The Internal Revenue Service building located in Washington D.C.
The outage of an important government tool could have serious consequences for current student loan borrowers around the country, not just student loan applicants working with the FAFSA.
After already being down for some time, the IRS data retrieval tool, an instrumental and handy tax information tool used during FAFSA applications, is expected to be down for six months, although lawmakers are meeting this week to review the decision to remove it from the IRS’s website and FAFSA application.
While most have been worried about how the absence of this tool will impact college applicants who are applying for financial aid, experts are warning that many current borrowers could have trouble with their repayment programs without the tool’s resources.
Borrowers enrolled in government programs that calculate their monthly student debt payments based on their income rely on the tool to re-certify their earnings with student loan servicers. Without the data retrieval tool, these borrowers would have to rely on a paper process that can be especially difficult for low-income borrowers to navigate.
Experts worry that this dilemma could lead to missed deadlines, delays, errors, and more—all of which can be costly to student loan borrowers who are already struggling to pay off their debt.
At any rate, the lack of the data retrieval tool has caused much confusion, and overall, the student aid process has taken a hit. These difficulties could continue for six months at least, but only time will tell if this is an accurate assessment.
While borrowers have had issues relying on the paper application and other documentation to re-certify their earnings in the past, there are also complaints that these companies are not keeping their customer base properly informed with issues surrounding the data retrieval tool’s outage.
With that in mind, the Consumer Financial Protection Bureau (CFPB) and other authorities are “closely monitoring” servicers to make sure that their customers are treated fairly.
One example is ACS Education Services who was fined $2.4 million by the MA Education Authority for malpractice according to The Student Loan Report. In another development covered by The Student Loan Report, the CFPB cracked down on Student Loan Processing, a fraudulent student debt relief company, in March of 2016.
Image Copyright © Tim Evanson