# Presentation: 138450

## <date/time>

## Session 9

***CPS Edits and Verification Selection: Improving the Accuracy of Applicant Information***

## Introduction

- Presenters:
- Jeanne Saunders, FSA
- Teri Hunt, ORC Macro/CPS
- Who is this session for?
- All levels of users
- Evaluations
- Questions

## Agenda

- Improving Accuracy of Applicant Data
- CPS Data Integrity Edits
- CPS Verification Selection Process

## Improving Accuracy of Applicant Data

- Title IV Programs have significant and long- standing public and political support
- More than $10 Billion in Pell Grant alone
- More than $50 Billion Total Aid
- To maintain this support we must ensure that money is spent properly – right money to right students.

## Improving Accuracy of Applicant Data cont.

- System of Self-Reported Data
- Corrections and updates needed
- Reporting of estimated income required to meet institution and state deadlines

## Improving Accuracy of Applicant Data cont.

*Tools for Ensuring Accuracy*
- IRS Match
- Verification
- Selection criteria refined using IRS match data and statistical model
- Outreach and Training
- Technical Assistance
- Program Review Focus

## Improving Accuracy of Applicant Data cont.

*IRS Match*
- Provision added to 1998 Higher Education Amendments authorizing ED to confirm with IRS AGI, taxes paid, number of exemptions, and tax filing status reported on FAFSA
- Treasury Department has determined that Internal Revenue Code (IRC) must be amended before IRS match with ED can be implemented

## Improving Accuracy of Applicant Data cont.

*IRS Match*
- IRS income match is one of ED’s top priorities
- ED and Treasury drafted revised IRC language and forwarded to Congress
- Passage is pending

## CPS Data Edits

- FAFSA data is subjected to several types of data edits during processing to ensure data integrity
- Edits initially developed for paper filers but have been expanded and revised to include electronic filers

## CPS Data Edits cont.

- Edits developed based on eligibility requirements, consistent responses to application questions, statistical data, correction behavior, policy issues, results of verification, etc.
- Re-evaluated and revised annually

## CPS Data Edits cont.

- Three basic types of edits performed:
- Assumptions
- Rejects
- Warnings

## CPS Data Edits cont.

- Assumptions
- Use available data to make reasonable assumptions for missing or inconsistent answers
- Allow processing to continue and EFC to be calculated for more applicants
- Only requires a correction if assumption is incorrect

## CPS Data Edits cont.

- Rejects
- Critical data is missing or obvious errors are identified
- Requires correction to add or change data
- Non-verifiable – data must be changed (numeric codes)
- Verifiable – data may be verified as correct or changed (alpha codes)

## CPS Data Edits cont.

- Rejects (cont.)
- Examples:
- Reject 5 – Date of Birth is missing; must be provided to continue processing and calculate EFC
- Reject C – Taxes Paid is greater than or equal to 40% of AGI; data can be verified as correct or corrected to new value to continue processing and calculate EFC

## CPS Data Edits cont.

- Warnings
- Reported data is unusual but not severe enough to be rejected
- Data highlighted for applicant review; corrected if necessary
- Example:  Independent student reports “No” to Legal dependents/Do you have children and number of family members is greater than 2

## CPS Data Edits cont.

- Assumptions, rejects, and some warning edits are performed by electronic products (EDExpress and Web applications) to increase accuracy of data and reduce need for corrections

## CPS Data Edits cont.

- Relevant changes for 2003-04
- New reject for Dependent and no parent SSN reported (Reject 9)
- New rejects for Dependent and parent SSN reported is not in valid range (Reject D – Father, Reject E - Mother)
- New reject for Taxes Paid is equal to or greater than 40% of AGI (Reject C)
- Modified reject for Taxes Paid is equal to or greater than AGI (Reject 12)

## CPS Verification Selection Process

- Quality Control studies conducted in the early 1980’s showed significant applicant error
- To minimize applicant error, in 1986-87 ED implemented an integrated verification process for Title IV programs
- CPS edits developed to select applications with potential errors
- Current verification process not perfect

## CPS Verification Selection Process cont.

*ED/IRS Statistical Study*
- In 2001 and 2002, ED and the IRS conducted joint statistical studies to --
- Determine frequency of income misreporting on the FAFSA
- Calculate Pell Grant awards that would have been awarded had IRS income been used in need analysis
- Estimate extent of Pell Grant award error

## CPS Verification Selection Process cont.

*ED/IRS Statistical Study*
- Study compared both students’ and parents’ FAFSA AGI and taxes paid information to IRS
- IRS provided aggregated statistical tables to ED

## CPS Verification Selection Process cont.

*ED/IRS Statistical Study*
- Results show significant --
- Discrepancies between FAFSA and IRS income
- Erroneous payments in the Federal Pell Grant Program

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Annual Process
- New selection criteria developed
- Designed to evaluate and strengthen the verification approach
- Thorough statistical and empirical analysis performed

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Objectives
- Goal of selecting minimum effective number of applicants who have the most error
- Total misallocated payments considered

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Data Used
- Minimum of 2 years applicant and payment data used in analysis
- Use of IRS data from tax year 2000 added for development of 2003-2004 selection criteria

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Data Used
- Income-related variables used as main predictors
- Includes calculation of estimated taxes and comparison to reported taxes

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Use of Random and Immune groups
- 2.5% of applicants selected randomly
- 2.5% of applicants not selected even if criteria are met (held immune from selection)
- Used as control groups to measure effectiveness of targeted selection

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Applicants excluded from analysis
- QA schools
- Schools who do 100% verification

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Analysis Approach
- Changed statistical procedure to Stepwise Linear Regression to produce error equations
- Separate equations produced using IRS data and applicant/payment data
- Equations then integrated to define final criteria

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Criteria defined for each dependency status
- 63 for dependents
- 61 for independents
- Score for meeting each criteria determined by regression equation

## CPS Verification Selection Process cont.

*Development of Verification Selection Criteria*
- Selection based on score cut-off that selects 30% of applicants with the most potential error, and that error would result in significant change in grant award
- Verification Tracking Flag on ISIR gives relative score – higher number has higher priority

## CPS Verification Selection Process cont.

*30% Verification Limit Option*
- If CPS selects fewer than 30% of school’s applications for federal aid, school must verify all selected applicants
- If CPS selects more than 30%, school has options --
- Verify all applicants selected, or
- Limit verification to 30% of total number of federal aid applicants at the school

## CPS Verification Selection Process cont.

*30% Verification Limit Option*
- ED strongly encourages verification of all selected students
- Schools choosing to verify more than 30% can --
- Follow verification requirements outlined in the Application and Verification Guide for all selected applicants (see chapter 3), or
- Follow federal verification requirements for 30% of applicants, but use own procedures for those beyond 30%

## Locally Designed Verification

- Focus on local sources of error and on the unique population of an individual school or campus
- Target resources on error prone populations where impact on EFC/Pell Grant eligibility is greatest
- ISIR Analysis Tool available to all schools to determine effectiveness of localized verification

## Related Sessions

- Session #8: Verification Applicant Information – School and Student Responsibility
- Session #22: Tools for Schools
- Session #23: Using the ISIR Analysis Tool to Answer Your Institutional Verification Questions
- Session #24: Take the ISIR Analysis Tool for a Test Drive
- Visit the PC Lab

- We appreciate your feedback! Send your questions and suggestions to:
**	****	****Email: fafsaweb@ncs.com**
**	****	****Phone: 1-800-433-3243**

-     Questions