Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

(GEN-94-37) (GEN-94-37) This Action Letter describes changes to the 1995-96 processing system, the Free Application for Federal Student Aid (FAFSA), the Student Aid Report (SAR), and the Federal Renewal FAFSA.

DCLPublicationDate: 9/1/94
DCLID: GEN-94-37
AwardYear: 1995-1996
Summary: This Action Letter describes changes to the 1995-96 processing system, the Free Application for Federal Student Aid (FAFSA), the Student Aid Report (SAR), and the Federal Renewal FAFSA.

September 1994


Dear Colleague:

This Action Letter describes changes to the 1995-96 processing
system, the Free Application for Federal Student Aid (FAFSA), the
Student Aid Report (SAR), and the Federal Renewal FAFSA. We
are working on the following major improvements:

- Eliminate Void output documents
- Eliminate Correction Applications
- Incorporate Title IV and Guarantee Agency Default Matches
into NSLDS
- Enhance the data matches
- Eliminate loan questions from the FAFSA
- Print Federal student aid information numbers on the FAFSA
- Revise state release question on the FAFSA

Central Processing System (CPS)

Students will no longer receive void SARs. In 1995-96, the
situations described below will result in two part rejected SARs
which will include all reported data.

An application with too many problems (therefore requiring too
many comments on the SAR), will generate a non-void rejected SAR
(reject 20). The SAR will contain comments directing the
applicant to make corrections on the SAR and to contact his or
her financial aid administrator (FAA) if he or she has questions.

An application received at the MDE FAFSA processor that has been
signed before January 1, 1995 or after the May 1, 1996 deadline
date, will be returned to the applicant unprocessed. The student
will receive a letter with an explanation why his or her
application was not processed. In the past, a student who did
not submit his or her application within the appropriate time
frame, received a void SAR, and if the submission was too early,
a correction application.

A student who submits a second or subsequent application to the
same MDE FAFSA processor will no longer receive a void,
unofficial output document. The CPS will now process subsequent
original applications to the same MDE in the same manner as those
sent to a different MDE. That is, the CPS will use information
processed from the previous transaction, except for address and
institutions listed (if different). A comment and comment code
indicating that the transaction is a second/subsequent application will
appear on the output document.

Two new rejects will be introduced. When an application has
incomplete income information and an EFC cannot be calculated by
CPS, the student will receive a two-part rejected SAR (reject 3
for renewal applications and reject 2 for original applications).
The student will be able to make necessary corrections directly
on the SAR and resubmit it for processing.

Because all SARs can now be used as correction documents,
including rejected SARs, the need for almost all correction
applications is eliminated. The Department of Education (ED)
will use correction applications only in a very few cases to
resolve issues involving applicants with duplicate social
security numbers. Therefore, we will not distribute correction
applications and institutions will no longer need to order or
stock them.

ED will no longer conduct the Title IV and Guarantee Agency
Default Matches. Instead we will conduct prescreening for
default information with the National Student Loan Data System
(NSLDS). Corresponding match flags and comment codes will be
provided on SARs and other output documents. See enclosure A
(described below) for information on NSLDS match flags and
comment codes.

Sometimes the Selective Service, Social Security Number (SSN),
NSLDS, or Immigration and Naturalization Service (INS) data match
is not conducted because of technical processing problems. In
1995-96, in an attempt to get definitive match results, CPS will
hold the records that were not matched and will re-submit them
daily for up to three days for processing. If after three days
the match is still not successful, application processing for
those records will be completed, despite the match results.

Enclosure A, 1995-96 SAR Comment Activity for Matches and Hold
Files, is an updated reference to identify all output document
comments and match flags resulting from the various eligibility
matches, the reason for the comment, and whether institutional
action is required.

Free Application for Federal Student Aid

The Free Application for Federal Student Aid (FAFSA) has some
major changes for the 1995-96 award year and several minor
changes in structure or language. Enclosure B is a copy of the
draft 1995-96 FAFSA.

The section formerly titled "Federal Family Education Loan
Program Information," which elicited information about the
applicant's previous loan history, has been eliminated. This
loan information will be available instead through the data-base
match that the CPS conducts with the NSLDS. All available
details of a student's loan history will appear on the SAR, and
other output documents.

The Asset Information section is placed before the information
release and signature section. Because reporting assets is
optional for students/parents who meet the Simplified Needs Test
(SNT), the asset questions previously appeared at the end of the
application. However, this placement caused confusion, resulting
in no signatures or not reporting sufficient information. The SNT
worksheets are unchanged, and continue to allow students to bypass
the asset section if they qualify.

In previous years, a student was required to check either "Yes" or
"No" in response to question 102 (should CPS release information to
the state of residence or state where college choices were located).
Students who overlooked the question often missed state deadlines
when information was not released in time. Therefore, the 1995-96
FAFSA assumes the student's response is "Yes" unless the student
specifically responds "No."

In 1994-95, we introduced a new worksheet entitled "Title IV
Income Exclusions" to collect certain financial items. The Higher
Education Amendments of 1992 directs us to exclude these items
from the EFC calculation. The worksheet facilitates verification by
handling all exclusions within the calculation rather than having the
applicant subtract amounts from the AGI. For 1995-96, we have
revised the worksheet to better describe which portions of financial
aid are taxable. We also determined that proration of taxes paid is
not required.

Page 10 of the FAFSA instructions includes the telephone numbers
of the toll-free Federal information line where students may obtain
assistance in completing the FAFSA and request more information
about the Title IV programs. The toll number is also included for
students who wish to request duplicate SARs or who need
information on whether their application has been processed.

Other changes to the FAFSA include:

SECTION A: YOU (THE STUDENT). Social security number and
date of birth follow directly after the name and address information.

SECTION C: YOUR PLANS. Questions about a student's
enrollment status, course of study and type of degree, and expected
date of completion were reordered to collect the information in a
more logical sequence.

Summer term 1996 was added to questions 24-28 to accommodate
summer enrollment periods that begin prior to July 1. Question 32
asks for "grade level" rather than "year in college." Students' choices
on how to respond correspond closely to the grade levels used for the
Federal Family Education Loan (FFEL) and Federal Direct Student
Loan programs. The one difference between the loan program and
the FAFSA grade levels is that the FAFSA allows states to
distinguish between a first year student who never attended college
and a student who previously attended college but remains at the
first-year level.

Question 37 is revised to encompass "dependent care" rather than
"child care" to reflect that cost of attendance may cover the cost of
elder care as well as child care.

SECTION D: STUDENT STATUS. Question 42 is revised to ask if
the student will be enrolled in "a graduate or professional program
(beyond a bachelor's degree) in 1995-96?" Question 44 is revised to
allow applicants who were wards of the court until the age of 18 to
respond "Yes" to the question. This change was directed in the
Higher Education Technical Amendments of 1993.

section is unchanged except that the former "Title IV Income
Exclusions" is now called "1994 Exclusions from Worksheet #3."

SECTION G: ASSET INFORMATION. As stated before, this
section is placed before the information release and signature section.
Applicants are directed to complete the Simplified Needs Test (SNT)
worksheets found in the instructions. The application also states that
states and colleges may require this information even if asset
reporting is not required to apply for Federal aid.

college release block includes a grid to collect the Title IV institution
code. The Department of Education will provide the Title IV
institution code list to high schools, college financial aid offices, and
public libraries. We will make every effort to distribute the Title IV
institution code list at the same time as FAFSAs are available.

If a student does not know the Title IV institution code for the
schools he or she wants to list on the FAFSA and cannot locate a
Title IV institution code list, the student may write the complete
name and address of a college, and branch campus identification, if
necessary. If the names and addresses are legible and complete, the
MDE FAFSA processors will look up the appropriate institution
codes and transmit them to the CPS for processing.

SECTION I: PREPARER'S USE ONLY. There is one change in
this section. The Higher Education Technical Amendments of 1993
clarified that a preparer need provide either a social security number
or the employer's identification number, but not both.

INSTRUCTIONS. The 1995-96 instructions include a notice to
citizens of the Federal States of Micronesia, the Marshall Islands, or
Palau who do not have SSNs, referring them to the financial aid
administrator. These students will be assigned identification
numbers that will allow their applications to be processed manually,
despite the Social Security Number Match.

Student Aid Report

The color of the 1995-96 SAR will be yellow. All data elements on
the SAR will be ordered and numbered to correspond with data
elements on the FAFSA and Renewal FAFSA.

As stated previously, the one-part SAR known as a "void SAR" has
been eliminated; the student will receive a rejected, two-part SAR
rather than a void SAR and a correction application. Because such a
student will not receive another application instruction book, the
1995-96 SAR will contain as many codes and additional
instructions as possible. Some of these instructions will appear
in SAR section headings, some will be in the "Helpful Hints"
section, and some will be included in specific comments.

Flags for Official/Unofficial and for Last Official Transaction for
Unofficials will be eliminated from the FAA Information section.
These flags corresponded with void transactions. Several new flags
are added to the FAA information section of the SAR for 1995-96.
These flags include SNT, MDE record type, FAA adjustment and
FAA recalculation. Comment code 40 will also be provided to
indicate if the transaction is a second or subsequent application.

The back of Part 3 of the SAR (Pell Grant Payment Voucher) has
been revised. Item 5 has been modified to provide a mechanism for
institutions to indicate the method they are using to calculate awards.
Also in item 5, block F "Payment Methodology" was added to reflect
the measurements that now "drive" the payment calculations for the
Pell Grant Program and to provide accurate information about what a
student should receive during the award year. These changes are
based on regulatory changes that will be effective in 1995-96.

Details about the 1995-96 SAR will be provided in the 1995-96 SAR
Guide, which will be updated from 1994-95 and provided to FAAs
as an action letter before FAAs receive 1995-96 SARs.

Renewal Free Application for Federal Student Aid

The paper Renewal FAFSA was introduced in the 1994-95 school
year and as of July 29, 1994, approximately 42% of all the
applications processed in 1994-95 were paper renewal applications.
Information we gained about how students completed this alternative
application led to changes in both design and processing of the 1995-
96 renewal application. The new option that allows schools more
control over the printing and distribution of renewal applications is
detailed in 1995-96 Action Letter #1 (GEN-94-26).

The questions on the Renewal FAFSA are identical to those on the
regular FAFSA, and appear in the same sequence. The renewal
application somewhat resembles Part 2 of the SAR. A draft copy of
the 1995-96 Renewal FAFSA is included with this letter as
Enclosure C. We preprint some information from the student's
previous year application on the 1995-96 form. Students do not have
to enter new information for 1995-96 if the information preprinted is
still correct.

A significant number of students who completed the renewal
application in 1994-95 did not release information to any colleges or
to their state agency, and did not provide required financial data. To
address these problems, we have made several design changes:

- Additional space is allowed at the top of page one, so that the
most basic instructions are provided on the form itself.

- An abbreviated instruction page (page 2) lists all the codes for
questions with multiple answer possibilities. This includes IRS
tax line references. Complete instructions are also available in
the booklet.

- The arrowed items that mean a response is required are printed
and outlined in bold, to add visual emphasis. The words "Enter
correct data" appear next to the arrows pointing to the 1995-96

- The college release section is enlarged and redesigned. Students
may check "Yes" to release information to a preprinted college
and write in a housing code for the preprinted college.
Alternatively the student may check "No" and write in a new
college and housing status code.

- The state release question is revised to make it easier for the
student to release his/her information to state agencies.

In addition to the design changes, in 1995-96 if an applicant does not
release application data to a college, and the following two
conditions are also met: 1) only one college is printed from the
previous year, and 2) the student reported "yes" to question #36 (Do
you plan to attend the same college in 1995-96), CPS will
automatically release the application data to the school listed.


Procedures for processing applications from students from the
Republic of the Marshall Islands, the Federated States of
Micronesia and the Republic of Palau who do not have SSNs are
basically the same for 1995-96 as 1994-95. These students that do
not have SSNs should send their FAFSAs to the following address
rather than to the address listed on the FAFSA or on the envelope
included with the FAFSA.

Federal Student Aid Programs
P.O. Box 4057
Iowa City, IA 52243

We request that institutions collect as many of these students'
completed FAFSAs as possible and send them to this address in a
bundle. The applications received will be assigned a processing
identification number in item 8 of the FAFSA and will be submitted
to the CPS for regular processing. Please refer to 1994-95 Action
Letter #7 (GEN-94-4) for detailed information.

Since correction applications will not be used in 1995-96,
procedures for these students that included correction applications
have been eliminated. In 1995-96, the FAFSA processor will
"verify" the assigned SSN in item 8 of all 01 transaction SARs and
re-submit them to the CPS. For 01 transaction SARs that were
rejected (for any reason), the resulting 02 transaction SAR will still
have the reject code, but the SSN will be "verified" for purposes of
application processing. The student can then make necessary
corrections on the SAR and submit it to the address provided on the
SAR for processing. A letter will be provided with the SAR
informing the student of the assigned identification number.

Financial aid administrators can still conduct dependency overrides
(from dependent to independent) on initial applications or on
SAR/electronic corrections. In 1995-96, if the student who had the
dependency override attends another school, and the second school
does not agree that the student should be independent, the second
school can undo the dependency override as a correction. To undo
the override, the FAA must check the second box (labeled "2") for
Dependency Override in the School Use Only box of the SAR. The
FAA must also provide the Title IV Institution Number and FAA
Signature. This will generate a transaction without the dependency
override. This will work only if the transaction already had an
override from dependent to independent. A flag value of "N" will be
added to Dependency Override in the FAA Information section of
the SAR. "N" will indicate that an override has been cancelled.

We have attempted to continue to improve and simplify the
application delivery system for 1995-96, and thank FAAs who
submitted suggestions to us. Please continue to send us your


Leo Kornfeld
Deputy Assistant Secretary for
Student Financial Assistance Programs

SAR Comment Activity for Matches and Hold Files
Draft 1995-96 FAFSA
Draft 1995-96 Renewal FAFSA

Last Modified: 08/31/1994