| AwardYear: 1994-1995 Edition: PostSecondary Part: 2 - - The Application Process for Financial Aid SectionNumber: SectionTitle: How the Application is Processed PageNumbers: 27-29 The federal CPS analyzes the information from the application and calculates an EXPECTED FAMILY CONTRIBUTION (EFC) based 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 Grant. 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. |