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Tolerance Option Instead of Correcting

AwardYear: 1995-1996
ChapterNumber: 3
ChapterTitle: Completing the Verification Process
Section: Tolerance Option Instead of Correcting

Verification often uncovers errors in application data--these
generally must be corrected before you may award student aid.
However, the discrepancies are sometimes so minor that the
applicant's eligibility for aid will not be significantly affected.
Therefore, ED has established a tolerance option.

If the original application contains any errors in a student's
nondollar items, such as household size, you MAY NOT use any
tolerance options. The student must follow the applicable correction
procedures, as detailed in the next section. However, if there are no
nondollar errors and if all dollar errors are within the tolerance
limit, you may award the student's aid based on the application data
as it is, without requiring that the EFC be recalculated.

In the past, there were two separate tolerances, one for Federal Pell
Grant purposes and another for the purposes of all other SFA
programs. However, the November 29, 1994 regulations established
a single, common tolerance level of $400 for all SFA programs.
Effective for all 1995-96 applications selected for verification (even
applications processed before July 1, 1995), a student's application
errors are within tolerance if there are no nondollar errors and if the
total dollar error is $400 or less. In such a case, recalculation is not
required, even though the application contains errors.

To calculate the total dollar error, first add the original
(uncorrected) AGI and untaxed income amounts. From that
amount, subtract the original U.S. income tax paid to get Total A.
Then, add the CORRECT AGI and untaxed income amounts, and
subtract from that the CORRECT U.S. income tax paid to get Total
B. If the difference between Total A and Total B is $400 or less
(and there are no nondollar errors), the errors are within tolerance;
recalculation is not required. In such a case, verification status code
"T" would be used when reporting the Pell Grant payment. (See the
"Verification Status Codes" section earlier in this chapter.)

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Last Modified: 06/11/1998