Summary

Many scholarship providers rely on information gathered from their applicants’ colleges and universities to make important award decisions, including scholarship amounts and disbursement timing. Information such as financial aid award letters and EFC figures – which are derived from students’ FAFSA submissions, and frequently sourced from institutions instead of students themselves – offer details on student and family financial circumstances and aid packages, including unmet need.

But, until very recently, no permanent legislation or policy guidance existed to allow private scholarship providers to request this information. Fortunately, the Consolidated Appropriations Act, 2021, signed into law in December 2020, included a permanent resolution to this issue, which impacts the vast majority of NSPA’s member organizations.

Not only that, but NSPA has also prepared an important resource to help you and your organization ensure that your own processes are in compliance with the Act. Read on for more details.

Background

Most scholarship providers know well the myriad of financial aid data points and figures assigned to enrolled college students. Terms like Estimated Family Contribution (EFC), financial need, award eligibility, award amounts, and award letters are very familiar to many in the NSPA community. Such financial aid information is derived from a student’s Free Application for Federal Student Aid (FAFSA) submission and from a college or university’s use of that data.

Today, many scholarship providers request such information from colleges and universities as part of scholarship award determination. This is especially true for those organizations making need-based awards.

However, prior to 2018, scholarship providers other than those administering federal, state and institutional funding were limited in their ability to collect such FAFSA-submitted or -derived data from colleges and universities, even with students’ and parents’ consent. This meant that important NSPA constituent groups such as private foundations, community foundations, and public charities were among those unable to access FAFSA information.

In 2018, federal legislation created a temporary authorization allowing private scholarship providers access to such information, with students’ written consent, which was a step in a positive direction.

As of a few short weeks ago, as part of the Consolidated Appropriations Act, 2021, Congress has made the temporary legislation permanent, creating a lasting solution for scholarship providers and similar education access entities. This is great news for NSPA members and scholarship providers!

What to Know about the Permanent FAFSA Data-Sharing Legislation

The Act made clear a number of important points that scholarship providers and others must abide by in accessing FAFSA data from colleges and universities. It is critical that entities operate in accordance with the legislation in order to be in compliance with Federal regulations.

• Written consent must be provided by the applicant. This should be in a separate document and include the applicant’s signature and the date it was signed.
• The organization seeking FAFSA information must identify itself on the consent document.
• FAFSA information collected should only be used for specific, allowable purposes and consented to by the applicant.
  • Allowable purposes include assessing an applicant’s eligibility and administering an award.
  • They also include educational information such as grade and course records.
• FAFSA information collected should not be shared with others without the applicant’s additional consent.
• FAFSA information collected may include Student Aid Report (SAR) data based on a FAFSA submission as well as federal income tax return information.

Under legal counsel and with the help of experts on FAFSA data-sharing, NSPA has revised its Authorization to Release FAFSA and FERPA Protected Information template. Scholarship providers are encouraged to use this resource to obtain applicant consent and offer guidelines on how they intend to use FAFSA information.

We hope this proves useful to you in accessing important information for the students you serve, in a way that is in accordance with the Act and requirements listed above.