Part: 2 - - The Application Process for Financial Aid
SectionTitle: The Federal Role in Application Processing
Historically, standards for application processing and need analysis
were developed in the 1950's by the financial aid community and
independent servicers. As the federal share of need-based aid
increased over the years, the law was amended to ensure that
prospective students could apply for federal aid without paying a fee.
The law also requires the Department to contract to the extent
practicable with organizations for the processing of financial aid
applications and issuing eligibility reports.
Currently, the Department contracts for two different kinds of
processing services: application processing and calculation of
federal student aid eligibility. There are four application processors
but only one central processor for the eligibility calculation.
Through contracts with other organizations, the Department has
arranged for four different APPLICATION PROCESSING
SYSTEMS to process the FAFSA and send the student's information
to the CENTRAL PROCESSING SYSTEM (CPS). The application
processors are also responsible for printing the STUDENT AID
REPORT (SAR) based on the EFC calculated by the CPS.
We will refer to these application processors as FAFSA
PROCESSORS for purposes of our discussion of the federal student
aid delivery system, although several of the organizations may
provide other services to students and schools. One of the FAFSA
processors is the Department's own application processor. We will
refer to this processor as the ED APPLICATION PROCESSOR.
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The application questions needed to apply for aid from the federal
student aid programs appear on a stand alone form, known as the
"Free Application for Federal Student Aid" (FAFSA). For the
federal student aid programs, the end result of the application
process is the eligibility report: the printed STUDENT AID
REPORT (SAR) that includes the student's official EFC number or
an electronic equivalent that is sent to the school. After the student's
application has been processed, a SAR is sent to the student's home
address, and the information on the SAR is sent electronically to the
school. (Note that students who file an application through the
ELECTRONIC DATA EXCHANGE (EDE) will NOT receive a
printed SAR at their home address; the SAR information will only
be sent to the school.) The student may submit a valid SAR (one on
which all information used to calculate the EFC is complete and
accurate as of the date the application is signed) to the school to
receive a Federal Pell Grant; the school may also use the EFC on the
SAR to award other federal aid.
However, for the 1994-95 award year, there are alternatives to using
the SAR as a payment document for Federal Pell Grants. The
school may also pay a Federal Pell Grant if it has received the
student's EFC and application information from the CPS through
INSTITUTIONAL STUDENT INFORMATION REPORTS
(ISIRs)*2*, or EDE. This information must be presented to the
student in printed form on an ESAR, and the student must sign to
certify that he or she has had an opportunity to review this
information and that the information is correct.
*2* ISIR refers to documents such as printouts from tapes or
rosters. An ISIR is a report to a school from the CPS containing all
of a students application information. The ISIR may be a paper
document or an institutional paper printout from a computer
generated electronic record. Only schools reporting Federal Pell
Grant disbursements electronically may rely on a signed ISIR in lieu
of a SAR as final documentation of a students eligibility for a
Federal Pell Grant.