Maintained for Historical Purposes

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

How the Application is Processed

AwardYear: 1994-1995
Edition: PostSecondary
Part: 2 - - The Application Process for Financial Aid
SectionTitle: How the Application is Processed

PageNumbers: 27-29

The federal CPS analyzes the information from the application and
on a formula developed by Congress to determine how much parents
and students can be expected to pay toward a student's education.
In essence, the EFC measures the family's financial strength, based
on the income and assets of the student, the student's spouse, and, if
the student is dependent, the student's parents. The EFC formula
also takes into account the family's expenses, based on the number
of persons in the household and the number of those persons
attending college. (See APPENDIX D for more information on
how the EFC is calculated.)

If the EFC is less than the cost of attendance, the student is
considered to have FINANCIAL NEED. A full-time student who
receives an EFC of 0 may receive the maximum Federal Pell Grant
award depending on the student's cost of attendance. The higher the
EFC, the less the student's need for Federal Pell Grant assistance. If
the student's EFC is above a maximum number determined each
award year by Congress, the student will not receive a Federal Pell

The CPS will calculate a "simplified EFC" for students who meet
certain income and tax filing requirements. Applicants who meet
the simplified needs test do not need to provide information about
their family's assets on the application. The tax filing requirement
is the same as in previous years: neither the student or the student's
spouse or the student's parents (for a dependent student) filed or is
required to file an IRS Form 1040. The income limit for the
simplified needs test has been raised from $15,000 to $49,999. Note
that this limit applies to the income of an independent student and
spouse, or to the income of a dependent student's parents, but the
income of a dependent student is not counted towards this limit.

The formula also provides for an automatic zero EFC for some
students. Applicants who meet the following requirements will
automatically receive a zero EFC:

- for a dependent student, neither parent was required to file a
1993 IRS Form 1040, and the parents' taxable income is
$12,000 or less

- for an independent student with dependents other than a
spouse, neither the student (or spouse) filed or were required to
file a 1993 IRS Form 1040, and the student (and spouse's)
taxable income is $12,000 or less.

Independent students with no dependents other than a spouse do not
qualify for an automatic zero EFC.

The CPS uses a series of "EDITS" to check the consistency of the
student's information. For instance, it would be inconsistent for the
dependent student of a single parent to report income earned from
work for two parents. If the student's information is inconsistent,
the CPS may be unable to calculate the EFC, or may calculate an
EFC based on assumptions built into the processing system. The
CPS also performs several ELIGIBILITY MATCHES to check the
student's information against drug abuse conviction records
maintained by the Department of Justice, citizenship records
maintained by the Immigration and Naturalization Service, and
registration status information maintained by Selective Service. If a
student's name and Social Security Number (SSN) match
information in records maintained by any of these agencies, the
student may not be eligible to receive Title IV student financial aid,
and it is noted on the SAR.

Beginning this year, the CPS will also send records to the Social
Security Administration to check the validity of a student's SSN.
The student will also receive a comment on the SAR if the SSN is a
valid number, but the name does not match, or the name matches
the SSN, but the date of birth does not. In addition, the Department
conducts Loan Default Matches to identify students who have
defaulted on a Federal Family Education Loan or other SFA loan
held by a state guaranty agency or the Department. If a student is
found to be in default and has not made satisfactory arrangements to
repay, he or she will receive a comment on the SAR saying he or she
is ineligible for aid until the default status is resolved.

For electronic applications, the FAA can (if desired) anticipate
certain assumptions the processor makes and correct or override
them on the student's first application. Thus, the student's first SAR
will not have to be reprocessed to confirm these assumptions. For
example, if the household size and the number of people in college
are equal to each other and more than 2, the processor assumes that
the number in college should be 1. In an electronic application, the
aid administrator can override this assumption if all members of the
household are in fact enrolled in college. This override allows
information contrary to the assumptions to be confirmed when first
filing through EDE (rather than requiring later confirmation).

The student will receive a SAR within three weeks of filing a paper
application. (The student's school may receive this information
sooner, through EDE, or on an ISIR, if the student has authorized
release of the information.) This document contains the student's
EFC and comments about the student's application information. If
the student completed a separate supplemental form required for
some state or institutional aid, the processor may provide its own
output document in addition to the SAR.

Last Modified: 02/03/1998