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Late Start of Tax Filing Season Will Affect Availability of IRS Data Retrieval Tool
The Internal Revenue Service (IRS) announced on Tuesday that it won’t begin accepting 2012 tax returns until January 30, which will delay the availability of data through the Department of Education’s (ED) data retrieval tool (DRT) for the 2013-14 FAFSA. The January 30 start-up date is eight days later than originally planned due to the January 2 enactment of tax law changes made to resolve the "fiscal cliff."
The DRT is scheduled to go live for the 2013-14 award year on February 3. However, since tax data is generally not available for retrieval for at least three weeks after a tax return is electronically filed, the earliest that the DRT will have 2012 tax information available for retrieval will be late February.
Verification rules require that applicants selected for verification who are also tax filers must either use the DRT or provide the school with an IRS Tax Return Transcript, except under very limited circumstances. In GEN-12-07 and subsequently in a November 2 electronic announcement, ED allowed schools to accept a signed copy of the relevant 2011 IRS Tax Return as acceptable verification documentation for the 2012-13 award year from applicants who had attempted unsuccessfully to use the DRT or to obtain an IRS Tax Return Transcript. To date, ED has not extended this guidance to the 2013-14 award year.
Direct Loan Interest Rates and Changes to Student Eligibility for the Direct Subsidized Loans
On July 6, 2012, President Obama signed Public Law 112-141 that included a one-year extension of the 3.4 percent interest rate that has applied to Direct Subsidized Loans made to undergraduate students since July 1, 2011. With this action, the interest rate on any Direct Subsidized Loan first disbursed on or after July 1, 2012 and before July 1, 2013 will be 3.4 percent.
The 3.4 percent interest rate applies only to Direct Subsidized Loans made to undergraduate students. The interest rate on Direct Unsubsidized Loans made to both undergraduate and to graduate or professional students remains at 6.8 percent. As explained in an earlier announcement, graduate and professional students are not eligible for Direct Subsidized Loans for loan periods beginning on or after July 1, 2012.
Public Law 112-141 also includes a new limit on eligibility for Direct Subsidized Loans for new borrowers on or after July 1, 2013. A new borrower on or after July 1, 2013 will not be eligible for new Direct Subsidized Loans if the period during which the borrower has received such loans exceeds 150 percent of the published length of the borrower’s educational program. The law also provides that a borrower reaching the 150 percent limit becomes ineligible for interest subsidy benefits on all Direct Subsidized loans first disbursed to that borrower on or after July 1, 2013. We will provide further information on this as it becomes available.
Tax Benefits for Education Costs
"Attention college students and their parents: There are two tax credits offered for postsecondary education," Fox Business reports. "Money used toward tuition, course materials, fees, books, and equipment can be considered for either the American Opportunity Credit or the Lifetime Learning Credit. Money spent on room and board is not eligible for either tax credit. Almost every college, university, vocational school or other postsecondary institution eligible to participate in a student aid program administered by the Department of Education qualifies. Even some foreign schools qualify. In fact, the school should be able to tell you whether attendance at their institution makes you eligible to take either credit."
Changes in State-Based Aid for NC Residents Planned in 2012-2013
Salem College students who are North Carolina residents will experience significant changes in state-based financial aid as a result of cuts made by the N.C. General Assembly.
The N.C. General Assembly made $35 million in cuts to state funding for independent colleges and universities across the state. These cuts were part of $925 million in funding cuts for education, including for public universities.
Beginning in the 2012-13 academic year, the following scholarships and grants will no longer be available:
- N.C. Legislative Tuition Grant (NCLTG)
- N.C. Contractual Scholarship Funds (NC SCF)
- N.C. Lottery Scholarship
In their place will be a single need-based scholarship, the NC Need-Based Scholarship. Therefore, please be aware that students who have traditionally received the NCLTG may no longer be eligible for a state grant under the new program.