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U.S. Disables Financial Aid Tool on Fears of Data Breach -- Update

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03/09/2017 | 06:25pm EST
By Douglas Belkin 

Concerns about a potential security breach have prompted the federal government to shut down a key link on the website current and prospective college students use to apply for financial aid, complicating efforts by millions of students to file for assistance.

The link, which appears on the U.S. Education Department's Free Application for Federal Student Aid (Fafsa) and allows students to automatically download information from their -- or their parents -- tax returns, stopped working last week and will be unavailable "for several weeks," the Education Department said Thursday.

Nearly 20 million people filed a Fafsa in 2015-16. In 2014-15, 5.2 million people used the link, called the data retrieval tool, to download their Internal Revenue Service tax data.

"As part of a wider, ongoing effort at the IRS to protect the security of data, the IRS decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves," the Education Department said in a statement. "At this point, we believe the issue is relatively isolated, and no additional action is needed by taxpayers or people using these applications."

The shutdown comes as several state deadlines for financial aid are approaching, including Indiana's and Texas'. U.S. Rep. Lloyd Doggett, (D., Texas) sent a letter Thursday to both the IRS and the Education Department calling the shutdown "unacceptable."

"With the application for state aid for public schools in Texas due next week, March 15, it is imperative that the tool be fixed immediately," Mr. Doggett wrote. "Families depend on it to obtain immediate, accurate access to tax information from prior years."

Justin Draeger, the president of the National Association of Student Financial Aid Administrators, said the link had been broken since Friday but the federal government had not explained what was happening.

"For students applying to traditional four-year schools, now is the time they complete the Fafsa and find out to what extent the school can issue an award," said Mr. Draeger. "It's going to be pretty stressful if they don't know how they're going to pay for tuition, room and board this fall."

The federal government lends college students about $150 billion a year to pay for school. The Fafsa is also used by schools and states to determine eligibility for student aid.

The data retrieval tool, which has been in place for eight years, doesn't mean students can't file a Fafsa, just that they must enter their family's financial information by hand.

But, by entering information by hand, students are much more likely to be asked to verify that information with documents, which may dissuade some students from applying for aid and attending college, said Carrie Warick, director of policy and advocacy at the National College Access Network, which pushes for underrepresented students to apply for and enter college.

"Many families who rely on state and federal aid do not have immediate or easy access to their tax information without this tool," wrote Mr. Doggett in his letter to the Education Department and the IRS. "The assumption that these families can complete the FAFSA manually by the deadline without using the DRT is inaccurate."

Write to Douglas Belkin at doug.belkin@wsj.com

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