Financial aid application forms ask questions about sensitive topics, such as the family’s income, assets and demographics. Parents and students are rightfully concerned about safeguards to protect their information.
There are several federal privacy laws concerning student aid information.
The Family Educational Rights and Privacy Act of 1974 (FERPA) [20 USC 1232g; 34 CFR 99], also known as the Buckley Amendment, protects the privacy of student educational records, including financial aid application forms and other financial aid records pertaining to the student. FERPA applies to all elementary, secondary and postsecondary schools that receive funding from the U.S. Department of Education. FERPA provides the student and parents with the right to review educational records and request corrections.
FERPA restricts the disclosure of educational records in most circumstances without prior written permission. Disclosures are permitted, however, “in connection with financial aid for which the student has applied or which the student has received, if the information is necessary for such purposes as to: (A) Determine eligibility for the aid; (B) Determine the amount of the aid; (C) Determine the conditions for the aid; or (D) Enforce the terms and conditions of the aid” [34 CFR 99.31(a)(4)(i)].
All rights under FERPA transfer from the parents to the student when the student reaches age 18 or attends a college or university. Generally, a school may continue to disclose information from a student’s educational records to his or her parents if either parent has claimed the student as a dependent on the parent’s most recent federal income tax return. However, schools are not required to disclose this information and “a postsecondary institution does not have to permit a student to inspect and review education records that are: (1) Financial records, including any information those records contain, of his or her parents …” [34 CFR 99.12(b)].
FERPA is administered and enforced by the Family Policy Compliance Office (FPCO), which can be reached by calling 1-800-USA-LEARN (1-800-872-5327) or 1-202-260-3887 (TDD 1-800-877-8339), sending email to firstname.lastname@example.org or writing to
Family Policy Compliance Office
U.S. Department of Education
400 Maryland Avenue, SW
Washington, D.C. 20202-8520
The Children’s Online Privacy Protection Act of 1998 (COPPA) [15 USC 6501-6508, P.L. 105-277, 16 CFR 312] restricts web sites from collecting personally identifiable information from a child under age 13 without verifiable parental consent.
Because of the difficulty of obtaining verifiable parental consent, free scholarship matching services do not allow children under age 13 to register to search for scholarships. Likewise, the online version of the Free Application for Federal Student Aid (FAFSA) does not permit students under age 13 to complete the FAFSA online using FAFSA on the Web, and, instead, requires them to submit a special paper version of the form.
COPPA is administered and enforced by the Federal Trade Commission (FTC), which can be reached by sending email to CoppaHotLine@ftc.gov. Complaints may be submitted using an online complaint form or by calling 1-877-FTC-HELP (1-877-382-4357).
The Fair Credit Reporting Act (FCRA) [15 USC 1681 et seq] sets rules and standards for the collection, correction, disclosure and use of consumer credit information. These rules apply to consumer reporting agencies, which include credit s. Credit companies, such as Experian, TransUnion and Equifax, maintain and evaluate a consumer’s credit history for lenders who are deciding whether to extend credit or make a loan to the consumer. For example, private student loan programs often obtain a prospective borrower’s credit scores from a credit company when deciding whether to make a loan to a borrower. The interest rates and fees on the loan may also be based on the borrower’s credit scores. The FCRA also establishes requirements for creditors, such as lenders, that report information to credit companies.
Under the FCRA, a consumer is entitled to receive a free copy of his or her credit report from each of the credit companies every year. The credit reports can be obtained free of charge through annualcreditreport.com, a web site set up by the Federal Trade Commission (FTC). Consumers are also entitled to a credit report if they are denied credit on the basis of a credit report.
FCRA is currently administered by the Federal Trade Commission (FTC), which publishes a summary of consumer rights under the Fair Credit Reporting Act.
The Fair Debt Collection Practices Act (FDCPA) [15 USC 1692 et seq; P.L. 104-208] sets rules that protect consumers from abusive debt collection practices. It also enables consumers to dispute debts, demand verification of the debt and to demand (in writing) that the debt collectors stop contacting the consumer (other than to notify the consumer about specific actions the debt collector is taking, such as filing suit against the consumer).
Although the U.S. Department of Education is not subject to the FDCPA, the federal education loan servicers and collection agencies under contract to the Direct Loan program are subject to the law. The holders of Federal Family Education Loan (FFEL) program loans and their contractors are also subject to the law.
FDCPA is currently administered by the Federal Trade Commission (FTC), which publishes a summary of consumer rights under the Fair Debt Collection Practices Act.
The Internal Revenue Code (IRC) [26 USC 6103] restricts the disclosure of federal income tax returns or any personally identifiable information from a federal income tax return by federal and state officials and employees. This law allows the Internal Revenue Service (IRS) to share tax return data with the U.S. Department of Education in connection with income-contingent repayment (ICR) plans, borrowers who have defaulted on a federal education loan or owe an overpayment on a Federal Pell Grant.
The Higher Education Act of 1965 includes several provisions relating to the privacy of student information:
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