Summer of 2023, so I don’t have any secret back doorway to get information.

Let’s start with a question that strikes me as a core issue here:

What Happened and How Has ED Addressed It?

On April 1^st, ED announced that it has identified three issues with tax data in the 24‑25 ISIRs.

1)    The FA‑DDX was bringing in incorrect values for the education credits. ED did not disclose in what manner the data were incorrect.

“Solution”: This has been corrected for ISIRs processed on and after March 30, 2024. Note though that a different problem with education credits is identified for people who completed the FAFSA manually. See item 3 (below). I do not know if the two issues are related, but I do not think that they are.

2)    If a taxpayer amended their tax return or if the IRS made a change to a taxpayer’s return after processing the original filing, the FA‑DDX was bringing in only the AGI and the filing status from the changed return. All other data were from the original return.

“Solution”: The IRS will be updating the FA‑DDX to bring in the original tax data (as the IRS DRT did in past years) and FAAs will have to collect 1040‑Xs or other documentation to manually correct ISIRs if they learn that a contributor to the FAFSA amended their tax return. This means that promised verification savings related to applicants and contributors who amended their tax returns will not be realized.

3)    The FAFSA instructions for “Income Tax for 2022” and “Education Credits” refer to different tax lines than the FA‑DDX used to push these items into the FAFSA. The FA‑DDX is bringing in Form 1040, line 24, while the FAFSA asks for Form 1040, line 22 minus Schedule 2, line 2. The FA‑DDX is also bringing in the total education credit reported on the tax return (Schedule 3, line 3 plus Form 1040, line 29, which it is pulling from Schedule 8863, lines 8 and 19), instead of just the non‑refundable portion of the credits (Schedule 3, line 3), which is asked for on the FAFSA. Anyone manually entering tax data into the ISIR was using different lines from the FA-DDX.

“Solution”: the FAFSA and other publications will be updated to reflect the values the FA‑DDX has been using, instead of the values ED assumed it was using.

Wait, What? FAFSA Tax Item Definitions are Changing? In April?

It appears so. The language that ED uses in the announcement for item 3 (above) is:

…[t]he third identified inconsistency has to do with inaccurate instructions on the FAFSA form [highlighting is the author’s].

After years of using specific lines from the tax forms in the FAFSA, that were carefully considered based on how data are used in the formula, ED has decided that rather than ask the IRS to update the FA‑DDX so that the data brought into the FAFSA by the FA‑DDX made sense, they are changing the data definitions to fit the FA‑DDX. See below for more commentary on this.

It appears that rather than correct the FA-DDX to bring in the values for Education Credits and Income Tax for 2022 that we are familiar with, ED has decided that the old values are wrong, and the FAFSA instructions were “inaccurate”. It appears that we will be using:

• Form 1040, line 24 for “Income Tax for 2022”
• Form 8863, line 8 plus Form 8863, line 19 for Education Credits.

I keep hoping for some clarification or a direct statement about ED’s intention here. But the language is pretty compelling – they have stated clearly that inaccurate instructions on the FAFSA form are responsible for the errors in the Education Credits and Income Tax Paid fields.

ISIR Reprocessing

ED had initially proposed reprocessing ISIRs only if the student would benefit from it – and leaving the incorrect information in the ISIRs of other students. ED received a lot of push back from Institutions (and, perhaps, Congress) and announced on April 4 that all incorrect ISIRs would be ...