The Data Retrieval Tool or DRT is an online tool available as part of the FAFSA submission process. The DRT provides parents and students an easy way to transfer their income tax-return information directly into the Free Application for Federal Student Aid (FAFSA) from the IRS. The DRT process is a critical step for the college financial aid offices since it minimizes the need for FAFSA submissions to be verified. The DRT system sets a flag in the FAFSA school record identifying that the FAFSA information was submitted using IRS DRT information directly.
To prevent fraud, the DRT provides to the school’s financial aid office the actual income and tax information. The Data Retrieval Tool eliminates the need to send copies of your tax returns and transcripts to the college. The colleges need this verification as part of the process to deploy any Federal Financial Aid. Many state-funded programs are also highly dependent on the FAFSA and the DRT verification.
DRT Is A Blind Submission
The DRT transfer does not display the transferred IRS data to the FAFSA form or the Student Aid Report (SAR) for you to see. This means it is a blind income and tax submission. This rule was put in place a few years ago due to some personal information security issues. Only the college financial aid administrator can see the numbers and make adjustments.
Many times, parents attending their college financial aid night are presented with EFC that is much lower. In many cases, a family’s EFC is much higher than what people expect. Without seeing the numbers imported from the IRS DRT, families face another level of uncertainty. We recommend first-time FAFSA filers submit manually.
Avoiding the Blind FAFSA DRT submission
For first-time FAFSA filers or people who have had a significant financial change, it is our recommendation to input the income and tax numbers manually. By inputting your information directly, parents can see the EFC number that the FAFSA will generate. By using this submission method, families can confirm the numbers that were used to calculate the EFC numbers before using the DRT system.
The family will still need to submit the FAFSA using DRT, but by using the manual process initially, a family will be able to compare submissions and see if there are any possible issues with the DRT submission versus the manual submission.
An alternative to the dual FAFSA submission process is found within the PayForED College Cost Analyzer. Our software generates an estimated EFC. It will help you have a better understanding of how the number is calculated and how the four quadrants of the EFC are developed. This college planning tool will then help families determine their financial aid position at each college before they apply. With the PayForED approach, students and parents will make informed and better college financial decisions. The PayForED analysis generates an easy-to-understand four-year side-by-side college comparison.
Who can use the IRS Data Retrieval Tool?
For some people, the DRT will not be available. This would include people with more complicated tax returns, those who are still on extensions, and anyone who had submitted an amended return for the tax year needed. If you are in that situation, you should contact the college to ask what information is required to complete the FAFSA verification. Many institutions will require your tax transcript, which is another IRS process that can be time-consuming.
Timing of DRT Availability
When and how you submit your taxes will impact when the information is available through the IRS system. It normally takes two to three weeks after the taxes are submitted electronically before it is available to the DRT system. Taxes submitted manually can take up to 8 weeks to be available. If you are on a payment plan or have a tax bill outstanding, your tax information will not be available for the DRT process. The government has provided a chart as a guide to help tax filers estimate when they will be able to retrieve their IRS tax return information using the IRS DRT.
What Tax Year Will DRT Pull Into the FAFSA?
The FAFSA process uses a process called Prior Prior. This was established in 2015 for the 2016-17 FAFSA submission year. The goal of the Prior Prior method was to simplify the FAFSA submission. Under normal tax situations, the FAFSA will be using a parent’s and student’s income and tax information that is complete or in hand when the FAFSA becomes available.
As an example, if a person is trying to complete the FAFSA for the school year 2023-24. They will be using the tax information from 2021. The FAFSA 2023-24 school year form is available on October 1, 2022. The financial awards will begin available starting July 1, 2023.
Retirement Plan Rollover Issue
Due to the way the IRS classifies retirement rollovers often, these numbers are included in the DRT to FAFSA import. This can increase a family’s EFC significantly since Parent’s income can be weighted up to 48% of the income number. It is vital for families that have had retirement rollovers in the tax year of 2021 to manually submit their FAFSA to properly reflect your EFC. You should contact each college’s financial aid office to explain the rollover amount.
You will still need to submit the FAFSA using the DRT. The college’s financial aid office can make the adjustment once the DRT is completed. This will result in the proper EFC being used and a better financial aid package.
How Will COVID impact DRT and FAFSA?
As stated above, the income and tax information being used for the coming FAFSA year is 2021. That information may not correctly reflect many people’s current financial situation. If that is the case, you will need to contact the colleges about the changes and understand their appeal process. Many colleges have a formal appeal submission process. Please review our article on appealing your financial award letter, which will give you some additional insights on the content and documentation that you should consider.
We are anticipating this to be an issue for the colleges this year. It will impact both new and existing college students.
Another issue that some may have is the timing of tax information due to the multiple legislative changes. If you have submitted your taxes later, they may not be available through the DRT system at the time of your FAFSA submission. You will need to wait until it processes through the IRS systems. You can still submit the FAFSA manually and then submit the FAFSA with DRT later.
Verification of Taxes Without DRT
If the school wants verification of your tax information but you are unable to use the IRS DRT, you can get an official transcript form from the Internal Revenue Service. It is always important to check with your school’s financial aid department to make sure all your information has been received according to the deadlines listed.
Periodically a family’s FAFSA submission is pulled for a random Department of Education audit. Here is the link to request an official tax transcript. When requesting this transcript make sure you have requested the correct year.
DRT Helpful Hint
In prior years, the DRT switch was very sensitive. You should have your 1040 information in front of you. The input to the FAFSA DRT fields must match the 1040 form exactly. Common errors are the use of abbreviations or forgotten middle initials. If it does not match exactly, then it will not process. At times, this can be very frustrating.
PayForED has a series of articles regarding the FAFSA, financial aid positioning, and paying for college that complements the FAFSA submission using DRT. The Data Retrieval Tool is becoming a more important part of the FAFSA submission. The Department of Education’s goal is to make the FAFSA process simpler and less intimidating. These goals are great yet DRT adds a lack of transparency that is concerning. This is especially true for first-time filers.
At PayForED, we understand the financial impact and stress that both the student and parents need to navigate. This year, we have created the PayForED Virtual Financial Aid Nights. We have planned multiple events calendared throughout the year to help families with