IRS plans to revive FAFSA student loan tool on October 1

The Internal Revenue Service will be bringing back its IRS Data Retrieval Tool on October 1 for people applying for federal student aid.

The retrieval tool will be available for the online 2018–19 Free Application for Federal Student Aid, or FAFSA, form starting that date. The IRS suspended the online data retrieval tool in March after detecting suspicious activity indicating identity thieves. Up to 100,000 taxpayers may have been affected (see Data breach of IRS student financial aid tool may have affected 100,000 taxpayers).

In early April, the IRS started mailing notifications about the breach to some 100,000 taxpayers who may potentially have been affected, though Commissioner John Koskinen testified before the Senate Finance Committee that the service believes that fewer than 8,000 fraudulent returns were processed (see IRS chief reports to Congress about tax season amid new push for his ouster). Up to $30 million in refunds were issued before the tool was shut down.

The U.S. Department of Education announced in June that the IRS Data Retrieval Tool was available for borrowers applying for an income-driven repayment plan, and new encryption protections have been added to the Data Retrieval Tool to further protect taxpayer information. It said at the time the data retrieval tool would become available for FAFSA applications starting October 1.

To address security concerns, the tax return information that will now be transferred to the Education Department will be encrypted and hidden from view on the IRS Data Retrieval Tool web page and on the online income-driven repayment plan application.

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