If you’re under the gun to fill out the federal financial aid form, pay attention to a special tool that’s supposed to save you time, reduce the chances of errors and generally make your life easier when entering the deep waters of paying for college.
It’s called the IRS Data Retrieval Tool, and it’s designed so that with a few clicks, you can automatically transfer information from your tax return to the financial aid application.
The tool became widely available three years ago with the Free Application for Federal Student Aid, or FAFSA, and it’s been used by millions of families each year.
The FAFSA is a vital form from the U.S. Department of Education that must be filled out to apply for any type of federal financial aid, such as Stafford and Perkins loans and federal work-study programs. Many states also rely on the FAFSA when determining how much money to offer students.
If you’re a FAFSA first-timer, keep in mind that filing sooner can improve your chances of getting more money.
The Department of Education on its website said it “highly recommends” using the IRS retrieval tool, but it hasn’t been as smooth a process this year.
That’s because the political wrangling over the “fiscal cliff” delayed the start of tax filing season until Jan. 30, about two weeks later than normal for electronic filers.
As a result, the data retrieval switch wasn’t flipped on at FAFSA’s website (www.fafsa.ed.gov
) until Feb. 3 — too late for some early financial aid applicants.
If you file your taxes electronically, the data system generally can be used one to two weeks after the IRS processes the forms. For those who mail their returns, there’s typically a six- to eight-week delay before the data can be retrieved.
In other words, don’t expect to use the retrieval system a day after filing your taxes.
If you haven’t finished your tax return and are coming up against a college financing deadline, the Department of Education recommends manually entering key income numbers from your tax documents. Or provide estimated income data and then update the FAFSA once your tax information is available on the retrieval tool.
Despite the late start to filing, “we don’t expect there will be delays in processing FAFSAs,” said Sara Gast, a spokeswoman for the Department of Education.
But there are other quirks with the retrieval tool that can lead to costly processing delays, said Kalman Chany, co-author of the Princeton Review’s “Paying for College Without Going Broke.”
For example, there can be problems with mismatched data , such as abbreviating your address on the FAFSA by using “Rd” instead of “Road” as it was listed on your tax return. Hyphenated names can lead to problems too, Chany said.
Fixing these time-wasting glitches may require a phone call to the IRS or the Social Security Administration, and be sure to go over names and addresses character by character.
Anything that speeds up the FAFSA filing process and eases the strain is helpful. But keep in mind that the retrieval tool is not foolproof.