Institutions will have additional due diligence requirements as part of the Department of Education’s efforts to protect the integrity of the federal student aid program.
In a June 6 Electronic Announcement, the Department of Education (ED) announced its nationwide effort to eliminate identity theft and fraud in the federal student aid programs. This is a result of data from Federal Student Aid (FSA), states, and financial aid administrators that indicates that the rate of fraud through identity theft has reached a level that impacts the Title IV programs. The Federal Pell Grant program, already plagued by budgetary shortfalls, is also a target for fraud rings.
While the nationwide effort will be launched by ED during the fall of 2025, this summer schools will be required to verify the identity of additional first-time applicants who complete a Free Application for Federal Student Aid (FAFSA).
Starting this fall, FSA will implement an additional screening process for each FAFSA applicant to identify potential cases of fraud, which will reduce the V4 verification rates to almost zero. However, as the model is enhanced, schools will see an increase in V4 verifications as the selection will focus on first-time applicants who are expected to receive Title IV aid for the first time during the summer.
While ED realizes that these verification selections may cause challenges for some schools and students, it is an important step in preventing fraud and restoring the integrity of the Title IV programs. ED doesn’t anticipate any change to the number of applicants selected for V1 verification, and V5 verification selections may increase slightly.
The Electronic Announcement also provides detailed information about the changes to the identity confirmation requirements and acceptable documentation for V4 and V5 Verification.
Schools are also required to have a system in place to identify conflicting information that impacts student eligibility for Title IV aid and the conflict must be resolved before disbursing aid. Schools must report any suspected misreported information or altered documentation used to fraudulently obtain Title IV funds.
