FAFSA Data-Sharing Guidelines for Scholarship Providers

The 2021 Consolidated Appropriations Act is great news for scholarship providers, making student FAFSA information more accessible. Learn more about the legislation and how your organization can stay in compliance with the new federal regulations.

A clear picture of a student’s financial status is an essential piece of scholarship awarding decisions ‒ especially for need-based scholarships. For consistency and accuracy, this information is drawn from a student’s Free Application for Federal Student Aid (FAFSA) submission.

However, for private foundations, community foundations, and public charities, collecting FAFSA-submitted data from colleges and universities (even with the consent of the student and parent) has been difficult. In 2018, temporary legislation addressed this oversight. And now, as part of the 2021 Consolidated Appropriations Act, Congress made the temporary legislation permanent.

While the Act makes it clear that all scholarship providers may request this information, thus removing barriers, it also puts several safeguards in place to protect student and parent data. Here’s what you need to know.

What Scholarship Providers Can Request

You may request:

• FAFSA Data  - Including the Student Aid Report (SAR) data based on a FAFSA submission and tax return information with respect to the applicant
• Financial Aid Information - Financial aid award letters and notifications, grants, scholarships, other awards, student employment, loans, disbursements, and eligibility
• Student Account Information - Bills, statements, charges, credits, balances, payments, past due amounts, collection activity
• Education Information - Grades, courses, credits, GPA, registration, student ID number, academic progress, enrollment status, attendance, communications with advisors and other college staff deemed relevant for the administration of my scholarship

FAFSA Data Usage Limitations

FAFSA information should only be used for specific, allowable purposes. The legislation defines allowable purposes as assessing an applicant’s eligibility and administering an award. This must be clearly explained on the consent form.

How to Structure the Consent Form

Your consent form must be in a separate document from the scholarship application. Be sure to include:

• How the information will be used (assessing eligibility and administering an award)
• The applicant’s signature 
• The date it was signed
• The parent’s signature and date (if the student is under 18)
• Your organization’s name as the entity seeking FAFSA information
• Assurance that the information will not be shared by your organization without the applicant’s consent

The National Scholarship Providers Association has revised its Authorization to Release FAFSA and FERPA Protected Information template in alignment with the 2021 Consolidated Appropriations Act. This resource incorporates input from their legal counsel and FAFSA data-sharing experts, so it’s a great starting point for your scholarship program to use.

How to Incorporate FAFSA-Related Data into Your Review Process

How can you streamline your data collection process, now that there’s a clear path for you to access this information? With scholarship management software, you have the ability to:

• Incorporate the FAFSA consent as a separate final process in the online application form, ensuring that there are no delays in requesting the information.
• Build custom fields to capture key data points from the FAFSA, enabling you to sort and filter applicants easily. This helps you reduce the pool of applications your reviewers need to manage.
• Generate reports related to the financial status of your applicants, financial aid gaps, and other metrics that tell a story about your scholarship program and make improvements for next year.

As a leading scholarship management platform, our team is always looking for ways we can make your program easier for students to apply, simpler to manage, and ultimately, more impactful. This new legislation is a great opportunity to take a closer look at your program and see how investing in scholarship management software can prompt a variety of best practices.