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transfer student from a certificate program and accepts 900 clock hours that the student earned toward its 1,500-hour
program, the student could be eligible for the second-year loan limits if other students in the program are eligible for
second-year loan limits after completing the first 900 hours of the program.
Annual Loan Limits for Preparatory Coursework and Teacher Certification Programs
In Chapter 1 of this volume we discussed instances in which a student may receive Direct Loans for coursework that is not
part of an eligible program leading to a degree or certificate awarded by the school (preparatory coursework and teacher
certification programs). The annual loan limits for students enrolled in preparatory coursework or teacher certification
programs are shown in Tables 2A and 2B below.
Volume 8, Chapter 4, Table 2A: Annual Loan Limits for Preparatory Coursework (Maximum 12 Consecutive Months)
Preparatory coursework required for enrollment in an undergraduate program:
Total (Subsidized and
Unsubsidized)
Maximum
Subsidized
Dependent undergraduates (excluding dependent students whose
parents can9t get Direct PLUS Loans)
$ 2,625 $ 2,625
Independent undergraduates (and dependent undergraduates whose
parents can9t get Direct PLUS Loans)
$ 8,625 $ 2,625
Preparatory coursework required for enrollment in a graduate or professional program:
Total (Subsidized and
Unsubsidized)
Maximum
Subsidized
Dependent undergraduates (excluding dependent students whose
parents can9t get Direct PLUS Loans)
$ 5,500 $ 5,500
Independent undergraduates (and dependent undergraduates whose
parents can9t get Direct PLUS Loans)
$12,500 $ 5,500
Volume 8, Chapter 4, Table 2B: Annual Loan Limits for Teacher Certification Coursework
Total (Subsidized and
Unsubsidized)
Maximum
Subsidized
Dependent undergraduates (excluding dependent students whose
parents can9t get Direct PLUS Loans)
$ 5,500 $ 5,500
Independent undergraduates (and dependent undergraduates whose
parents can9t get Direct PLUS Loans)
$12,500 $ 5,500
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Note that for dependent undergraduates, the annual loan limits shown above in Tables 2A and 2B do not provide an
additional unsubsidized loan amount beyond the maximum annual subsidized amount, as is the case with the loan limits
for independent undergraduates and dependent undergraduates whose parents cannot get Direct PLUS Loans. For
dependent undergraduates enrolled in preparatory coursework or teacher certification programs, there is just a single
annual loan limit representing the maximum amount of subsidized and/or unsubsidized loans that the student may
receive for an academic year.
For example, a dependent undergraduate taking preparatory coursework required for enrollment in a graduate or
professional program could receive up to $5,500 per academic year in Direct Loan funds, which could be all subsidized, all
unsubsidized, or a combination of subsidized and unsubsidized. In contrast, an independent undergraduate taking the
same preparatory coursework could receive up to $12,500 per academic year, not more than $5,500 of which could be
subsidized.
Loan limits for preparatory coursework and teacher certification coursework are not subject to proration (see Chapter 5 of
this volume) if the coursework is less than a full academic year.
Combined Undergraduate and Graduate Programs
Some programs combine undergraduate and graduate study and allow a student to complete both a bachelor's degree
and a graduate or professional degree within the same program. These are referred to as "dual degree programs." For
instance, a school could offer a 5-year dual degree program leading to both a bachelor's degree and a graduate or
professional degree and could define the first three or four years of study as being at the undergraduate level, and the
remaining year(s) of study as being at the graduate or professional level. A student may receive Direct Loans at the
applicable undergraduate annual loan limits (as well as other
Title IV aid at the undergraduate level) during the
undergraduate portion of such a program, and then may receive Direct Loans at the graduate and professional student
annual loan limit (and also Direct PLUS Loans) for the graduate and professional portion of the program.
See Volume 1 for more detailed guidance on student eligibility for Title IV aid in programs that combine undergraduate
and graduate study, including programs that lead only to a graduate or professional degree, but admit students who do
not yet meet the regulatory requirements to be considered graduate or professional degree students.
Students Returning for a Second Baccalaureate Degree
If a student with a baccalaureate degree enrolls in another baccalaureate program, the student9s grade level for loan limit
purposes would be based on the amount of work that the school counts toward satisfying the requirements of the new
program. For instance, if your school accepts 30 semester hours of a student9s work in a previous baccalaureate program
toward the requirements for a BS in Chemistry at your school and, on that basis, classifies the student at the second-year
level, then the student would be eligible for second-year undergraduate loan limits (see <Loan Limit When a
Baccalaureate or Associate Degree Is Required for Admission to an Undergraduate Program= earlier in this chapter for the
loan limit that applies when a student is required to have a prior associate or baccalaureate degree as a condition for
being admitted to an undergraduate program).
Students Who Transfer From a Graduate Program to an Undergraduate Program During an Academic Year
If a student transfers from a graduate program to an undergraduate program in the middle of an academic year, the
undergraduate annual loan limit for the student9s grade level applies but amounts previously borrowed at the graduate
level within the same academic year do not count against the undergraduate annual loan limit. However, the total amount
awarded for the academic year may not exceed the higher (graduate or professional) annual loan limit.
Volume 8, Chapter 4, Example 1: Transfer From a Graduate to Undergraduate Program During the Same Academic
Year
A student who received $10,250 in Direct Unsubsidized Loan funds for a fall semester loan as a graduate student
enrolls in an undergraduate program at the same school in the spring semester of the school9s fall-spring
academic year and is classified as a third-year independent undergraduate. As a third-year independent
undergraduate, the student9s annual loan limit is $12,500, not more than $5,500 of which may be subsidized.
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Increased Unsubsidized Annual Loan Limits for Certain Health Professions Students
There are higher annual Direct Unsubsidized Loan limits for some graduate and professional health professions students.
Schools may award the increased unsubsidized amounts to students who are enrolled at least half time in certain health
professions programs. The programs must be accredited by specific accrediting agencies.
The programs that are eligible for the increased Direct Unsubsidized Loan amounts, the applicable increased unsubsidized
loan amounts, and the approved accrediting agencies for these programs are shown in Tables 3A and 3B below. As shown
in the tables, the increased unsubsidized loan annual limits vary by program and academic year length.
Volume 8, Chapter 4, Table 3A: Health Professions Programs Eligible for an Additional $20,000 or $26,667
Additional $20,000 in Unsubsidized Loans for an Academic Year Covering 9 months
Additional $26,667 in Unsubsidized Loans for an Academic Year Covering 12 months
Program Approved Accrediting Agency
Doctor of Allopathic Medicine Liaison Committee on M edical Education
Doctor of Osteopathic Medicine American Osteopathic Association, Bureau of Professional Education
Doctor of Dentistry American Dental Association, Com mission on Dental Accreditation
Doctor of Veterinary Medicine American Veterinary Me dical Association, Council on Education
Doctor of Optometry American Optometric Association, Council on Optometric Education
Doctor of Podiatric Medicine American Podiatric Medi cal Association, Council on Podiatric Medical
Education
Doctor of Naturopathic Medicine, Doctor of
Naturopathy
Council on Naturopathic Medical Education
Volume 8, Chapter 4, Table 3B: Health Professions Programs Eligible for an Additional $12,500 or $16,667
Additional $12,500 in Unsubsidized Loans for an Academic Year Covering 9 months
Additional $16,667 in Unsubsidized Loans for an Academic Year Covering 12 months
Program Approved Accrediting Agency
Doctor of Pharmacy Accreditation Council for Pharmac y Education
However, the student may not receive the full $12,500, since that amount, when added to the $10,250 the
student received as a graduate student in the fall, would exceed the $20,500 graduate or professional student
annual loan limit. Therefore, the student9s maximum loan eligibility for the spring semester (if supported by COA
and OFA) is $10,250, not more than $5,500 of which may be subsidized.
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Graduate program in Public Health (including Master's and Doctoral
degree programs in Public Health)
Council on Education for Public Health
Doctor of Chiropractic Council on Chiropractic Educa tion, Commission
on Accreditation
Doctoral Degree in Clinical Psychology American Psyc hological Association,
Committee on Accreditation
Master's or Doctoral Degree in Health Administration Commission on Accreditation of Healthcare
Management Education
The increased unsubsidized amounts that an eligible health professions student may receive are in addition to the regular
$20,500 Direct Unsubsidized Loan annual loan limit for graduate and professional students. For example, a student
enrolled in a nine-month Doctor of Dentistry program is eligible for the regular Direct Unsubsidized Loan annual maximum
for a graduate or professional student ($20,500), plus the maximum increased unsubsidized amount of $20,000, for a
total Direct Unsubsidized Loan maximum of $40,500 per academic year.
Graduate and professional students who qualify for the higher annual Direct Unsubsidized Loan limits are also eligible for
a higher combined subsidized and unsubsidized aggregate loan limit, as explained later in this chapter.
Proration of the Increased Health Professions Annual Loan Limit for an Academic Year Covering 10 or 11 Months
Tables 3A and 3B above show the increased unsubsidized loan limits for programs with an academic year of either nine
months or 12 months. For eligible health professions programs with an academic year covering 10 or 11 months, the
annual additional unsubsidized loan limit must be prorated. If the academic year covers 10 or 11 months, the prorated
annual loan limit is determined by dividing the applicable loan limit for an academic year covering nine months by nine,
and then multiplying the result by 10 or 11. For example, the prorated increased unsubsidized loan limit for a Doctor of
Dentistry program with an 11-month academic year would be $24,444, calculated as follows:
$20,000 ÷ 9 = $2,222.22
$2,222.22 x 11 = $24,444.42, rounded to $24,444
Foreign Schools May Not Award Increased Unsubsidized Loan Amounts
Foreign schools that participate in the Direct Loan Program may not award the increased Direct Unsubsidized Loan
amounts to health professions students.
Aggregate Loan Limit Overview
As explained earlier in this chapter, there are limits on the maximum Direct Subsidized Loan and Direct Unsubsidized Loan
amounts that a student may receive each academic year (annual loan limits). There are also limits on a student9s
maximum outstanding total Direct Subsidized Loan and Direct Unsubsidized Loan debt. These are called aggregate loan
limits. A borrower who has reached the aggregate borrowing limit for Direct Subsidized Loans and Direct Unsubsidized
Loans may not receive additional loans. Once the loans are repaid, in full or in part, the borrower may apply for additional
loans.
To ensure that a student doesn9t exceed the aggregate loan limits, the student9s FAFSA form data is matched with NSLDS.
If the student has exceeded or is approaching the aggregate loan limits, this will be noted in the ISIR. If a student
transfers to your school, you must inform NSLDS so that it can begin the Transfer Student Monitoring process.
Aggregate Loan Limits for Direct Subsidized Loans and Direct Unsubsidized Loans
The aggregate loan limits for Direct Subsidized Loans and Direct Unsubsidized Loans are shown in Table 4 below.
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Volume 8, Chapter 4, Table 4: Aggregate Limits for Direct Subsidized Loans and Direct Unsubsidized Loans
Total (Subsidized and
Unsubsidized)
Maximum
Subsidized
Dependent undergraduates (excluding those whose parents can9t get
Direct PLUS Loans)
$31,000 $23,000
Independent undergraduates (and dependent undergraduates whose
parents can9t get Direct PLUS Loans)
$57,500 $23,000
Graduate and professional students $138,500 $65,500
Notes on the aggregate loan limits shown in Table 4:
The <Total (Subsidized and Unsubsidized)= column shows the maximum combined outstanding subsidized and
unsubsidized loan debt for a student. The <Maximum Subsidized= column shows the maximum portion of the
combined subsidized and unsubsidized limit that may be subsidized. For example, a dependent undergraduate may
have up to a maximum of $31,000 in combined subsidized and unsubsidized outstanding loan debt, but no more
than $23,000 of this amount may consist of subsidized loans.
Capitalized interest (unpaid accrued interest that has been added to the principal balance of a loan) is not counted
toward a borrower9s aggregate loan limits (see "Checking Remaining Loan Eligibility Under Aggregate Loan Limits=
below for more information).
The $138,500 combined subsidized and unsubsidized aggregate loan limit for graduate and professional students
includes loans received for undergraduate study.
The $65,500 subsidized aggregate loan limit for graduate and professional students includes subsidized loans
received for prior undergraduate study. It also includes any subsidized loans received for prior graduate or
professional study before July 1, 2012, when graduate and professional students were eligible to receive subsidized
loans (subsidized loan eligibility for graduate and professional students was eliminated effective for loan periods
beginning on or after July 1, 2012).
The loan amounts counted toward a borrower9s aggregate loan limits include any outstanding Direct Subsidized Loan
and Direct Unsubsidized Loan amounts, and also any outstanding Subsidized and Unsubsidized Federal Stafford
Loans previously borrowed under the FFEL Program (no new loans have been made under the FFEL Program since
June 30, 2010).
If a borrower has a Direct Consolidation Loan or a Federal Consolidation Loan (a consolidation loan made under the
FFEL Program), the outstanding amount of the consolidation loan representing any Direct Subsidized Loans, Direct
Unsubsidized Loans, Subsidized Federal Stafford Loans, or Unsubsidized Federal Stafford Loans that were paid off by
the consolidation loan is counted toward the borrower9s aggregate subsidized and unsubsidized loan limits
accordingly.
Aggregate Loan Limit for an Undergraduate Student With a Graduate Degree
Aggregate Loan Limits
34 CFR 685.203(d), (e)
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In some cases, a student who previously received undergraduate and graduate degrees returns to school to complete a
second undergraduate program. Only the loans that the student received for the first undergraduate program are
included in determining the student9s remaining eligibility for loans for the second undergraduate program, up to the
undergraduate aggregate limits. Although loans received for graduate study are not counted toward a student9s
undergraduate aggregate loan limit, the combined loan amounts received for undergraduate and graduate programs may
not exceed the total allowable aggregate loan limits.
Treatment of Direct Subsidized Loans and Direct Unsubsidized Loans Received for Teacher Certification Coursework or
Preparatory Coursework
Students receiving Direct Loans for teacher certification coursework or for preparatory coursework (including preparatory
coursework required for admission to a graduate or professional program) are considered to be undergraduates for all
Title IV purposes. Therefore, Direct Subsidized Loans and Direct Unsubsidized Loans that a student receives for teacher
certification coursework or preparatory coursework are counted against the student's undergraduate aggregate loan
limits. (See Chapter 1 of this volume and the discussion earlier in this chapter for guidance on Direct Loan eligibility for
Volume 8, Chapter 4, Example 2: Returning to an Undergraduate Program After Receiving Loans for Graduate Study
An independent student has received the following loan amounts for a first undergraduate program and a
graduate program:
Subsidized: Unsubsidized: Total
Undergraduate $19,000 $26,000 $45,000
Graduate $0 $86,000 $86,000
Total $19,000 $112,000 $131,000
The student has now enrolled in a second undergraduate program. Only the loans received for the first
undergraduate program are counted toward the student9s undergraduate aggregate loan limit. Because the total
amount received for the first undergraduate program ($45,000) does not exceed the aggregate loan limit for an
independent undergraduate ($57,500, maximum $23,000 subsidized), the student has remaining loan eligibility
for the second undergraduate program.
The difference between the independent undergraduate aggregate loan limit and the total amount of the loans
received for the first undergraduate program is $12,000. However, the student may not receive the full $12,000,
because that amount, when combined with the amount received for the first undergraduate program and the
amount received for the graduate program, would exceed the combined undergraduate and graduate aggregate
loan limit of $138,500:
$45,000 + $86,000 + $12,500 = $143,500
Therefore, the student9s remaining loan eligibility for the second undergraduate program is $7,500 ($138,500
minus $131,000 already received for the first undergraduate program and the graduate program). Not more than
$4,000 of this amount may be subsidized ($23,000 undergraduate subsidized aggregate loan limit minus $19,000
in subsidized loans received for the first undergraduate program).
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teacher certification and preparatory coursework and the applicable annual loan limits.)
Higher Aggregate Loan Limit for Certain Health Professions Students
As explained earlier in this chapter, graduate and professional students who are enrolled in certain health professions
programs are eligible for higher annual Direct Unsubsidized Loan limits. These students also have a higher combined
subsidized and unsubsidized aggregate loan limit.
The combined subsidized and unsubsidized aggregate loan limit for graduate and professional health professions students
who are eligible to receive the increased annual unsubsidized amounts is $224,000. Not more than $65,500 of this
amount may be from subsidized loans (see the notes following Table 4 above regarding the $65,500 subsidized aggregate
loan limit for graduate and professional students).
If a student who received increased Direct Unsubsidized Loan amounts for a qualifying health profession program later
enrolls in a non-health professions program, the student is no longer eligible for the increased Direct Unsubsidized Loan
limits. However, the additional loan amounts received for the health professions program are not counted toward the
normal aggregate loan limit for that student.
Checking Remaining Eligibility Under the Aggregate Loan Limits
Before originating a Direct Subsidized Loan or Direct Unsubsidized Loan, it9s important to make sure the student still has
remaining eligibility under the aggregate loan limits. As long as there is no conflicting information, you may rely on the
financial aid history (provided on the ISIR as well as on the NSLDS Professional Access website) and the Transfer Student
Monitoring process (for transfer students only) to tell you if a student is about to exceed the applicable aggregate loan
limit. (See
Volume 1, Chapter 3 for more detail on NSLDS financial aid history, which may also affect eligibility for other
Title IV programs.)
The Loan History in NSLDS for a borrower who has received Title IV loans shows Aggregate Loan Information for the
borrower9s outstanding subsidized and unsubsidized loans. The Subsidized and Unsubsidized Aggregate Outstanding
Principal Balance amounts shown for a borrower in NSLDS do not include unpaid accrued interest, capitalized interest
(unpaid interest that has been added to the principal balance of the loan), or other charges, as these amounts are not
counted against the aggregate loan limits.
For each individual loan that a borrower has received, NSLDS shows both the Outstanding Principal Balance (OPB) and the
Aggregate Outstanding Principal Balance (Agg. OPB). The OPB is what the borrower owes, which may include capitalized
interest and other charges. The Agg. OPB is the portion of the OPB that counts against the aggregate loan limits for
subsidized and unsubsidized loans.
For instance, suppose a student has a Direct Unsubsidized Loan disbursed in the amount of $5,000. Over time, $200 in
interest accrues and is capitalized. Assuming that the borrower has made no payments on the loan, the OPB on the loan
will be $5,200 (this is the amount the borrower owes), and the Agg. OPB will be $5,000 (this is the amount that is counted
against the aggregate loan limit). If you are looking at information in NSLDS for individual loans, it is the Agg. OPB that
you should use to determine the student9s remaining loan eligibility under the applicable aggregate loan limit.
The Subsidized and Unsubsidized Aggregate Outstanding Principal Balance amounts displayed in NSLDS for a borrower
also include the outstanding portion of consolidation loans (both Direct Consolidation Loans and Federal Consolidation
Loans made under the FFEL program) attributable to Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized
Federal Stafford Loans, and Unsubsidized Federal Stafford Loans that were repaid by the consolidation loan.
Unallocated Consolidation Loan Amounts
NSLDS may also show a <Consolidation Loans, Unallocated= amount that is not counted against a borrower9s aggregate
loan limits. The <Consolidation Loans, Unallocated= amount represents the portion of a consolidation loan that cannot be
attributed to other loans in the borrower9s loan history. For example, it may represent capitalized interest or non-
Title IV
loans that were consolidated. You are not responsible for determining the origin of any unallocated consolidation loan
amounts.
Treatment of Consolidated Perkins Loans and PLUS Loans
A consolidated Perkins Loan or PLUS loan becomes part of the unsubsidized portion of a consolidation loan, but it is not
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counted toward the borrower9s aggregate Direct Loan limits.
Effect of a Change in Student Status on Aggregate Loan Limits
In some cases, a student may qualify for higher loan limits but then lose eligibility for the higher limits due to a change in
status. One such situation is when a dependent undergraduate qualifies for additional Direct Unsubsidized Loan amounts
because the student9s parent is unable to obtain a Direct PLUS Loan, but in a subsequent academic year the student9s
parent qualifies for a Direct PLUS Loan. In this circumstance the dependent student no longer qualifies for the additional
unsubsidized loan amounts at the higher independent undergraduate annual and aggregate loan limits. During any
academic year when a dependent student9s parent qualifies for a Direct PLUS Loan, the student is subject to the
dependent undergraduate annual and aggregate loan limits, but only loan amounts the student otherwise would have
been eligible to receive under the dependent undergraduate annual loan limits are counted when determining the
student9s remaining eligibility under the $31,000 combined subsidized and unsubsidized dependent undergraduate
aggregate limit (see Example 3 below).
A similar situation occurs when a student who received loans for a graduate or professional degree program later returns
to school and enrolls in an undergraduate program. The student is then subject to the undergraduate annual and
aggregate loan limits, but only loan amounts the student previously received as an undergraduate are counted when
determining the student9s remaining eligibility under the undergraduate aggregate loan limit (see Example 2 earlier in this
chapter).
Volume 8, Chapter 4, Example 3: Aggregate Loan Limits and Additional Direct Unsubsidized Loan Amounts When
Parents Are Unable To Obtain Direct PLUS Loans
A dependent student receives additional Direct Unsubsidized Loan funds (up to the additional amounts available
to independent undergraduates) for the first three years of a four-year program because the student9s parent is
unable to obtain a Direct PLUS Loan for each of those years.
For each of the first three years, the student receives the maximum subsidized and unsubsidized loan amounts
under the independent student annual loan limits (remember that the annual subsidized maximums are the same
for dependent and independent undergraduates):
First Year (independent student loan
limit)
$3,500
subsidized
$6,000 unsubsidized ($4,000 more than dependent
maximum)
Second Year (independent student
loan limit)
$4,500
subsidized
$6,000 unsubsidized ($4,000 more than dependent
maximum)
Third Year (independent student loan
limit)
$5,500
subsidized
$7,000 unsubsidized ($5,000 more than dependent
maximum)
Total $13,500
subsidized
$19,000 unsubsidized ($13,000 more than dependent
maximum)
In the fourth year, the parent is eligible to borrow a Direct PLUS Loan, so the student is then subject to the annual
and aggregate loan limits for a dependent undergraduate. The dependent student received a total of $13,500 in
Direct Subsidized Loan funds and $19,000 in Direct Unsubsidized Loan funds ($32,500 combined subsidized and
unsubsidized total) for the first three years when the student9s parent was unable to obtain Direct PLUS Loans.
These are the same amounts that an independent student who qualified for the maximum annual loan limit each
year could have received. If the student9s parent had been able to receive Direct PLUS Loans during each of the
first three years and the student received the maximum subsidized and unsubsidized loan amounts under the
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dependent student annual loan limits, the total loan amounts received would have been $13,500 in Direct
Subsidized Loan funds and $6,000 in Direct Unsubsidized Loan funds ($19,500 combined subsidized and
unsubsidized total).
Because the combined subsidized and unsubsidized loan amount of $32,500 that the student received for years
one through three exceeds the $31,000 dependent undergraduate aggregate loan limit, it might appear that the
student would have no remaining loan eligibility for the fourth year of the program. However, only the $19,500 in
combined subsidized and unsubsidized loan funds that the student could have received under the dependent
student annual loan limits are counted against the $31,000 aggregate, leaving the student with $11,500 in
remaining loan eligibility under the dependent undergraduate aggregate loan limit, not more than $9,500 of
which may be subsidized. Therefore, in the fourth year of the program (when the student9s parent is eligible to
receive a Direct PLUS Loan), the student could receive up to the full combined subsidized and unsubsidized
annual loan limit for a dependent fourth-year undergraduate (that is, $7,500, not more than $5,500 of which may
be subsidized).
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Chapter 5
Loan Limit Proration
Proration Overview
The annual maximum loan amount an undergraduate student may receive must be prorated (reduced) when the borrower
is:
Enrolled in a program that is shorter than a full academic year; or
Enrolled in a program that is one academic year or more in length but is in a remaining period of study (a period of
study at the end of which a student will have completed all requirements of the program) that is shorter than a full
academic year.
With one exception (see "Proration of the Annual Loan Limit for Students who Graduate Early From Clock-Hour Programs"
later in this chapter), the annual loan limits for Direct Subsidized Loans and Direct Unsubsidized Loans are prorated only
in these two situations. Loan limits are not prorated based on a student9s enrollment status, such as when a student is
enrolled less than full time, or when a student is enrolled for a period of less than a full academic year that is not a
remaining period of study.
The annual loan limit for Direct Unsubsidized Loans is not prorated for students enrolled in graduate or professional level
programs. Loan proration requirements also do not apply to students taking preparatory coursework or coursework
necessary for teacher certification. This is because the annual loan limit must be prorated only when a student is enrolled
in a program or remaining portion of a program that is shorter than an academic year. Students taking preparatory
coursework or teacher certification coursework are not considered to be enrolled in a program for purposes of awarding
Title IV aid.
It9s important to understand that loan limit proration determines the maximum loan amount that a student may borrow
for a program or remaining balance of a program, not the actual loan amount a student is eligible to receive. In some
cases, the loan amount a student is eligible to receive (based on costs, SAI, and OFA) may be less than the prorated loan
limit.
Use of Fractions vs. Decimals When Prorating Loan Limits
As we explain in more detail below, proration involves multiplying the annual loan limit by a fraction. You may choose to
convert the fraction to a decimal and then multiply the annual loan limit by the decimal, but this conversion is not a
requirement. However, you should be consistent in the method you use, since the fraction and decimal calculations
sometimes result in slightly different prorated loan limits, as shown in the examples later in the chapter.
Using the School9s Academic Year Definition If Longer Than the Title IV Minimum
As explained above, proration of the annual loan limit is required when an undergraduate student is enrolled in a program
that is shorter than an academic year or is enrolled in a remaining period of study that is shorter than an academic year.
A school may choose to define its academic year as longer in weeks or hours than the minimum statutory requirements. If
so, the school9s standard 3 not the statutory minimum 3 determines whether a program or a final period of study is shorter
than an academic year.
Separate Calculations for the Combined Subsidized and Unsubsidized Annual Loan Limit and the Maximum Subsidized
Loan Limit Proration
34 CFR 685.203(a), (b), (c)
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Annual Loan Limit
As explained in Chapter 4 of this volume, for undergraduate students there is a maximum combined annual loan limit for
Direct Subsidized Loans and Direct Unsubsidized Loans, and a maximum portion of that combined annual loan limit that a
student may receive in Direct Subsidized Loans. If the annual loan limit for an undergraduate student must be prorated,
you must first determine the combined Direct Subsidized Loan and Direct Unsubsidized Loan prorated annual loan limit,
and then separately determine the Direct Subsidized Loan prorated annual loan limit. This is illustrated in the proration
examples below.
Prorating Loan Limits for Programs Shorter Than an Academic Year
If an academic program is shorter than a full academic year in length, you must multiply the applicable loan limit(s) by the
lesser of 4
or
The result is the prorated annual loan limit for that program.
Proration Examples: Programs Shorter Than an Academic Year
Examples 1 and 2 illustrate how the prorated annual loan limit is determined when a student is enrolled in a program that
is shorter than an academic year.
Semester, trimester, quarter, or clock hours enrolled in program
Semester, trimester, quarter, or clock hours in academic year
Weeks enrolled in program
Weeks in the academic year
Volume 8, Chapter 5, Example 1: Clock-Hour Program Shorter Than an Academic Year
A dependent student is enrolled in a 400 clock-hour, 12-week program (a <short-term program= as described in
Volume 2, Chapter 2). The school defines the academic year for this program as 900 clock hours and 26 weeks of
instructional time.
To determine the maximum loan amount the student can borrow, convert the fractions based on weeks and hours
to decimals:
12 weeks in program/26 weeks in academic year = 0.46
400 hours in program/900 hours in academic year =0.44
Multiply the smaller decimal (0.44) by the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual
loan limit for a first-year dependent undergraduate ($5,500, not more than $3,500 of which may be subsidized):
$5,500 x 0.44 = $2,420 combined subsidized and unsubsidized prorated annual loan limit
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Prorating Loan Limits for Remaining Periods Shorter Than an Academic Year
You must also prorate loan limits for students enrolled in remaining periods of study shorter than an academic year. This
circumstance can occur when a student is enrolled in a program that is one academic year or more in length, but the
remaining period of study needed to complete the program (sometimes called a <final= period of study) will be shorter
than an academic year.
Proration is required only when you know in advance that a student will be enrolled for a remaining period of study that is
shorter than an academic year. With one exception, if a student originally enrolls for a remaining period of study that is a
full academic year in length, but completes the program in less than a full academic year, there is no requirement to
retroactively prorate the annual loan limit (for the exception, see <Proration of the Annual Loan Limit for Students Who
To determine the maximum portion of the $2,420 prorated annual loan limit that the student may receive in
subsidized loan funds, multiply the maximum subsidized annual loan limit of $3,500 by the smaller decimal
(0.44):
$3,500 x 0.44 = $1,540 subsidized prorated annual loan limit
The maximum combined Direct Subsidized Loan and Direct Unsubsidized Loan amount the student can borrow for
the program is $2,420, but no more than $1,540 of this amount may be in subsidized loans.
Note: In Example 1 above and in the other proration examples that follow, the fractions are converted to
decimals. As an alternative you could choose to multiply the annual loan limit by the original fraction, though you
should be consistent in using one method or the other. Using the fraction 400/900 in Example 1 instead of the
decimal 0.44 would result in a slightly higher prorated loan limit: $5,500 x 400/900 = $2,444.
Volume 8, Chapter 5, Example 2: Non-Term Credit-Hour Program Shorter Than an Academic Year
An independent student is enrolled in a 24 quarter-hour, 20-week program. The school defines the academic year
for this program as 36 quarter hours and 30 weeks of instructional time.
To determine the maximum loan amount the student can borrow, convert the fractions based on weeks and
quarter-hours to decimals:
20 weeks in program/30 weeks in academic year= 0.67
24 hours in program/36 hours in academic year= 0.67
Multiply the smaller decimal (in this case, both are 0.67) by the combined Direct Subsidized Loan and Direct
Unsubsidized Loan annual loan limit for a first-year independent undergraduate ($9,500, not more than $3,500 of
which may be subsidized):
$9,500 x 0.67 = $6,365 combined subsidized and unsubsidized prorated annual loan limit
To determine the maximum portion of the $6,365 prorated annual loan limit the student may receive in
subsidized loan funds, multiply the maximum subsidized annual loan limit of $3,500 by the same decimal (0.67):
$3,500 x 0.67 = $2,345 subsidized prorated annual loan limit
The maximum combined Direct Subsidized Loan and Direct Unsubsidized Loan amount the student can borrow for
the program is $6,365, not more than $2,345 of which may be in subsidized loans.
Note: Using the fraction 24/36 in Example 2 instead of the decimal 0.67 would result in a slightly lower prorated
loan limit: $9,500 x 24/36 = $6,333.
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Graduate Early From a Clock-Hour Program= later in this chapter).
In a standard-term program, or a credit-hour program using SE9W nonstandard terms, a remaining period of
study is considered shorter than an academic year if the remaining period contains fewer terms than the number of terms
covered by the school9s Title IV academic year. For programs that are offered in a Scheduled Academic Year (SAY; see
Chapter 6), the number of terms covered in the school9s Title IV academic year usually does not include a summer
<header= or <trailer= term.
Consider a student who is enrolled in a four-year program that is offered in an SAY consisting of three quarters plus a
summer trailer, and who has completed four academic years of study. The student needs to attend an additional quarter
term to complete the program requirements. The final quarter term falls in a new academic year; therefore the annual
loan limit must be prorated because the remaining period of study (a single quarter) is less than a full academic year.
Similarly, if a student enrolled in a two-year program not offered in an SAY (where the
Title IV academic year covers two
15-week semesters) has completed two academic years of study, but needs to return for an additional semester to
complete the program requirements, the loan limit must be prorated if the student receives a loan for the final semester.
Note that for standard-term programs or credit-hour programs with SE9W nonstandard terms, the length of the loan
period does not determine whether a student is enrolled in a remaining period of study that is shorter than an academic
year. The determining factor is the length of the remaining period of study in which the student is enrolled, which may not
be the same as the loan period. For example, if an undergraduate student is enrolled for a full SAY consisting of fall and
spring semesters, and will complete the program at the end of the spring term, but is enrolled less than half time during
the spring, the student is eligible to receive a Direct Loan only for the fall semester. Although the loan period (fall only) is
shorter than an academic year, the remaining period of study (fall through spring) is a full academic year. Therefore, if the
student receives a Direct Loan in the fall, proration of the annual loan limit is not required.
In a clock-hour program, non-term program, or a program with non-SE9W nonstandard terms, a remaining
period of study is considered less than an academic year if it consists of fewer clock or credit hours than the program9s
defined Title IV academic year. In contrast to standard term and SE9W nonstandard term programs, if a student enrolled
in a clock-hour, non-term, or non-SE9W nonstandard term program is in a remaining period of study shorter than an
academic year and receives a Direct Loan, the loan period and the remaining period of study will always be the same. This
is because for these programs the minimum loan period is the lesser of the length of the program (or remaining portion of
a program) or the academic year.
For all types of programs, you determine the prorated loan limit for a student enrolled in a remaining period of study less
than an academic year by multiplying the applicable annual loan limit by the following fraction:
Unlike proration for programs that are shorter than an academic year, there is no comparison of weeks and hours. Only
the credit or clock hours that the student is scheduled to attend, or is actually attending, at the time of
origination are used in the calculation.
Proration Examples: Remaining Periods of Study Shorter Than an Academic Year
Examples 3 through 7 illustrate how the prorated annual loan limit is determined when a student is enrolled in a
remaining period of study shorter than an academic year.
Semester, trimester, quarter, or clock hours enrolled in program
Semester, trimester, quarter, or clock hours in academic year
Volume 8, Chapter 5, Example 3: Remaining Period = One Quarter
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A dependent student is enrolled in a two-year credit-hour program offered in standard terms (quarters). The
school defines the academic year for the program as 36 quarter hours and 30 weeks of instructional time
(covering three quarters: fall, winter, and spring).
The student has attended the program for six quarters (two academic years), but to finish the program needs to
complete an additional six hours (half time) in the fall quarter of the next academic year:
Fall
(half time: 6 hours)
Winter
(not enrolled)
Spring
(not enrolled)
To determine the prorated Direct Loan limit for the student9s remaining period of study (one quarter), convert the
fraction based on the hours that the student is expected to attend and the hours in the academic year to a
decimal:
6 hours in fall/36 hours in academic year = 0.17
Multiply this decimal by the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a
dependent second-year undergraduate ($6,500, not more than $4,500 of which may be subsidized):
$6,500 x 0.17 = $1,105 combined subsidized and unsubsidized prorated annual loan limit
To determine the maximum portion of the $1,105 prorated annual loan limit that the student may receive in
subsidized loan funds, multiply the maximum subsidized annual loan limit of $4,500 by the same decimal (0.17):
$4,500 x 0.17 = $765 subsidized prorated annual loan limit
The maximum combined Direct Subsidized Loan and Direct Unsubsidized Loan amount the student can borrow for
the remaining portion of the program is $1,105, not more than $765 of which may be subsidized.
Volume 8, Chapter 5, Example 4: Remaining Period = Two Semesters, With Less Than Half-Time Enrollment in One
Term
The student from Example 3 transfers to a BA program at a different school. The academic year for the program
contains two semesters, fall and spring. During the second year of the BA program, the student will be enrolled
full time in the fall and less than half time in the spring, and will graduate at the end of the spring term:
Fall
(full time)
Spring
(less than half time)
Although the student is not eligible to receive a Direct Loan for the spring term, the remaining period of study
(two semesters) is equal to a full academic year. Therefore, proration of the annual loan limit is not required if the
student receives a Direct Loan for the fall term.
Volume 8, Chapter 5, Example 5: Remaining Period Shorter Than an Academic Year, With Less Than Half-Time
Enrollment in One Term
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A dependent fourth-year undergraduate is enrolled in a program with a defined academic year of 36 quarter
hours and 30 weeks of instructional time, covering three quarters (fall, winter, and spring). The student will attend
the fall and winter quarters, but not the spring quarter, and will graduate at the end of the winter term.
The student will be enrolled for 12 quarter hours (full time) during the fall quarter, but will be enrolled for only
three hours (less than half time) in the winter quarter:
Fall
(full time: 12 hours)
Winter
(less than half time: 3 hours)
Spring
(not enrolled)
The student9s final period of study (two terms) is shorter than an academic year, so the annual loan limit must be
prorated. However, because the student will be enrolled less than half time during the winter quarter (and
therefore ineligible to receive Direct Loan funds for that term), the loan period will cover the fall quarter only.
Only the 12 quarter hours will be used for the fall term are to determine the prorated annual loan limit.
To determine the prorated loan limit for the final period of study, convert the fraction based on the hours that the
student is expected to attend in the fall quarter and the hours in the academic year to a decimal:
12 hours enrolled in fall/36 hours in academic year = 0.33
Multiply this decimal by the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a
dependent fourth-year undergraduate ($7,500, not more than $5,500 of which may be subsidized):
$7,500 x 0.33 = $2,475 combined subsidized and unsubsidized prorated annual loan limit
To determine the maximum portion of the $2,475 prorated annual loan limit that the student may receive in
subsidized loan funds, multiply the maximum subsidized annual loan limit of $5,500 by the same decimal (0.33):
$5,500 x 0.33 = $1,815 subsidized prorated annual loan limit
The total prorated annual loan limit for the fall quarter loan is $2,475, not more than $1,815 of which may be
subsidized.
Volume 8, Chapter 5, Example 6: Remaining Period = Two Quarters, Separated by a Period of Non-Enrollment
A school has an academic year that covers three quarters: fall, winter, and spring. An independent fourth-year
undergraduate will be enrolled full time in the fall and spring quarters, but will not attend the winter quarter, and
will graduate at the end of the spring quarter:
Fall
(full time: 12 hours)
Winter
(not enrolled)
Spring
(full time: 12 hours
Because the fall quarter is in the same academic year as the student9s final quarter of attendance, it is part of the
remaining period of study, even though there is a term between the fall and spring quarters in which the student
will not be enrolled. As explained under <Loan Periods= in Chapter 2, the school may originate a single loan for a
loan period covering the fall, winter, and spring quarters (but no costs associated with the winter quarter may be
included when determining the loan amount the student is eligible to receive).
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The remaining period of study (two terms) is shorter than an academic year, so the annual loan limit for each loan
must be prorated based on the total number of hours for which the student is enrolled in the fall and spring
quarters.
The prorated loan limit is determined by converting the fraction based on the combined number of hours in the
fall and spring terms to a decimal:
24 hours enrolled in fall and spring /36 hours in academic year = 0.67
Note: In this example the decimal is rounded up:
24/36 = 0.666, rounded up to 0.67
It would also be acceptable to truncate the decimal to 0.66, but you should be consistent in the method used,
since rounding up vs. truncating will result in slightly different amounts (see below).
Multiply this decimal by the combined subsidized and unsubsidized annual loan limit for an independent fourth-
year undergraduate ($12,500, not more than $5,500 of which may be subsidized):
$12,500 x 0.67 = $8,375 combined subsidized and unsubsidized prorated annual loan limit for the fall and spring
terms.
To determine the maximum portion of the $8,375 prorated annual loan limit that the student may receive in
subsidized loan funds for the fall and spring terms, multiply the maximum subsidized annual loan limit of $5,500
by the same decimal (0.67):
$5,500 x 0.67 = $3,685 subsidized prorated annual loan limit for the fall and spring terms.
The maximum loan amount the student may receive for the two terms in the final period of study (fall and spring)
combined is $8,375, not more than $3,685 of which may be subsidized.
As an alternative, the school could choose to originate separate fall-only and spring-only loans. With this option,
the prorated loan limit is determined separately for each term by converting the fraction based on the number of
hours in each term to a decimal:
12 hours enrolled in term /36 hours in academic year = 0.33
This decimal is then be multiplied by the combined subsidized and unsubsidized annual loan limit for an
independent fourth-year undergraduate:
$12,500 x 0.33 = $4,125 combined subsidized and unsubsidized prorated annual loan limit for a single term (fall
or spring)
To determine the maximum portion of the $4,125 prorated annual loan limit that the student may receive in
subsidized loan funds for a single term, the subsidized annual loan limit of $5,500 is multiplied by the same
decimal (0.33):
$5,500 x 0.33 = $1,815 subsidized prorated annual loan limit for a single term (fall or spring)
The prorated loan limit for each single-term loan (fall-only and spring-only) in the remaining period of study is
$4,125, not more than $1,815 of which may be subsidized. This means that the maximum loan amount the
student may receive for the two terms in the final period of study combined is $8,250, not more than $3,630 of
which may be subsidized.
Note: With the alternate approach of originating separate fall-only and spring-only loans, the total loan amount
the student receives is slightly less than the total amount determined using the single loan approach with a fall-
winter-spring loan period, as described earlier in this section. This is due to rounding up the fraction to 0.67 in the
single loan approach. If the fraction used in the single-loan period approach were instead truncated to 0.66, both
approaches would result in the same total loan amount.
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Proration of the Annual Loan Limit for Students Who Graduate Early From a Clock-Hour Program
Under the regulations that govern the treatment of Title IV funds when a student withdraws, a student who completes all
the requirements for graduation from a program before completing the days or hours that they were scheduled to
complete is not considered to have withdrawn, and no return of Title IV funds calculation is required (see Volume 5 for
more detail). However, a school may be required to return a portion of the Direct Loan funds that were disbursed to a
student who successfully completes the requirements for graduation from a clock-hour program before completing the
number of clock hours that they were scheduled to complete.
A student's eligibility to receive Title IV aid for a clock-hour program is based, in part, on the total number of clock hours
in the program. If a school allows a student to graduate from a clock-hour program without completing all the originally
established hours for the program, the school has effectively shortened the program length and reduced a student's Title
IV aid eligibility for the program. In this circumstance, the school must prorate (or re-prorate) the annual loan limit for the
student based on the number of hours the student actually completed, and after this recalculation, the school must return
to the Department any portion of the Direct Loan funds the student received that exceed the newly prorated (or re-
prorated) annual loan limit. (For a student who received a Pell Grant, the school must also recalculate the student's Pell
Grant award in this situation. See Volume 7 for more information.)
This requirement applies only to clock-hour programs, and it applies regardless of the length of the program or remaining
portion of a program. In some cases, this means that a previously prorated annual loan limit must be re-prorated.
Examples 8 and 9 illustrate the requirement described above.
Volume 8, Chapter 5, Example 7: Clock-Hour Program With a Remaining Period Shorter Than an Academic Year
A school has an 1800 clock-hour program with a defined academic year of 900 clock hours and 26 weeks of
instructional time. A dependent undergraduate student successfully completes the first 900 clock hours of the
program in 22 weeks of instructional time. However, the student must complete an additional four weeks of
instructional time before receiving a second loan (see Chapter 6 of this volume).
After 26 weeks of instructional time have elapsed, the student has successfully completed 1,040 clock hours and
may then receive a second loan. However, the loan limit must be prorated based on the number of clock hours
remaining in the program at this point (760). To determine the prorated loan limit for the student9s second loan,
convert the fraction based on the number of clock hours remaining to a decimal:
760 hours remaining in program/900 hours in academic year = 0.84
Multiply this decimal by the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a
dependent second-year undergraduate ($6,500, not more than $4,500 of which may be subsidized):
$6,500 x 0.84 = $5,460 combined subsidized and unsubsidized prorated annual loan limit
To determine the maximum portion of the $5,460 prorated annual loan limit that the student may receive in
subsidized loan funds, multiply the maximum subsidized annual loan limit of $4,500 by the same decimal (0.84):
$4,500 x 0.84 = $3,780 subsidized prorated annual loan limit
The total prorated loan limit for the remaining period of study is $5,460, not more than $3,780 of which may be
subsidized.
Volume 8, Chapter 5, Example 8: Proration of the Loan Limit for a Student Who Graduates Early From a Clock-Hour
Program
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A dependent student enrolls in a 900 clock-hour program, with the academic year defined as 900 clock hours and
26 weeks of instructional time. The school assumes that the student will complete 900 clock hours.
The combined subsidized and unsubsidized annual loan limit for a dependent first-year undergraduate is $5,500,
not more than $3,500 of which may be subsidized. The student qualifies to receive the maximum annual
combined loan limit in the form of a $3,500 Direct Unsubsidized Loan and a $2,000 Direct Unsubsidized Loan.
Each loan is paid in two equal disbursements, as shown below.
Original Direct Subsidized
Loan Amount
$3,500
Direct Subsidized Loan First
Disbursement
$1,750
Direct Subsidized Loan Second
Disbursement
$1,750
Original Direct Unsubsidized
Loan Amount
$2,000
Direct Unsubsidized Loan First
Disbursement
$1,000
Direct Unsubsidized Loan Second
Disbursement
$1,000
The school considers the student to have met the requirements for graduation from the program after the student
has completed only 750 of the originally scheduled 900 clock hours. As soon as practicable after determining that
the student will meet the graduation requirements after completing only 750 clock hours, the school must prorate
the student9s Direct Loan annual loan limit because the student is now treated as having been enrolled in a
program shorter than an academic year in length (i.e., as though the student had originally enrolled in a 750
clock-hour program). However, in this circumstance, only the number of clock hours that the student completed
are used to determine the prorated loan limit. There is no comparison of hours and weeks fractions, as is normally
required when prorating the Direct Loan annual loan limit for students who are enrolled in programs shorter than
an academic year.
The school determines the prorated annual loan limit by multiplying the applicable annual loan limit by the
number of clock hours the student completed, then dividing the result by the number of clock hours in the
program's academic year definition:
($5,500 x 750) ÷ 900 = $4,583 prorated combined subsidized and unsubsidized annual loan limit
($3,500 x 750) ÷ 900 = $2,917 prorated subsidized annual loan limit
(As noted earlier in this chapter, the prorated loan limit may also be determined by converting the fraction
consisting of the number of clock hours the student completed in the program over the number of clock hours in
the program's academic year to a decimal, and then multiplying the decimal by the applicable annual loan limit.
Whatever approach a school chooses should be applied consistently, as the fraction method shown above and the
decimal method may produce slightly different results.)
The total prorated loan limit is $4,583, not more than $2,917 of which may be subsidized. Because the student
received more than the prorated maximums, the school reduces each disbursement of the student9s Direct
Subsidized Loan and Direct Unsubsidized Loan as shown below and returns the excess loan funds to the
Department. Note that the school 3 not the student 3 is responsible for returning the excess Direct Loan funds in
this situation.
Reduced Direct
Subsidized Loan
Amount
$2,917
($583 reduction from
original amount
Direct Subsidized Loan
Adjusted First
Disbursement
$1,458
(original disbursement
reduced by $292)
Direct Subsidized Loan
Adjusted Second
Disbursement
$1,459
(original disbursement
reduced by $291)
Direct Subsidized Loan
Funds Returned to
Department
$583
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disbursed)
Reduced Direct
Unsubsidized Loan
Amount
$1,666
($334 reduction from
original amount
disbursed)
Direct Unsubsidized
Loan Adjusted First
Disbursement
$833
(original disbursement
reduced by $167)
Direct Unsubsidized Loan
Adjusted Second
Disbursement
$833
(original disbursement
reduced by $167)
Direct Unsubsidized Loan
Funds Returned to
Department
$334
Volume 8, Chapter 5, Example 9: Re-Proration of a Previously Prorated Loan Limit for a Student Who Graduates Early
From a Clock-Hour Program
A dependent student is enrolled in the remaining 500 clock hours of a 1500 clock-hour program that has a defined
academic year of 900 clock hours and 26 weeks of instructional time. Because the student is enrolled in a final
period of study shorter than an academic year, the school prorates the annual loan limit based on the 500 hours
that it expects the student to complete:
($6,500 x 500) ÷ 900 = $3,611 prorated combined subsidized and unsubsidized annual loan limit
($4,500 x 500) ÷ 900 = $2,500 prorated subsidized annual loan limit
The total prorated loan limit for the remaining period of study is $3,611, not more than $2,500 of which may be
subsidized. The student qualifies to receive the maximum annual combined prorated loan limit in the form of a
$2,500 Direct Subsidized Loan and a $1,111 Direct Unsubsidized Loan. Each loan is paid in two equal
disbursements, as shown below.
Original Direct Subsidized
Loan Amount
$2,500
Direct Subsidized Loan First
Disbursement
$1,250
Direct Subsidized Loan Second
Disbursement
$1,250
Original Direct Unsubsidized
Loan Amount
$1,111
Direct Unsubsidized Loan First
Disbursement
$556
Direct Unsubsidized Loan Second
Disbursement
$555
The student successfully meets the requirements for graduation from the program after completing only 400
clock hours. This means that the school must re-prorate the annual loan limit based on the 400 hours that the
student actually completed:
($6,500 x 400) ÷ 900 = $2,889 re-prorated combined subsidized and unsubsidized annual loan limit
($4,500 x 400) ÷ 900 = $2,000 re-prorated subsidized annual loan limit
The total re-prorated loan limit for the remaining period of study is $2,889, not more than $2,000 of which may be
subsidized. Since the student originally received Direct Loan amounts in excess of the re-prorated loan limit, the
school must adjust the original disbursements and return the difference to the Department, as shown below. The
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school 3 not the student 3 is responsible for returning the excess funds.
Reduced Direct
Subsidized Loan
Amount
$2,000
($500 reduction from
original amount
disbursed)
Direct Subsidized Loan
Adjusted First
Disbursement
$1,000
(original disbursement
reduced by $250)
Direct Subsidized Loan
Adjusted Second
Disbursement
$1,000
(original disbursement
reduced by $250)
Direct Subsidized Loan
Funds Returned to
Department
$500
Reduced Direct
Unsubsidized Loan
Amount
$889
($222 reduction from
original amount
disbursed)
Direct Unsubsidized
Loan Adjusted First
Disbursement
$445
(original disbursement
reduced by $111)
Direct Unsubsidized Loan
Adjusted Second
Disbursement
$444
(original disbursement
reduced by $111)
Direct Unsubsidized Loan
Funds Returned to
Department
$222
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Chapter 6
Monitoring Annual Loan Limit Progression
Annual Loan Limit Progression Overview
The academic year (not the award year) is used as the basis for monitoring Direct Loan annual loan limits. That is, a
student may receive up to the applicable annual loan limit each academic year (see Volume 3, Chapter 1 for guidance on
defining the academic year). Note that the loan period for which a Direct Loan is originated does not always correspond to
the academic year. Although the loan period is often the same as the academic year, it may also be for a period shorter
than the academic year.
For Direct Subsidized Loans and Direct Unsubsidized Loans, a school must use either a Scheduled Academic Year (SAY) or
a Borrower-Based Academic Year (BBAY) to determine when a student is eligible for a new annual loan limit. Although
there is no fixed annual loan limit for Direct PLUS Loans, Direct PLUS Loans are awarded for the same SAY or BBAY period
that is used for Direct Subsidized Loans and Direct Unsubsidized Loans. The type of academic year (SAY or BBAY) that a
school may (or must) use to monitor annual loan limit progression depends on a program9s academic calendar, as
explained in the sections that follow.
Scheduled Academic Year
An SAY corresponds to a traditional academic year calendar that is published in a school9s catalog or other materials and
is a fixed period of time that generally begins and ends at the same time each year. An SAY may be used by:
Programs with standard terms and a traditional academic calendar; or
Programs with SE9W nonstandard terms (see Chapter 3) and a comparable calendar.
The guidance above also applies to subscription-based programs with standard terms or SE9W nonstandard terms. For
more information on academic calendars for subscription-based programs, see Volume 3, Chapter 1.
Examples of SAYs for a standard term program are fall and spring semesters, or fall, winter, and spring quarters. If a
program has SE9W nonstandard terms, an SAY could consist of two or more SE9W nonstandard terms running from fall
through spring. For both standard term and SE9W nonstandard term programs, the number of credit hours and weeks of
instructional time in the fall through spring SAY period must meet the regulatory requirements for an academic year.
SAY for Programs With Standard Terms Using a Traditional Academic Calendar
As noted previously, an SAY corresponds to a traditional academic year calendar and usually begins and ends at the same
time each calendar year (for example, beginning on the first day of the fall semester and ending on the last day of the
spring semester). An SAY must meet the Title IV requirements for an academic year (as defined in Volume 3, Chapter 1).
An SAY may include one or more terms that a student does not attend.
Standard terms are semesters, trimesters, or quarters (see Volume 3, Chapter 1 for more detail on standard terms). A
standard-term program may use an SAY if it has a traditional academic calendar (i.e., has terms that start and end at
about the same time each year, such as an academic calendar consisting of the fall and spring semesters or the fall,
winter, and spring quarters).
Summer terms are generally not considered to be part of the SAY, but for purposes of monitoring loan limits they may be
treated as a <trailer= to the preceding SAY or as a <header= to the following SAY. Your school has the option to establish a
policy that designates its summer term as either a trailer or header to the SAY for all students. You can also choose to
make different designations for different educational programs, or for different students, as long as you ensure that there
is no overlap in academic years. Note that a fixed designation of the summer term as either a trailer or header can limit a
student9s eligibility. For instance, if you always treat your summer term as a trailer to a preceding fall-spring SAY, a
student who receives the full annual loan limit for fall-spring would have no remaining loan eligibility for summer.
If the summer term is split into modules (sometimes called <minisessions=), such as <summer 1= and <summer 2,= the
modules can be combined and treated as a single trailer or header, or they can be treated separately and assigned to
different SAYs. That is, the first module can be treated as a trailer to the preceding fall-spring SAY, and the second module
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treated as a header to the following fall-spring SAY.
If a term other than the summer term is divided into modules, the modules must be combined with each other or with
other terms and treated as a single standard or nonstandard term (see Volume 3, Chapter 1 for more information on
combining modules). If modules (summer or otherwise) are grouped together and treated as a single term, the COA
cannot include costs for a module for which the student is not expected to be enrolled. A student doesn9t have to be
enrolled in each module but must be able to enroll at least half time in the combined term.
The annual loan limit applies to the SAY, plus the summer trailer or header. For example, if the SAY consists of fall and
spring semesters followed by a summer trailer, a student may receive a full annual loan limit for the fall-spring-summer
period. Once the calendar period associated with all terms in the SAY and the summer header or trailer (if any) has
elapsed, a student regains eligibility for a new annual loan limit.
SAY for Programs With SE9W Nonstandard Terms Using an Academic Calendar Comparable to a Traditional Academic
Calendar
A program with SE9W nonstandard terms may use an SAY if all the following requirements are met:
It has a fixed academic calendar comparable to a traditional academic calendar (i.e., terms that start and end at
about the same time each year, with the academic year comprised of two or more SE9W nonstandard terms in the
fall through spring);
All the nonstandard terms, including any summer term, are SE9W; and
The number of credit hours and weeks of instructional time in the comparable fall-spring academic calendar meet the
regulatory requirements for an academic year.
Borrower-Based Academic Year
A BBAY does not have fixed beginning and ending dates. Instead, it <floats= with a student9s (or a group of students9)
attendance and progression in a program of study. There are three types of BBAY:
BBAY 1, for credit-hour programs using an SAY with standard terms or SE9W nonstandard terms (including
subscription-based programs, as described in Volume 3, Chapter 1).
BBAY 2, for credit-hour programs not using an SAY, with standard terms or SE9W nonstandard terms (including
subscription-based programs, as described in Volume 3, Chapter 1).
BBAY 3, for clock-hour programs, non-term programs, programs with non-SE9W nonstandard terms (see Chapter 4
of this volume), or programs with standard and nonstandard terms not described above.
If a program is offered in an SAY calendar, you have the option of using either an SAY or BBAY 1 to monitor the annual
loan limits for students in that program. You must use a BBAY to monitor the annual loan limits for any academic program
that does not meet the definition of a program allowed to use an SAY. However, there are significant differences between
Volume 8, Chapter 6, Example 1: SE9W SAY
A school has programs with an academic calendar using semester hours with three 12-week quarters, offered
over the fall through spring (comparable to a traditional academic year calendar) and a 10-week term offered in
the summer. The school defines the academic year for these programs as 36 weeks of instructional time and 24
semester hours. Because the terms are quarters, but academic progress is measured in semester hours, the
terms are considered nonstandard.
Because these terms are SE9W nonstandard terms offered in a fixed schedule with an academic calendar
comparable to a traditional calendar, the school may use an SAY (with the summer term treated as a trailer or
header) or BBAY 1 consisting of any three consecutive terms (see below) for these programs.
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the different types of BBAY. We describe the differences between BBAY 1, BBAY 2, and BBAY 3 in the sections that follow.
BBAY 1 for Credit-Hour Programs With an SAY
If a program is offered in an SAY, you have the option of using a BBAY 1 as an alternative to the SAY for monitoring annual
loan limit progression. As explained earlier, a BBAY is not a fixed period that begins and ends at the same time each year.
The beginning and ending dates depend on the individual student9s enrollment.
For programs with an SAY, a BBAY 1 must include the same number of terms as the SAY that would otherwise be used
(not counting any summer trailer or header). For example, if the SAY includes three quarters (fall, winter, spring), a BBAY
1 would consist of any three consecutive terms. A BBAY 1 may include terms the student does not attend if the student
could have enrolled at least half time in those terms, but (unlike an SAY) it must begin with a term in which the student
is enrolled (even though the student may be enrolled less than half time for the first term and not eligible for a loan for
that term). Also, any modules (summer or otherwise) that run consecutively within a term must be combined and treated
as a single term. The COA cannot include costs for a module for which the student is not expected to be enrolled. A
student doesn9t have to be enrolled in each module but must be able to enroll at least half time in the combined term.
Like an SAY, a BBAY 1 must meet the minimum
Title IV requirements for an academic year. However, a BBAY 1 that
includes a summer term may include fewer than 30 weeks of instructional time or fewer credit hours than the minimum
number required for an SAY. This is because a summer term may be shorter than a standard term in an SAY but is
recognized as academically equivalent to a standard term when used as one of the terms in a BBAY 1. This exception
applies only to a BBAY 1 used as an alternative for a program with an SAY.
You may use a BBAY 1 for all students, only for students in certain programs, or on a student-by-student basis. For
example, you could use a BBAY 1 for students enrolled in a program that begins in a term other than the first term of the
SAY. You can even alternate BBAY 1 and SAY for a student, provided the academic years don9t overlap. This treatment
may allow a student to receive another loan sooner than would be allowed under an SAY standard.
As with an SAY, the annual loan limit applies to the BBAY 1. Once the calendar period associated with all terms in the
BBAY 1 has elapsed, a student regains eligibility for a new annual loan limit.
Alternating an SAY With BBAY 1
Alternating an SAY with BBAY 1 may allow a student to receive another loan sooner than would be allowed with an SAY.
For instance, if you normally use an SAY consisting of fall and spring semesters with a summer trailer, a student who
received the maximum annual loan limit for fall-spring could not receive another loan until the start of a new SAY in the
fall. If the student enrolls for summer and wants a loan, you could choose to switch the student to a BBAY 1 consisting of
the summer and fall terms. The student could then receive a loan for the summer term, which would be the start of a new
academic year. A school that provides flexibility in academic year standards for purposes of monitoring annual loan limits
must have a written policy that explains how it applies this flexibility when determining loan eligibility.
Examples 2 through 5 illustrate the optional use of BBAY 1 for a program that is offered in an SAY. Note that in each
example the first BBAY 1 is the same as the SAY.
Volume 8, Chapter 6, Example 2: BBAY 1 Where the SAY Contains Two Semesters
Year 1: SAY or BBAY 1 Year 2: BBAY 1 Year 3: BBAY 1
Fall + Spring Summer + Fall Spring + Summer
In Example 2, the initial fall and spring terms could be considered either an SAY or BBAY 1. If the student attends
the summer session at the school, the school can choose to treat the summer term and the next fall as a BBAY 1
for the student. In that case, the following spring and summer would also constitute a BBAY 1. The maximum loan
limit for an academic year applies to each BBAY 1. If these were the first three years of study for a dependent
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student who progressed a grade level each academic year, the student would be eligible for up to the applicable
annual loan limit during each BBAY 1.
Volume 8, Chapter 6, Example 3: BBAY 1 Where the SAY Contains Two Semesters (Student Is Not Enrolled in the
Second Term of the BBAY)
Year 1: SAY or BBAY 1 Year 2: BBAY 1 Year 3: BBAY 1
Fall + Spring Summer + Fall (not enrolled in Fall) Sp ring + Summer
A student doesn9t have to attend all of the terms in a BBAY 1, but the BBAY 1 cannot begin with a term that the
student doesn9t attend. In Example 3, the student is not enrolled in the second term (fall) of year 2.
Volume 8, Chapter 6, Example 4: BBAY 1 Where the SAY Contains Two Semesters (Student Is Not Enrolled in a Term
That Would Otherwise Be the First Term in the BBAY)
Year 1: SAY or BBAY 1 Year 2: BBAY 1 Year 3: BBAY 1
Fall + Spring Summer + Fall Spring (not enrolled) Summ er + Fall
In Example 4, if the student does not attend a term that otherwise would have been the beginning of a BBAY 1 (in
this case, spring), then the student9s next BBAY 1 cannot begin until the next term that the student attends (in
this case, summer). As with Examples 2 and 3, the annual loan limit applies to each BBAY 1.
Volume 8, Chapter 6, Example 5: BBAY 1 Where the SAY Contains Three Quarters
Year 1: SAY or BBAY 1 Year 2: BBAY 1
Fall + Winter + Spring Summer + Fall + Winter
The same concepts apply to quarter-term programs. For instance, in Example 5, the fall, winter, and spring terms
constitute the school9s SAY. If the student attends the summer session at the school, it can be the first term of a
BBAY 1 that also includes the following fall and winter terms.
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BBAY 2 for Standard-Term Programs and SE9W Nonstandard Term Programs Without an SAY
If a program with standard terms or SE9W nonstandard terms is not offered in a traditional academic year calendar (SAY),
BBAY 2 must be used. If the program uses semesters or trimesters, a BBAY 2 consists of any two consecutive terms. If the
program uses quarters, a BBAY 2 consists of any three consecutive terms. If the program uses SE9W nonstandard terms,
a BBAY 2 consists of the number of consecutive terms that coincide with the weeks of instructional time in the program9s
academic year.
As with the optional BBAY 1 that may be used for programs with an SAY, BBAY 2 may include terms that a student does
not attend (as long as the student could have enrolled at least half time in those terms), but it must begin with a term in
which the student is enrolled (even if the student is enrolled less than half time during the first term and therefore
ineligible to receive a Direct Loan for that term). Unlike the optional BBAY 1 for programs offered in an SAY, there is no
exception to the minimum academic year requirements for a BBAY 2 that includes a summer term. This means that the
BBAY 2 for standard-term programs that are not offered in a traditional academic calendar, or for SE9W nonstandard term
programs not offered in a comparable academic calendar, must always include enough terms to meet the minimum
Title
IV academic year requirements for weeks of instructional time.
As with BBAY 1, any modules (summer or otherwise) that run consecutively within a term must be combined and treated
as a single term. The COA cannot include costs for a module for which the student is not expected to be enrolled. A
student doesn9t have to be enrolled in each module but must be able to enroll at least half time in the combined term.
The annual loan limit applies to the BBAY 2. Once the calendar period associated with all of the terms in the BBAY 2 has
elapsed, a student regains eligibility for a new annual loan limit.
BBAY 3 for Clock-Hour, Non-Term Credit-Hour, and Non-SE9W Nonstandard-Term Programs
All clock-hour programs, non-term credit-hour programs, and non-SE9W nonstandard-term programs must use a BBAY 3
that meets the minimum requirements for an academic year. That is, the BBAY 3 must contain at least 30 weeks (or, for
clock-hour programs, 26 weeks) of instructional time and:
For undergraduate programs, a minimum of 24 semester or trimester hours, 36 quarter hours, or 900 clock hours; or
For graduate programs, at least the number of hours a student would complete under the school9s full-time standard
in weeks of the Title IV academic year, which must be a minimum of 30 weeks of instructional time for credit-hour
programs, or at least 26 weeks of instructional time for clock-hour programs.
The BBAY 3 begins when a student enrolls and does not end until the later of the date the student successfully
completes the hours in the academic year or the number of weeks of instructional time in the academic year. Because a
student must successfully complete the minimum number of hours or weeks of instructional time in an academic year
(whichever comes later) before a new BBAY 3 begins, a student9s enrollment status may affect how soon the student
Volume 8, Chapter 6, Example 6: BBAY 2
First BBAY 2 Second BBAY 2 Third BBAY 2
Semester 1 + Semester 2 Semester 3 + Semester 4 (not enrolled in Semester 4) Semester 5 + Semester 6
A school has a program that measures academic progress in credit hours and uses 15-week semesters, but it is
not offered in a traditional academic year calendar (SAY). New students begin the program each month, and a 15-
week semester begins at that time for that cohort of students. The school must use BBAY 2 to monitor annual
loan limits. A BBAY 2 consists of any two consecutive semesters, beginning with a semester in which a student is
enrolled. In Example 6, the student is not enrolled in the second semester (Semester 4) of the second BBAY 2.
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regains eligibility for a new annual loan limit. For example, a student who is attending less than full time will take longer
to complete a BBAY 3 than a full-time student. (In contrast, an SAY, BBAY 1, or BBAY 2 ends when the calendar period
associated with the terms in the SAY or BBAY has elapsed, regardless of how many credit hours or weeks of instruction
the student completed during the SAY or BBAY.)
Individual Academic Progress in BBAY 3
In many clock-hour, non-term, and nonstandard-term programs, students are allowed to progress at an individual pace.
For example, consider a school that defines its academic year as 900 clock hours and 26 weeks of instructional time and
offers a 900 clock-hour program that most students complete in 26 weeks. However, one student might complete 900
clock hours in 22 weeks, and another in 30 weeks.
As we explained in Chapter 5 of this volume, the annual loan limit must be prorated (reduced) if an undergraduate
student is enrolled in a program that is less than a full academic year in length or is in a remaining period of study that is
shorter than a full academic year. However, in the scenario described above, you do not have to prorate the loan limit for
the occasional student who completes the program in fewer than 26 weeks. This policy applies only to programs that are
exactly one academic year in length. If a program is longer than an academic year, proration may be required for a loan
covering the remaining portion of the program if a student completes more than the minimum number of hours during the
first 26 weeks of instructional time (see Example 7 in Chapter 5 of this volume).
BBAY 3 for Programs With Both Standard and Nonstandard Terms
BBAY 3 must also be used if a program has both standard terms and nonstandard terms and does not qualify to use an
SAY. For example, if you offer a program with a 4-week intersession between a 15-week fall semester and a 15-week
spring semester, and you do not combine the intersession with one of the standard terms but instead treat it as a
standalone nonstandard term, you must use BBAY 3 to monitor annual loan limit progression. In this circumstance you
cannot simply ignore the intersession and consider the program to be offered only in standard terms. In contrast, if you
combine the intersession with one of the semesters, you could use an SAY consisting of the fall and spring semesters.
Volume 8, Chapter 6, Example 7: BBAY 3 for a Clock-Hour Program
A school has an 1,800 clock-hour program with 52 weeks of instructional time and defines its academic year as
900 clock hours and 26 weeks of instructional time. The first BBAY 3 begins with a student9s initial enrollment
date and ends when the student has successfully completed the first 900 clock hours and 26 weeks of
instructional time in the program, whichever comes later.
The second BBAY 3 would be the period of time it takes the student to successfully complete the final 900 hours
and 26 weeks of instructional time in the program. A student who completes the first 900 hours in less than 26
weeks must still complete 26 weeks of instructional time before the second BBAY 3 begins. Similarly, a student
who has completed fewer than 900 clock hours after 26 weeks of instructional time must successfully complete
900 hours before the second BBAY 3 begins.
During the first BBAY 3, the student may receive up to the full annual loan limit for a first-year undergraduate.
The student becomes eligible for a new annual loan limit (at the second-year undergraduate level) when the
second BBAY 3 begins.
The principles described in this example for a clock-hour program also apply to non-term credit-hour programs or
non-SE9W nonstandard term credit-hour programs. For example, if a school offers a non-term 48 semester hour,
60 weeks of instructional time program with a defined academic year of 24 semester hours and 30 weeks of
instructional time, the second BBAY 3 would not begin until a student has successfully completed the first 24
semester hours and 30 weeks of instructional time.
Similarly, in a 72 quarter-hour program with 60 weeks of instructional time offered in a series of non-SE9W
nonstandard terms, with a defined academic year of 36 quarter hours and 30 weeks of instructional time, the
second BBAY 3 would not begin until a student has successfully completed the first 36 quarter hours and 30
weeks of instructional time, whichever comes later, regardless of the number of terms that have elapsed. For
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SAY and BBAY Summary
For reference, the table below compares the main features of SAY, BBAY 1, BBAY 2, and BBAY 3 (as discussed in more
detail earlier in the chapter) in a side-by-side format.
Volume 8, Chapter 6: SAY and BBAY Comparison Table
SAY
Used for credit-hour
programs with standard
terms or SE9W nonstandard
terms offered in a traditional
academic calendar.
BBAY 1
Alternative to SAY for
credit-hour programs
with standard terms
or SE9W nonstandard
terms that are also
offered in an SAY.
BBAY 2
Must be used for
credit-hour programs
with standard terms
or SE9W nonstandard
terms that are not
offered in an SAY.
BBAY 3
Must be used for clock-hour
programs, non-term
programs, programs with
non-SE9W nonstandard
terms, and programs that
mix standard and
nonstandard terms and do
not qualify to use an SAY.
SAY uses:
Traditional academic
calendar with at least 2
semesters or trimesters or
3 quarters in fall through
spring, or
Comparable academic
calendar with SE9W
nonstandard terms, if all
terms (including summer)
are SE9W, and if number of
hours or weeks in
comparable fall-spring
calendar meets regulatory
academic year minimums.
N/A N/A N/A
Generally begins and ends at
same time each year.
Doesn9t begin and
end at same time
each year; <floats=
with student9s
enrollment.
May be used as
alternative to SAY
for all students,
certain students, or
certain programs.
May alternate SAY
and BBAY 1 (but
Doesn9t begin and end at
same time each year;
<floats= with student9s
enrollment.
Doesn9t begin and end at
same time each year.
Begins when student
enrolls at least half-time
and <floats= with student9s
enrollment.
instance, a student who successfully completes only 33 quarter hours in the first 30 weeks of instructional time
must successfully complete an additional three quarter hours before the second BBAY 3 begins and the student
becomes eligible for a new annual loan limit at the second-year undergraduate level.
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academic years
may not overlap).
Student not required to be
enrolled in first term.
Student must be
enrolled in first term
(may be less than
half time).
May include terms
student does not
attend (except first
term) if student
could have enrolled
at least half time.
Student must be
enrolled in first term
(may be less than
half time).
May include terms
student does not
attend (except first
term) if student
could have enrolled
at least half time.
N/A
Must at least meet program9s
Title IV academic year in weeks
and hours.
Length of BBAY 1
must equal number
of terms in
program9s SAY,
excluding summer
trailer and header.
BBAY 1 that
includes summer
term may contain
fewer than
regulatory minimum
number of hours
and weeks in
academic year.
Must meet at least
minimum requirements
for hours and weeks in
program9s
Title IV
academic year, and must
consist of:
At least 2
consecutive
semesters or
trimesters;
At least 3
consecutive
quarters; or
At least number of
consecutive SE9W
nonstandard terms
covered by
program9s
Title IV
academic year.
Must meet at least minimum
requirements for hours and
weeks in program9s
Title IV
academic year.
Summer term may be <trailer=
or <header=:
By strict policy;
By program; or
By student on a case-by-
case basis.
N/A N/A N/A
Total loan amount received
within SAY plus summer trailer
or header may not exceed
annual loan limit.
Total loan amount
received within BBAY 1
may not exceed annual
loan limit.
Total loan amount
received within BBAY 2
may not exceed annual
loan limit.
Total loan amount received
within BBAY 3 may not exceed
annual loan limit.
Student becomes eligible for Student becomes eligibl e Student becomes eligible Student becomes eligible f or
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new annual loan limit after SAY
(plus summer trailer or header)
calendar period ends.
for new annual loan limit
after BBAY 1 calendar
period ends.
for new annual loan limit
after BBAY 2 calendar
period ends.
new annual loan limit only after
successfully completing clock or
credit hours AND weeks of
instructional time in BBAY 3.
After original loan, student may
receive additional loans during
same SAY if:
Received less than annual
loan amount and has
remaining eligibility;
Progresses to grade level
with higher annual loan
limit; or
Changes from dependent
to independent.
After original loan,
student may receive
additional loans during
same BBAY 1 if:
Received less than
annual loan amount
and has remaining
eligibility;
Progresses to grade
level with higher
annual loan limit; or
Changes from
dependent to
independent.
After original loan,
student may receive
additional loans during
same BBAY 2 if:
Received less than
annual loan amount
and has remaining
eligibility;
Progresses to grade
level with higher
annual loan limit; or
Changes from
dependent to
independent.
After original loan, student may
receive additional loans within
BBAY 3 only if:
Received less than annual
loan amount and has
remaining eligibility; or
Changes from dependent
to independent.
Student may not become
eligible for next grade level
annual loan limits until after
completion of BBAY 3.
Summer term modules may
be combined and treated
as single trailer or header,
or assigned to different
SAYs (one as trailer, the
other as header).
Modules in terms other
than summer must be
combined with each other
or with other terms and
treated as single standard
or SE9W nonstandard term
(affects all
Title IV
programs).
Student need not enroll in
each module, but must
have been able to enroll at
least half time in combined
term.
Modules (summer or
otherwise) must be
combined with each
other or with other
terms and treated
as single standard
or nonstandard
term (affects all
Title IV programs).
Student need not
enroll in each
module, but must
have been able to
enroll at least half
time in combined
term.
Modules (summer or
otherwise) must be
combined with each
other or with other
terms and treated
as single standard
or nonstandard
term (affects all
Title IV programs).
Student need not
enroll in each
module, but must
have been able to
enroll at least half
time in combined
term.
N/A
Annual Loan Limit Increase Based on Grade Level Progression or Dependency Status Change
The annual loan limit for Direct Subsidized and Unsubsidized Loans increases as a student progresses in grade level.
Generally, a student9s grade level for loan limit purposes is set according to the school9s academic standards.
While the law defines minimum coursework for an academic year, it doesn9t define how much coursework a student must
complete to progress from one grade level to another. Unless a student9s program of study or a school9s academic
standards clearly specify when this grade-level progression takes place, a reasonable approach would be to base grade
levels on the number of credits required for the program, divided by the number of academic years it takes a typical
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student to earn that number of credits. For instance, if your school has a baccalaureate program that requires 120
semester hours of work and is typically completed in four academic years, then you might use a standard of 30 hours
completed at each grade level.
Standard Term and SE9W Nonstandard Term Programs: Grade Level Progression Within the Same Academic Year
In standard term programs or SE9W nonstandard term programs, a student who has already received the full annual limit
within an academic year can receive additional loan funds if the student progresses to a grade level with a higher annual
loan limit during that same academic year. (See
Volume 3, Chapter 1 for a discussion of academic year requirements.)
Increasing the Loan Amount When a Student9s Grade Level Changes During an Academic Year
There are two options for awarding an additional loan amount when a student progresses to a grade level with a higher
annual loan limit during an academic year:
1. Originate a new loan at the new grade level for the difference between the new loan limit and the amount of the first
loan. The loan period for the new loan must correspond to the term(s) during which the student qualifies for the
higher loan limit. You could also choose to cancel any pending disbursements of the first loan and originate a new
loan for an amount equal to the canceled disbursements of the first loan plus the additional amount for which the
student is eligible due to the grade level change.
2. Adjust the amount of the current loan. Change the grade level in the loan record and increase the amount of the
existing loan to the new amount.
With either option, the student9s remaining loan eligibility must be calculated using only the COA and OFA for the term(s)
during which the student qualifies for the higher loan limit.
As a reminder, a student can progress to a higher grade level during an academic year only in a program with standard
terms or SE9W nonstandard terms.
Volume 8, Chapter 6, Example 8: Grade-Level Progression Within the Same SAY
A dependent second-year undergraduate student qualifies for the maximum annual combined subsidized and
unsubsidized annual loan limit of $6,500, not more than $4,500 of which may be subsidized. For purposes of this
example, assume that the student is eligible to receive the maximum $4,500 in Direct Subsidized Loan funds and
the remaining $2,000 in Direct Unsubsidized Loan funds. The student receives a first disbursement of $2,250 in
Direct Subsidized Loan funds and $1,000 in Direct Unsubsidized Loan funds at the beginning of the fall semester
of a fall-spring SAY.
Based on the coursework completed during the fall semester, the student progresses to third-year academic
status at the beginning of the spring semester. The student now qualifies for the $7,500 combined subsidized and
unsubsidized annual limit (maximum $5,500 subsidized) that applies to third-year and beyond dependent
undergraduates. If otherwise eligible, for the spring term the student could receive up to the difference between
the amount already received in the fall and the new annual limit in the spring term. If the student again qualifies
for the maximum subsidized loan amount, eligibility for the spring term is as follows:
$5,500 - $2,250 subsidized received in the fall = $3,250 subsidized eligibility for spring; and
$2,000 - $1,000 unsubsidized received in the fall = $1,000 additional unsubsidized eligibility for spring.
However, only the COA and OFA associated with the spring term can be used in determining the student9s
eligibility for the additional loan amount in that term. The COA and OFA for the fall term cannot be considered.
The school may either originate a new spring-only subsidized loan for the additional subsidized loan eligibility in
the spring term (note that the grade level progression does not increase the student9s additional unsubsidized
eligibility) or may increase the amount of the original fall-spring subsidized loan and make the appropriate
adjustment to the second disbursement of that loan.
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Clock-Hour, Non-Term Credit Hour, and Non-SE9W Nonstandard Term Programs: Grade Level Progression Occurs Only at
the Beginning of a New BBAY 3
In contrast to standard term and SE9W nonstandard term programs, progression to a higher grade level and the
beginning of a new BBAY 3 for loan limit purposes always happens at the same time for a student in a clock-hour program,
non-term program, or non-SE9W nonstandard-term program. To advance to the next grade level for annual loan limit
purposes, a student must successfully complete both the weeks and hours in the program9s
Title IV academic year. That
is, the student must complete at least 30 weeks of instructional time (or, for clock-hour programs, at least 26 weeks) and
the number of credit or clock hours in the academic year, whichever comes later. For instance, a first-year student in a
two-year non-term program with a defined academic year of 36 quarter hours and 30 weeks of instructional time who
earns 36 quarter credits over 24 weeks of instructional time cannot progress to the next grade level (and begin a new
BBAY 3 for annual loan limit purposes) until another six weeks of instructional time are completed.
New Annual Loan Limit at the Same Grade Level
The beginning of a new academic year for annual loan limit purposes does not always coincide with a student9s
progression to a higher grade level. For both standard-term programs and SE9W nonstandard term programs, if a student
is enrolled at the same grade level after a full academic year has elapsed, the student may be eligible for a new annual
maximum amount at the same grade level, provided that the student maintains satisfactory academic progress. For
example, a student in a standard term or SE9W nonstandard term program who completes only 12 semester hours during
the first SAY, BBAY 1, or BBAY 2 could receive another loan when the calendar period associated with that academic year
has elapsed, but the borrower would still be classified as a first-year undergraduate at the start of the second academic
year.
If a student is maintaining satisfactory academic progress, a school may not have a general policy that limits the number
of times the student can receive the maximum annual loan limit at one grade level. A school may refuse to originate a
loan or may originate a loan for an amount less than the borrower9s maximum eligibility only on a case-by-case basis (see
<Refusing to Originate a Loan or Originating for Less Than Maximum Eligibility= in Chapter 1 of this volume).
Remedial Work and Grade Level Progression
Remedial coursework can be counted towards a student9s grade level progression, but only if the school9s written and
officially approved academic grade level progression policy specifies that remedial coursework can be counted for this
purpose. For instance, a school might have a policy stating that a student must complete 30 semester hours to progress
to a second-year grade level and specifying that up to 10 of those hours may be in the form of remedial coursework.
Increasing the Loan Amount When a Student9s Dependency Status Changes During the Academic Year
For any type of educational program (whether term-based or non-term, credit-hour or clock-hour), a dependent student
who has already borrowed up to the annual loan limit within an academic year may be eligible to receive additional loan
funds if their dependency status changes to independent during that same academic year.
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Chapter 7
Annual Loan Limits for Students Who Transfer or Change Programs
Overview
The Direct Loan annual loan limits apply to an academic year. If a student who received a Direct Loan transfers from one
school to another school, or changes to a different program at the same school, and there is an overlap between the
academic year associated with the loan received at the first school or for the first program and the academic year for the
new school or program, this overlap may affect the amount that the student is initially eligible to borrow at the new school
or for the new program.
An overlap in academic years exists if the academic year at the new school (or the academic year for the new program at
the same school) begins before the calendar end date of the academic year at the prior school or program. In the case of
a transfer student from another school, you may obtain documentation from the prior school of the specific beginning and
ending dates for the prior academic year, or look for the academic year dates of Direct Loans originated by the prior
school on the <award detail information page= in the COD Web interface.
Transfer Into a Standard Term or SE9W Nonstandard Term Program (SAY, BBAY 1, or BBAY 2)
Transfers Between Schools
Example 1 below illustrates the determination of the annual loan limit for a student who transfers from one school into a
standard-term program at another school with an overlap in academic years.
Transfers Between Programs at the Same School
If a student transfers to a different program at the same school at the beginning of a new term within the same academic
Volume 8, Chapter 7, Example 1: Transfer Into a Standard-Term Program
A student receives a $2,000 Direct Subsidized Loan at School A for a loan period from May 1 to August 31. School
A reports the academic year for this loan as May 1 to November 27. The student, a dependent undergraduate,
transfers to a program at School B in September and is admitted at grade level 2. The student requests a loan for
the fall and spring semesters (September-May). The program at School B uses an SAY consisting of fall and spring
semesters, followed by a summer trailer term.
Because the academic year at School B begins before the end of the academic year at School A, the student may
initially receive only up to a maximum of $4,500 for the fall semester at School B, not more than $2,500 of which
may be subsidized. This amount represents the difference between the annual loan limit of $6,500 (maximum
$4,500 subsidized), and the amount received at School A ($2,000 subsidized) for the overlapping academic year
period.
The initial loan period at School B corresponds with the fall term. If the student receives the maximum of $4,500
for the fall semester, at the start of the spring semester in January the student may borrow up to an additional
$2,000 (the difference between the second-year dependent undergraduate annual loan limit and the amount
already borrowed for the fall-spring academic year at School B). If the student received the maximum $2,500 in
subsidized loan funds for the fall term, the additional $2,000 would be limited to unsubsidized loan funds.
As an alternative, School B could choose to change the student from an SAY schedule to a BBAY 1 schedule
beginning with the spring semester. The student would then be eligible to borrow up to the full annual loan limit
for a spring-summer BBAY 1. Although this might appear to result in an overlap between the SAY and BBAY 1 at
School B, in this limited transfer student circumstance the fall semester at School B can be considered the last
term of the academic year that began at School A.
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year, the student9s loan eligibility for the remaining term(s) of the academic year is equal to the difference between the
applicable loan limit for the new program and the loan amount the student received for the prior program within the same
academic year.
Transfer Into a Clock-Hour, Non-Term, or Non-SE9W Nonstandard Term Program (BBAY 3): Abbreviated Loan Periods
Transfers Between Schools
If a student transfers into a clock-hour, non-term, or non-SE9W nonstandard term program at a new school and the
academic year associated with the last loan the student received at the prior school overlaps the initial academic year for
the program at the new school, the new school may originate an initial loan for a loan period that covers the remaining
portion of the academic year that began at the prior school. The loan period for this initial loan is called an <abbreviated
loan period= because it is shorter than the loan period that would otherwise be required under the normal minimum loan
period requirements. As explained earlier in this volume, under normal rules the minimum loan period for a clock-hour,
non-term, or non-SE9W nonstandard term program is the lesser of:
The academic year; or
The length of the program or the remaining portion of the program.
The new school may originate a loan for an abbreviated loan period regardless of whether the new school accepts transfer
hours from the prior school. The abbreviated loan period begins with the date of the student9s enrollment at the new
school and ends on the calendar period ending date of the academic year that began at the prior school, without
regard to the number of credit or clock hours or weeks of instructional time that the student has completed during the
abbreviated loan period. After the abbreviated loan period is completed, the student progresses to a new loan period and
academic year (BBAY 3) and a new annual loan limit.
If the new school accepts credits or hours from the prior school, this may give the student advance standing that reduces
the length of time it will take to complete the program at the new school. If the remaining portion of the program at the
new school following the completion of the abbreviated loan period is shorter than an academic year, the annual loan limit
for the next loan must be prorated.
Generally, the loan amount for the abbreviated loan period at the new school may not exceed the remaining balance of
the full annual loan limit applicable to the student at the new school, minus the loan amount the student received at the
first school for the same academic year. However, there is an exception to this general rule if:
The student is transferring into a program at the new school that is less than a full academic year in length; or
The student is transferring into a remaining portion of a program (of any length) that is less than an academic year in
length.
In the two circumstances described above, the total loan amount that the student may receive for the program (or
remaining portion of the program) at the new school (for the abbreviated loan period and any subsequent loan period
combined) may not exceed the applicable prorated annual loan limit for the program or remaining portion of the program.
Rules for Abbreviated Loan Periods:
The abbreviated loan period begins when the student starts at the new school.
The abbreviated loan period ends when the academic year would have ended at the prior school, without regard to
how many hours or weeks of instructional time the student has completed at the new school during the abbreviated
loan period.
Generally, the maximum loan amount that the student can receive for the abbreviated loan period is the difference
between the full annual loan limit applicable to the student at the new school and the loan amount that was
disbursed at the prior school during the overlapping academic year (see the preceding discussion for an exception to
this general rule).
The first disbursement of the loan for the abbreviated loan period at the new school is made at the beginning of the
abbreviated loan period. Unless the school qualifies based on its cohort default rate for the exemption from the
multiple disbursement requirement (see Volume 3, Chapter 1), the loan must be disbursed in at least two
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installments, with the second disbursement made at the calendar midpoint of the abbreviated loan period regardless
of how many clock or credit hours or weeks of instructional time have been completed. The normal payment period
disbursement rules do not apply in this situation.
The next loan period and a new BBAY 3 at the new school begins the day after the last day of the abbreviated loan
period.
Once the new loan period and BBAY 3 begin, all normal rules for the timing of disbursements and annual loan limit
progression apply.
Examples 2 and 3 illustrate the principles described above. Although this is not shown in the abbreviated loan period
examples, in some cases a student who transfers into a program after having received a loan at another school for an
overlapping academic year may be eligible to receive a higher total loan amount for the program at the new school than a
non-transfer student would be eligible to receive for that same program. In other cases, a transfer student may be eligible
to receive a lower total loan amount for the same program than a non-transfer student. The total loan amount that a
transfer student may receive depends on factors such as the length of the program at the second school, the program9s
COA, and the loan amount the transfer student received at the prior school for the overlapping academic year.
Exceptions to the Minimum Loan Period Rules (Abbrev iated Loan Periods)
34 CFR 685.301(a)(10)(ii), (iii)
Volume 8, Chapter 7, Example 2: Transfer Into a Clock-Hour Program One Academic Year or Greater in Length
A dependent first-year undergraduate student receives the first disbursement ($2,750) of a Direct Unsubsidized
Loan at School A. The loan period and academic year dates are April 1 to December 31. For purposes of this
example, assume that the student has no financial need for a Direct Subsidized Loan and receives only Direct
Unsubsidized Loans. The student transfers from School A to an 1,800 clock-hour program at School B and begins
attendance on June 25. The student is still classified as a dependent first-year undergraduate. The program at
School B has an academic year of 26 weeks of instructional time and 900 clock hours.
The student9s first loan period at School B will be an abbreviated loan period from June 25 (the beginning date of
attendance at School B) through December 31 (the date the academic year would have ended at School A). For
the initial abbreviated loan period, School B may originate a loan for up to the difference between the student9s
annual loan limit ($5,500) and the loan already received at School A for the overlapping loan period ($2,750). The
loan amount available to the student during the abbreviated loan period is $2,750.
On January 1, the day after the last day of the abbreviated loan period, a new BBAY 3 begins, and the student
becomes eligible for a new annual loan limit. The loan period for the new loan the student receives following the
completion of the abbreviated loan period will correspond to the lesser of the academic year or the remainder of
the program at School B. If there is less than a full academic year of the program remaining after the abbreviated
loan period has ended, the loan limit for the new loan must be prorated.
Volume 8, Chapter 7, Example 3: Transfer Into a Clock-Hour Program Shorter Than an Academic Year
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Transfers Between Programs at the Same School
Unless a student is considered to remain in the same loan period and payment period (see below), when a student
transfers within the same academic year from one program to a different program at the same school, and the new
program is a clock-hour, non-term, or non-SE9W nonstandard term program, the school may originate an initial loan for
the new program with an abbreviated loan period that ends on the calendar period ending date of the academic year
associated with the prior program. The same abbreviated loan period rules that apply when a student transfers from one
school to another school (see above) also apply when a student transfers within the same academic year to a new
program at the same school.
If certain requirements are met, when a student who has received a Direct Loan for one program transfers to a different
program at the same school, you have the option of considering the student to remain in the same payment period and
loan period. Otherwise, you must place the student in a new payment period and originate a new loan with a new loan
period.
Same Payment Period and Same Loan Period
At your option, you can consider a student who transfers from one program to another program at the same school to be
in the same payment period and loan period if all the following conditions apply:
The student is continuously enrolled at the school;
The coursework in the payment period the student is transferring out of is substantially similar to the coursework the
student will be taking when they first transfer to the new program;
The student9s current payment period and the payment periods that would otherwise apply in the new program are
substantially equal in length in weeks of instructional time and credit or clock hours;
There are few or no changes in school charges associated with the transfer to the new program; and
The credits or clock hours from the payment period the student is transferring out of are accepted toward the new
program.
If you choose to keep the student in the same payment period, the loan period for the loan the student received for the
first program would also remain the same. However, you must consider any changes as to when the student is expected
to complete the hours and weeks of instructional time of the academic year and make any necessary adjustments to the
A dependent first-year undergraduate student receives the first disbursements of a Direct Subsidized Loan
($1,750) and Direct Unsubsidized Loan ($1,000) at School A. The loan period and academic year dates are January
26 to July 31.
The student leaves School A and transfers into a 300 clock-hour/12-week program at School B on June 15. School
B defines its Title IV academic year as containing 900 clock hours and 26 weeks of instructional time. The
combined subsidized and unsubsidized prorated annual loan limit for the 300-hour program at School B is $1,815,
not more than $1,155 of which may be subsidized (see Chapter 5 of this volume for guidance on calculating
prorated annual loan limits).
For the abbreviated loan period at School B (June 15 to July 31), a transfer student would normally be eligible to
receive the difference between the full first-year annual loan limit and the loan amount received at School A (that
is, an additional $1,750 subsidized and $1,000 unsubsidized). In this example, however, the student may not
receive those amounts, because they would exceed the prorated annual loan limits for the 300 clock-hour
program. Therefore, the maximum loan amount the student may receive for the program at School B (for the
abbreviated loan period and any subsequent loan period combined) is a total of $1,815, not more than $1,155 of
which may be subsidized (the prorated loan limits for the program). If the student receives the maximum prorated
loan limit for the program during the abbreviated loan period, there is no remaining loan eligibility for the
program following the completion of the abbreviated loan period.
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ending date of the loan period or the dates of the second and any subsequent disbursements.
New Payment Period and New Loan Period
If the requirements described above are not met, or if they are met but you choose to place a student who transfers from
one program to a different program in a new payment period, you must perform a Return of
Title IV (R2T4) funds
calculation for the student9s withdrawal from the payment period in the first program. This is assuming that the student
did not complete that payment period without starting a new one before transferring into the new program if the R2T4
calculation is done on a payment period basis. Likewise, it is assuming the student did not complete the loan period if the
calculation is done on a period of enrollment basis. That calculation would close out the original loan period. Then the
student would start over with a new loan period for their new program that uses the remaining annual loan limit eligibility
from the academic year associated with the first program.
If a student transfers from one program at your school to a different program at your school within the same academic
year and is not considered to remain in the same payment period and loan period (regardless of whether the student
completed the first program or is changing to a different program without having completed the first program), you may
originate an initial loan for the new program with an abbreviated loan period that ends on the calendar period ending date
of the academic year associated with the prior program, as described in more detail above. As with a student who
transfers from a different school, for the abbreviated loan period, the student may receive up to the difference between
the applicable annual loan limit for the new program and the loan amount that the student received for the prior program
during the same academic year.
Volume 8, Chapter 7, Example 4: Transfer Into a Non-Term Credit-Hour Program at the Same School
A school offers some programs in a standard term academic calendar and other programs in a non-term calendar.
A first-year dependent undergraduate student enrolls in a standard term program with an SAY consisting of fall,
winter, and spring quarters and receives the first and second disbursements of a Direct Subsidized Loan (total of
$2,234) and a Direct Unsubsidized Loan (total of $1,334). The loan period and academic year dates are
September 1 to May 31.
The student decides not to finish the program and after completing the winter quarter transfers to a 2-year non-
term credit hour program offered at the same school. The academic year for the new program is defined as 24
semester hours and 30 weeks of instructional time. The student begins the new program on March 1. For the new
program, the school may originate an initial loan for an abbreviated loan period that begins on March 1 and ends
on May 31, the ending date of the academic year associated with the loans the student received for the first
program. For the abbreviated loan period, the student can receive up to $1,932, not more than $1,266 of which
may be subsidized. This represents the difference between the first-year dependent undergraduate annual loan
limit ($5,500, maximum $3,500 subsidized) and the loan amounts received for the first program during the
overlapping academic year.
On June 1, the first BBAY 3 for the new program will begin. (BBAY 3 must be used because this is a non-term
credit-hour program.) The loan period will be for the first full academic year of the new program (the period
during which the student will be expected to complete 24 semester hours and 30 weeks of instructional time).
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Application and Verification Guide
Introduction
This guide is intended for college financial aid administrators and counselors who help students with the financial aid
process4completing the Free Application for Federal Student Aid (FAFSA®) form, verifying information, and making
corrections and other changes to the information reported on the FAFSA form.
Throughout the Federal Student Aid Handbook, we use <college,= <school,= and <institution= interchangeably unless a
more specific use is given. Similarly, <student,= <applicant,= and <aid recipient= are synonyms. <Parents= in this volume
refers to the legal parents of dependent students, and <you= refers to the primary audience of the Handbook: financial aid
administrators at colleges. <We= indicates the U.S. Department of Education (the Department, ED), and <federal student
aid= and <Title IV aid= are synonymous terms for the financial aid offered by the Department.
We appreciate any comments that you have on the Application and Verification Guide (AVG), as well as all the volumes of
the FSA Handbook. We revise the text based on questions and feedback from the financial aid community, so please
reach out to us about how to improve the FSA Handbook through the <Contact Customer Support= feature in our Partner
Connect Help Center clicking on <FSA Handbook= under the Topic section.
FAFSA Simplification Act
The FAFSA Simplification Act, passed on Dec. 27, 2020, as part of the Consolidated Appropriations Act, 2021, mandated a
significant overhaul of federal student aid, including the Free Application for Federal Student Aid (FAFSA®) form, need
analysis, and many policies and procedures for schools that participate in the Title IV programs. FSA implemented the
FAFSA Simplification Act alongside the FAFSA portion of the Fostering Undergraduate Talent by Unlocking Resources for
Education (FUTURE) Act to streamline the FAFSA application process.
Changes From the FUTURE Act
The Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act authorized a direct data
exchange 3 the FUTURE Act Direct Data Exchange (FA-DDX) 3 with the Internal Revenue Service (IRS) to facilitate
completing the FAFSA form. The previous tool to transfer U.S. income and tax information from the IRS 3 the IRS Data
Retrieval Tool (DRT) 3 was retired after the close of the 2023-24 application cycle. Implementation of the FA-DDX
eliminated the need for most applicants (and their spouse or parents) to self-report their income and tax information
reported to the IRS. Also, federal tax information (FTI) that is transferred via the FA-DDX to the FAFSA form is considered
verified for Title IV purposes.
Unlike with the IRS-DRT, which allowed applicants to opt in, the FA-DDX requires applicants and contributors (student9s
spouse and/or parents, as appropriate) to provide consent and approval for the Department to obtain FTI from the IRS via
the FA-DDX and use it to determine the student9s eligibility for federal student aid.
Other Changes
Throughout the AVG, all dates, pertinent tax return and schedule information, along with various resources and references
have been updated to support the requirements associated with the 2025-26 processing year and the 2023 base tax year.
Where appropriate, links and publications associated with FSA9s Partner Connect and Knowledge Center have been
properly updated. We also removed references to COVID-19 guidance and waivers.
Some sections were moved to better align topics and assist with narrative flow. Use the search feature to find sections
that may have been relocated. The following describes changes made in each chapter.
Chapter 1: The Application Process
We removed the <Returning FAFSA Filers= section as FAFSA renewal functionality has been deferred for future cycles.
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Chapter 2: Filling Out the FAFSA
We added a section on signatures which describes the appropriate use of the signature page from the FAFSA Partner
Portal (FPP).
We expanded the <Student Tax Filing Status (19)= section to include subsections on (1) nontax filers, foreign
countries, and international organizations and (2) fiscal year tax returns.
We updated the tax line number used for education credits to IRS Form 1040: line 29 + IRS Form 1040 Schedule 3:
line 3.
We moved the section on foreign earned income exclusion to Chapter 5.
We expanded <Parent Tax Filing Status (37)= section to explain the six answer options on the FAFSA form and when
each answer should be selected. This section also explains when an answer to this question might be conflicting
information that requires resolution (comment code 303).
Chapter 3: Student Aid Index (SAI) and Pell Grant E ligibility
Edits to this chapter include general changes and updated links, but no significant changes or reorganization.
Chapter 4: Verification, Updates, and Corrections
We added a note regarding the unavailability of the Verification of Identity functionality in the FPP and the flexibility
the Department provided around reporting timeframes.
We added a note to the <Using the Tax Return= section regarding the treatment negative values when calculating
Income Earned from Work.
We renamed the <Special Cases= section to <Unique Situations and Exceptions= and moved <Verification for Confined
or Incarcerated Individuals= to a subsection under this renamed section.
Under <Filers of Amended Returns=, we removed the exception to not update tax information for certain amended
tax return filers. This exception was outlined in Electronic Announcement GEN-24-29 and was limited to the 2024-25
application cycle.
We updated acceptable documentation guidance for individuals who are victims of tax-related identity theft.
We added subsection <Birth of a Child= under the <Updating Information= section.
Chapter 5: Special Cases
We moved the section on foreign earned income exclusion from Chapter 2.
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Chapter 1
The Application Process: FAFSA to ISIR
The laws governing the Federal Student Aid (FSA) programs require that a person apply for aid with a form provided by
the U.S. Department of Education (ED, Department) and that no fee be charged for processing it. This form is the Free
Application for Federal Student Aid (FAFSA®) form.
To be considered for federal student aid, a student must complete a FAFSA form. It collects financial and other information
used to calculate the Student Aid Index (SAI; formerly Expected Family Contribution or EFC) and to determine a student9s
eligibility through computer matches with other agencies.
The FAFSA form is the only application students must complete to apply for Title IV aid. A school cannot require extra
information from students to package Title IV aid, except for verification, resolution of conflicting information, or
professional judgment determinations. However, a school may require additional information for other purposes, such as
packaging private or institutional aid. If the school collects additional information that affects Title IV eligibility, it must
take the information into account when awarding Title IV aid.
Types of FAFSA Applications
More than 99% of FAFSA forms are filed electronically. However, there are other options for individuals unwilling or unable
to file electronically.
FAFSA Online
Implementation of the FAFSA Simplification Act and the FUTURE Act required a complete overhaul of the FAFSA form,
beginning with the 2024-25 award year. Submitted FAFSA forms are sent directly to the FAFSA Processing System (FPS).
Help is available for students online or by calling the Federal Student Aid Information Center (FSAIC) at 1-800-4-FED-AID
(1-800-433-3243).
There are many advantages to filing electronically, including:
Faster processing;
Availability of online help;
Skip logic, which allows applicants to skip over questions that don9t pertain to them; and
Fewer errors and rejected applications because internal and end-of-entry data edits ensure that required fields are
completed and conflicts are resolved prior to submission.
Paper (PDF) FAFSA Form
The paper (PDF) FAFSA form is available on StudentAid.gov. In future cycles, students will also be able to call the Federal
Student Aid Information Center (FSAIC) at 1-800-433-3243 to request a single copy.
The form can be printed and completed by hand, or by typing the data on the PDF before printing and mailing it. The
mailing address is printed on the first page of the FAFSA form under <Mail Your FAFSA® Form=. The address changes
annually, so use the address printed on the associated year9s FAFSA form.
You must mail all fillable pages of the form (pages 7-20), including pages that are left blank because they do not apply to
the applicant. Extra postage will be required due to the size and/or weight of the mailing.
FSA no longer prints or mails aid-related publications, though they are available on StudentAid.gov for users to download
and print.
Incarcerated Applicants
Incarcerated applicants who have access to the necessary technology can complete a FAFSA form online using their
StudentAid.gov account username and password. However, many incarcerated applicants will not be able to file
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electronically due to limitations on access to computers and the internet. These applicants can complete a paper (PDF)
FAFSA form designated specifically for incarcerated applicants, available on the Prison Education Programs resource page
of the FSA Knowledge Center.
The mailing address for the Incarcerated Applicant FAFSA form is printed on the first page of the form under <Mail Your
FAFSA® Form=. The address changes annually and differs from the general FAFSA form mailing address, so use the
address printed on the associated year9s Incarcerated Applicant FAFSA form. You must mail all fillable pages of the form
(pages 7-20), including pages that are left blank because they do not apply to the applicant. Extra postage will be
required due to the size and/or weight of the mailing.
FAFSA Partner Portal
The FAFSA Partner Portal (FPP) replaced FAA Access to CPS Online beginning with the 2024-25 award year. FSA
decommissioned the FAA Access site after the 2023324 application cycle closed.
The FAFSA Partner Portal removed the ability for a financial aid administrator (FAA) to initiate a new application on behalf
of a student. This is due to the requirement in the FUTURE Act that all FAFSA form contributors (including students,
spouses, and parents) must provide their consent to disclose information to the Internal Revenue Service (IRS) and
approval to retrieve and use certain Federal Tax Information (FTI). FAAs cannot provide consent and approval on behalf of
any other person. Therefore, you will not be able to use the FPP to start and submit a new FAFSA form on an applicant9s
behalf. However, you can make certain corrections or updates.
Translation Assistance
The FAFSA form is available in English and Spanish. If you need assistance completing the form in English or Spanish
contact the FSAIC at 1-800-433-3243. Translation assistance in additional languages is available by calling 1-833-610-
2590 and pressing <7= to request a specific language.
Account Username and Password (FSA ID)
The account username and password, also known as the FSA ID, is used to access a person9s StudentAid.gov account. It
serves as an electronic signature and a digital identifier to allow access to various ED systems and services for students,
spouses of students, parents, or spouses/partners of parents. Therefore, each individual must create their own account
and should not share their login credentials with anyone, including FAAs. Users can create an account online at
StudentAid.gov quickly and securely. See Electronic Announcement GENERAL-23-123 for additional information on
creating a StudentAid.gov account for individuals without a Social Security number.
Each person who provides data in the online FAFSA form must have an account username and password to access the
form. In the past, a Social Security number (SSN) was required to create a StudentAid.gov account. Starting with the
2024325 award year, all individuals4even those without an SSN4can create a StudentAid.gov account. Persons with an
SSN will still have their information verified by the Social Security Administration (SSA), while those without an SSN will
use the TransUnion® knowledge-based identity verification process described below.
The account username and password are created in real-time so that the student or other contributor can use it
immediately to enter the FAFSA form. Pending StudentAid.gov accounts with an SSN will be sent to the SSA to be
matched. Only those accounts with a successful match (<SSA Match Status= value of 4 on the Institutional Student
Note: There will be two active portals that coincide with the two open FAFSA application cycles. The links below
are specific to the application cycle. Be sure to use the correct portal for the applicable award year.
2024-25 FAFSA Partner Portal - https://fafsa.partnerportal.ed.gov
2025-26 FAFSA Partner Portal - https://fafsa.partnerportal-2526.ed.gov
If the Department is able to consolidate to one portal in future cycles, we will provide an updated link.
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Information Record) will be considered verified. A pending username and password that has not been verified will still
allow the user to access and submit the online FAFSA form and complete other limited actions on StudentAid.gov.
However, the Department will not be able to retrieve federal tax data from the Internal Revenue Service (IRS). For this
reason, we recommend that users do not sign and submit the online FAFSA form until the account username and
password is verified through a match with the SSA.
If the SSN match is unsuccessful, the account is not considered verified, and an email is sent to notify the individual that
they should review the information they provided (name, date of birth, and SSN) to ensure it is accurate. If the applicant
used an unverified account username and password to sign their FAFSA form, the applicant is also sent a paper FAFSA
Submission Summary requesting all required signatures.
TransUnion ® Knowledge-Based Identity Verification
Users who create a StudentAid.gov account without an SSN will be required to complete a knowledge-based identity
verification process with TransUnion® to verify their identity and provide login credentials. The student (if a citizen of one
of the Freely Associated States - the Republic of the Marshall Islands, the Republic of Palau, or the Federated States of
Micronesia), student9s spouse, parent, or parent spouse/partner are sent through the TransUnion® process when they do
not have an SSN and check the <I don9t have an SSN= box during the account creation process. They will be asked to
provide additional information to confirm their identity.
FAFSA Filers Under the Age of 13
Because the Children9s Online Privacy Protection Act (COPPA) of 1998 prohibits any entity, including a government
agency, from electronically conducting business or communicating with a person under age 13, applicants who are 12 or
younger cannot complete the FAFSA form online. Instead, when they apply for financial aid, the student and required
contributor(s) can fill out the appropriate award year paper (PDF) FAFSA form and mail it to:
Federal Student Aid Programs
Attn: COPPA Process
25 Air Park Drive
London, KY 40744-8236
Such applicants should not provide an email address on the application or any correction that might follow. After the
FAFSA form is submitted, it will be processed and a paper FAFSA Submission Summary will be sent to the student and an
ISIR will be sent to schools. See
Electronic Announcement APP-24-02 for additional information.
Processing the FAFSA
Applications that are signed and submitted online go directly to the FPS. The paper FAFSA forms go to the FAFSA
processor for data entry and then to the FPS. The FPS uses application data to calculate the SAI and to match the
student9s information against several databases: NSLDS, the SSA, and the Department of Veterans Affairs, as well as the
Department of Homeland Security9s database of noncitizens.
Individuals Without a Social Security Number
Electronic Announcement GENERAL-23-123
Electronic Announcement GENERAL-24-52
Electronic Announcement GENERAL-24-95
Electronic Announcement GENERAL-24-140
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The FPS also checks the application for possible inconsistencies and mistakes. For instance, if a dependent student
reported the parents9 marital status as married but reported the family size as <2,= the edit checks would catch the
inconsistency. Even when data is inconsistent, the FPS may be able to calculate an SAI based on assumptions. Students
who submit applications online will be able to correct or confirm FPS edits before submitting the application.
Output Documents
After processing is complete, the FPS produces output documents 3 the Institutional Student Information Record (ISIR) and
the FAFSA Submission Summary 3 that show the information the student originally provided, the SAI, results of the
eligibility matches, information about aid history, and information about any inconsistencies identified through the FPS
edits. If the FPS was unable to calculate an SAI, the output record will not show one. The ISIR is made available
electronically to the schools the student listed on the FAFSA form (or added later) and their state agency. The FAFSA
Submission Summary is made available to the student online or a paper FAFSA Submission Summary is mailed to the
student if the student is unable to access it online. The type of output document depends on the type of record that the
applicant submitted. Neither the online nor the paper FAFSA Submission Summary will contain FTI. See Volume 6 of the
2025-26 FAFSA Specifications Guide for additional information.
You will receive an ISIR for the student only if the applicant includes your school on their FAFSA form. If your school is not
listed, you can request an ISIR for the student through the FAFSA Partner Portal by adding your federal school code if you
have the applicant9s Data Release Number (DRN), which authorizes your access to the student9s application information.
The DRN appears on the FAFSA Submission Summary, on the FAFSA confirmation page, and in the FAFSA confirmation
email.
You are required to receive ISIRs and to accept FAFSA Submission Summaries from students, but you cannot require
students to submit FAFSA Submission Summaries to receive aid. If you don9t have an ISIR for a student, your federal
school code must be added to their record so that an ISIR is sent to you. We recommend making corrections electronically
via the online FAFSA (the student) or the FAFSA Partner Portal (the school); however, students can also use a paper FAFSA
Submission Summary to make corrections. If you don9t have an ISIR for a student who provided a FAFSA Submission
Summary, you must use the FAFSA Submission Summary to package and disburse the student aid. Again, you must also
ensure that your school code is added to the student9s FPS record (see the <How to Submit Corrections and Updates=
section in Chapter 4).
The FAFSA Submission Summaries and ISIRs include comment codes and text explaining any questionable results from
FAFSA processing. Some comment codes also have an associated C Flag, which you must resolve before paying the
student aid. If a student9s FAFSA Submission Summary/ISIR contains a comment code that requires resolution, the
underlying issue must be resolved before any Title IV funds may be disbursed to the student. For instance, if an applicant
has defaulted on a federal student loan, the FAFSA Submission Summary and ISIR will note this in several places,
including comments to the applicant and the NSLDS financial aid history page. In addition, if a school disburses Title IV
funds to a student with a comment code that requires resolution and the student withdraws before the school has
resolved the underlying issue, any funds disbursed must be returned to ED since the funds were provided to an otherwise
ineligible student.
For other problems, the FAFSA Submission Summary and ISIR will show that the FAFSA form has been rejected and no SAI
has been calculated. The FAFSA Submission Summary will tell the applicant how to resolve the reject by correcting errors
or providing consent and approval, signatures, or more information. A complete list of comments, C Flags, reject codes,
and required resolutions are available in
Volume 7 of the 2025-26 FAFSA Specifications Guide.
A valid output document (ISIR or FAFSA Submission Summary) is one on which all the information reported on a student9s
FAFSA form is accurate and complete as of the date the application is signed.
Valid Output Document
34 CFR 668.2(b)
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Deadlines
The application processing cycle typically lasts 21 months, with the FAFSA form opening on October 1 in the year prior to
the start of the award year. For the 2025-26 application cycle, the online FAFSA opened for beta testing to a limited
population of applicants on October 1, with the form expected to be available to all applicants by December 1, 2024.
Applications will be accepted through June 30, 2026.
The FPS must receive a student9s online FAFSA information by June 30, 2026. A paper FAFSA form must be legible, and it
must be mailed to the Federal Student Aid Programs address listed on the FAFSA form in time for the processor to receive
it by June 30, 2026. There are no exceptions to these deadlines. An online application received after June 30, 2026, will
not be processed.
A paper application received before the application opens for the award year, or after June 30, 2026, will be returned
unprocessed with a letter of explanation. If it is signed before and received after the application opens for the award year,
it will be accepted but the student will receive a rejected FAFSA Submission Summary asking them to date and re-sign the
FAFSA Submission Summary and return it for processing.
For other deadlines pertaining to corrections, changes, disbursements, and verification, see the official deadline notice for
the 2025-26 award year. It will provide all the processing deadline dates and will be available in the Knowledge Center
under <
Federal Registers.= For these deadlines, the date the FPS processed the ISIR transaction is the date the institution
received the ISIR. The processed date is displayed above the SAI on the first page of the FAFSA Submission Summary and
ISIR printout.
Students who submit the FAFSA form later in the award year can receive aid for the entire year, including completed
payment periods, if they were not ineligible at the time. See the section on retroactive disbursements for completed
periods in
Volume 4, Chapter 2 of the FSA Handbook.
Websites for students
https://studentaid.gov/4Higher education portal that contains resources and information about paying for
college. The site includes access to the FAFSA application, loan information, counseling, repayment, and other
tools to help future, current, and former students access financial aid.
https://studentaid.gov/fafsa4Submit a FAFSA application or make corrections to a previously submitted
application; get an online FAFSA Submission Summary; check status of an application.
https://studentaid.gov/aid-estimator/4The Federal Student Aid Estimator can help applicants understand
their options to pay for college or career school by providing an early estimate of the SAI and eligibility for federal
student aid.
https://studentaid.gov/fsa-id/create-account/launch4Create an account username and password, which
allows students, FAFSA contributors, and other borrowers access to the StudentAid.gov portal.
https://studentaid.gov/fafsa-apply/parents4Who counts as a parent on the FAFSA form? This tool helps
determine which parent(s) should participate in a student9s FAFSA form.
Resources for schools
2025-26 FAFSA Specifications Guide 3 This guide consolidates all FAFSA-related processing information and
guidance into a multi-volume resource. It includes the following volumes and replaces previous stand-alone
guides:
Volume 1 3 Summary of Changes (PDF)
Volume 2 3 FPS Schedule and Getting Help (PDF)
Volume 3 3 Electronic Data Exchange and FAFSA Processing (PDF)
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Volume 4A 3 Record Layouts (PDF and Excel)
Volume 4B 3 Processing Codes (PDF and Excel)
Volume 5 3 Edits and Rejects (PDF)
Volume 6 3 ISIR Guide (PDF)
Volume 7 3 Comment Codes (PDF)
Volume 8 3 Agency Matches (PDF)
Volume 9 3 Testing and Web Demo System (PDF)
FPS Test ISIR Data Files (ZIP)
FPS/SAIG Technical Support4For questions related to the FAFSA Processing System (FPS), the Student Aid
Internet Gateway (SAIG), web products such as the FAFSA Partner Portal (FPP), and assistance with software
products such as EDconnect and EDExpress. Questions related to Two Factor Authentication (TFA) tokens may
also be directed here. Call or email FPS customer service: 1-800-330-5947, [email protected].
Technical system publications4Federal Student Aid has consolidated software and other tools used by the
financial aid community for student aid processing on this page.
FSA Help Center4Collection of additional help and resources, including contact information for FSA Customer
Service Centers.
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Chapter 2
Filling Out the FAFSA Form
This chapter describes the 2025-26 FAFSA form. While the chapter follows the organization of the paper (PDF) FAFSA form
and the ISIR, the guidance applies equally to the online FAFSA. To see how FAFSA data are used to calculate the Student
Aid Index (SAI), refer to Chapter 3.
The easiest, fastest, and most accurate way to complete a FAFSA form is using the online application and providing
consent and approval for the access, disclosure, and use of federal tax information (FTI). The online FAFSA form provides
robust instructions for completing the form. It also provides a clear path for the student and each contributor, allowing
them to skip (or never see) questions that are unnecessary, irrelevant, or already known based on information previously
provided or imported. However, some applicants will be unable or unwilling to complete the FAFSA form online and have
the option to complete a paper version of the form.
FUTURE Act Direct Data Exchange (FA-DDX)
The FUTURE Act amended Section 6103 of the Internal Revenue Code (IRC) to allow the Internal Revenue Service (IRS) to
disclose certain FTI to FSA. The IRS and FSA worked together to develop the FUTURE Act Direct Data Exchange (FA-DDX)
which established a secure connection between both agencies through an application programming interface that
processes requests in near-real time. The FA-DDX replaced the IRS Data Retrieval Tool (IRS-DRT) to import certain FTI into
an applicant9s FAFSA form.
Consent and Approval
The student and each contributor to the FAFSA form must provide consent and approval to the access, disclosure, and use
of FTI in evaluating the applicant9s eligibility for Title IV aid. Consent and approval are required regardless of the
application method (online or paper).
To provide consent and approval, FAFSA contributors (including parent(s) or spouse) must agree to:
1. The Department9s use and disclosure of their information (e.g., name and Social Security number) to match with the
IRS;
Definitions
FAFSA Privacy Act Consent 3 Formal consent provided by an applicant and any applicable contributor(s) for a
given FAFSA cycle (e.g., December 2024 to September 2026 for the 2025-26 FAFSA form) that meets the
statutory requirements of collecting and using an individual9s personally-identifiable information (PII) under the
Privacy Act, as amended (5 U.S.C. § 552a). PII provided on the FAFSA form (e.g., name, date of birth, Social
Security number) with consent of the individual, will be provided to the IRS to conduct a match for the
Department to receive FTI for purposes of determining an applicant9s federal financial aid eligibility and permit
further redisclosure of FTI by the Department.
FAFSA FTI Approval 3 Formal approval granted by an applicant and any applicable contributors for a given
FAFSA cycle (e.g., December 2024 to September 2026 for the 2025-26 FAFSA form) to retrieve and use FTI to
determine an applicant9s federal financial aid eligibility as well as permit the redisclosure of FTI by the
Department to an eligible institution; state higher education agency; or a designated scholarship organization for
the application, award, and administration of student aid programs. An applicant and contributor (if applicable)
must provide approval once each year. If FAFSA FTI approval is not provided, the student will not be eligible for
any
Title IV aid until the approval is provided by each contributor.
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2. The disclosure of their FTI by the IRS to the Department;
3. The use of their FTI by a Department official to determine an applicant9s eligibility for federal student aid and the
amount for which they are eligible; and
4. The redisclosure of FTI by the Department to an eligible institution, state higher education agency, or a designated
scholarship organization (e.g., institutional or state financial aid).
Only the Department has the authority to obtain approval and consent for the use and disclosure of FTI for such purposes.
Our partners (FAAs, advocates, etc.) are not permitted to obtain approval and consent on behalf of FAFSA contributors
(including parent(s) or spouse) for the use and disclosure of FTI.
Once a FAFSA contributor has provided consent and approval for use and disclosure of FTI for a FAFSA cycle (e.g., the
2025-26 FAFSA cycle), they cannot revoke consent for that cycle. The ability to revoke consent is not needed for FAFSA
purposes because the FAFSA contributor is providing a one-time consent for a specific tax year and an annual consent is
required for each FAFSA cycle.
Students and contributors are not able to view or edit the imported FTI data. This is to enhance security, privacy, and to
reduce the risk of the misuse of sensitive data. However, you (the financial aid administrator) will be able to see the
transferred data on the ISIR. Schools and other partners that receive ISIRs must protect federal student aid information
provided to them by the Department or otherwise obtained in support of the application, award, and administration of the
federal student aid programs as permitted under the IRC 6103(l)(13) and HEA, as amended. In keeping with the
expectation that you protect the confidentiality of data associated with the
Title IV programs, you must not disclose FTI
from the FAFSA form unless the disclosure and use is permitted under the IRC 6103(l)(13) and HEA 1098h. For additional
information and guidance on the use of FTI, see Electronic Announcement GENERAL-23-34.
Signatures
Each student and required contributor must both (1) provide consent and approval to obtain tax information from the IRS
and (2) sign the FAFSA application. While both the student and contributors must provide consent and approval once per
application cycle, a signature may be required multiple times throughout the cycle if a student makes corrections to a
processed FAFSA form. In these cases, the student or the contributor must sign that correction to certify the information is
accurate but will not be prompted to provide consent and approval again. Therefore, it is possible for a FAFSA transaction
to contain consent and approval but not the required signature(s). If your school receives an ISIR transaction indicating
that the transaction source (i.e. paper or online FAFSA) was unsigned, the applicant or contributor can return to their
FAFSA form and sign the correction. Alternatively, you can print a signature page in the FAFSA Partner Portal (FPP), collect
the necessary original signature(s), and indicate in FPP that you have the signature on file. This will resolve the signature
requirement but will not satisfy the requirement for consent and approval. Only the Department can collect a contributor9s
consent and approval.
Federal Tax Information
The following data received by the Department from the IRS are considered FTI:
Tax Year (ex. Award year 2025-26 is based on 2023 tax year information from the IRS)
Tax Filing Status
Adjusted Gross Income (AGI)
Number of Exemptions and Number of Dependents
Income Earned from Work
Taxes Paid
Educational Credits
Untaxed IRA distributions
IRA deductions and payments
Tax exempt interest
Untaxed pension amounts
Schedule C net profit/loss
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Indicators for Schedules A, B, D, E, F, H
IRS response code
In some limited circumstances, the student or contributor may need to manually provide data if it is unavailable through
the FA-DDX or does not reflect their current personal circumstances. In these cases, manually entered data will be used in
the SAI calculation. For example, a contributor would be required to manually report income and tax data if they were
married and filed their 2023 U.S. tax return jointly with their spouse but are now divorced.
IRS Response Codes
The IRS will provide one of the following response codes for each contributor, and they will appear on a student9s ISIR.
Code Indication
200 Usable FTI data retrieved successfully
214 No return on file
203
206
212
No usable FTI data retrieved
The IRS provides a response code value of <200= when the IRS has data and it was successfully shared with FSA for
inclusion on the applicant9s FAFSA form. Income and tax information for contributors with a <200= IRS response code is
considered verified. The IRS response code of <214= means the IRS was able to locate the individual in its records and
confirmed that it does not have a tax return on file for that individual for the tax year, designating them as a non-U.S. tax
filer.
IRS response codes <203=, <206=, and <212= indicate that the IRS is unable to provide FTI for that contributor. This may be
because the IRS is unable to locate the individual in its records or the IRS is unable to share FTI (such as in cases of
identity theft). If the IRS returns any of these codes for a contributor, that individual must manually provide income and
tax information on the applicant9s FAFSA form. This manually entered data will be used in the SAI calculation but is not
considered verified and may be subject to verification if selected by the Department or your institution.
Contributors
<Contributor= refers to anyone who is required to provide information, consent, and approval, and a signature on the
FAFSA form. The FAFSA form is organized by contributor. Each contributor will complete their own section of the form
which contains specific questions and instructions pertaining to that contributor. The guidance in this chapter
supplements those instructions and explains why some of the questions are needed on the FAFSA form.
The following sections discuss the questions found within each contributor section on the FAFSA form. The parents
mentioned are the legal parents of dependent students. The numbers in parentheses are for the items as they appear on
the FAFSA Submission Summary, ISIR, paper (PDF) FAFSA, and FAFSA Partner Portal. The FAFSA form is considered a
<snapshot= of the family9s information as of the date the application is signed and it can be updated only in certain
circumstances and only for certain items. See Chapter 4 for more information about updating a FAFSA form.
Contributor: Student
This section consists of 24 questions related to the student.
Student Identity Information (1)
This question requests the name, date of birth, and Social Security number (SSN) or Individual Taxpayer Identification
Number (ITIN) of the student contributor. The name, with other identifying information, is used for several data matches.
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Because the Department matches the student9s name and SSN with the Social Security Administration (SSA), the name on
the FAFSA form should match the one in the SSA9s records (i.e., as it appears on the student9s Social Security card).
Students (except citizens of one of the Freely Associated States 3 see <Account Username and Password= in Chapter 1)
must have an SSN to apply for federal student aid. If they submit a paper (PDF) FAFSA form without an SSN, the FAFSA
form will be returned unprocessed. Students will be unable to submit a FAFSA form electronically without an account
username and password, which requires an SSN (except students who are citizens one of the Freely Associated States).
The student must contact the local SSA office to get an SSN or to find out what the number is if they lost their Social
Security card. Go to https://www.ssa.gov/number-card for more information.
If the student9s name, date of birth, or SSN does not match with the Social Security Administration, the student typically
needs to resolve the issue with the SSA. If the information submitted is correct, the student must contact SSA to update
its records. After the student receives confirmation that SSA has corrected its records, the student must contact the
Federal Student Aid Information Center (FSAIC) and ask them to manually sync their data with SSA. Alternatively, if the
student notifies the school that they received confirmation from SSA, the FAA may update the Resend to Matches field to
<Y= in the FAFSA Partner Portal and submit it as a correction so the transaction can go back to SSA for an updated match
flag. Records sent for rematching will continue to receive this match flag until SSA updates its database.
Students who enter their name, date of birth, or SSN incorrectly should log in to StudentAid.gov and update their
information in Account Settings. The record will be resent to SSA for matching. Once SSA verifies the account, the
student should update their FAFSA form by submitting a correction.
Student Contact Information (2)
This is the student9s current mobile phone, email address, and permanent home address, with three exceptions:
Students under the age of 13 should not provide an email address as FSA cannot communicate with them
electronically. See <FAFSA Filers Under the Age of 13= in Chapter 1 for additional information.
Incarcerated students should use an address where they can reliably receive mail. This may be the physical address
of the facility they are in, the address of the school (if permitted by the school), or a central processing facility used
by the facility for mail distribution. If a prison ID number is required by the facility for the applicant to receive mail,
the applicant should list that at the end of the address field. If an incarcerated student is released, they should also
update their address in their StudentAid.gov account or on their FAFSA Submission Summary.
Homeless students should use a mailing address where they can reliably receive mail. That can be the address of a
relative or friend who has given them permission to use it, or it can be their school9s address if they have contacted
the school for permission and instructions on how mail they receive at the school will reach them. As soon as
homeless students have more permanent housing, they should update their address in their StudentAid.gov account
or on their FAFSA Submission Summary.
If the student provides an email address, they should get an email with a link to their online FAFSA Submission Summary
within one to three days after the FPS receives the completed application. The Department will also use this email address
to correspond with the student regarding their application.
Student Current Marital Status (3)
This is marital status <as of today= 3 the day the application is signed. Marital status cannot be projected. It can be
updated in limited circumstances; see Chapter 4.
A student who is only engaged should select <single (never married)= unless they wait until after their marriage date to
complete the FAFSA form. A student in a relationship that meets the criteria for common-law marriage in their state of
legal residence should select <married= and will be considered independent. A student who is separated from their spouse
should select <separated= and will be considered a dependent student for FAFSA purposes, unless they meet other criteria
to be considered an independent student.
Student College or Career School Plans (4)
Students should answer this question based on the degree or certificate program they will be working on at the start of
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the 2025-26 award year. Students may update the answer to this question if their plans change or they progress to a
higher grade level during the award year.
A student9s grade level is not based on the number of years the student has attended college but on work completed
toward the degree or certificate. For instance, a full-time student might attain second-year grade level after one year of
study, while a half-time student would take two years to reach that level.
The student should also indicate whether they will have a first bachelor9s degree before beginning the 2025-26 year
because eligibility for Pell and Federal Supplemental Educational Opportunity grants (FSEOG) is almost exclusively
restricted to students who have not received a bachelor9s degree or completed the requirements for one. See <General
Eligibility Requirements for Federal Pell Grants= in
Volume 7, Chapter 1 of the FSA Handbook regarding degrees from
unaccredited and foreign schools, which can count as bachelor9s degrees for Pell and FSEOG eligibility.
If the student indicates they have a first bachelor9s degree, they should also indicate if they will be pursuing an initial
teaching certification at the elementary or secondary level. If a student answers <yes= to this question, you must evaluate
and determine if the student is enrolled in a postbaccalaureate program for which a student may receive a Pell Grant. See
Volume 7, Chapter 1 of the FSA Handbook regarding eligible postbaccalaureate programs.
A student who is a graduate or professional student is independent for purposes of Title IV aid and not eligible for Pell
grants or other forms of undergraduate aid. If a Pell-eligible student incorrectly indicates they are working on a master9s,
doctorate, or graduate certificate program, they must submit a correction before they can receive a Pell grant. If a student
completes an undergraduate program during the year and begins graduate school, the student can update the answer to
this question and the FPS will reprocess the student9s application.
See Volume 1, Chapter 1 of the FSA Handbook for definitions of undergraduate and graduate students.
Student Personal (5), Homelessness (6), or Unusual (7) Circumstances
The law governing the Title IV programs is based on the premise that the family is the first source of the student9s
support, and the law provides several criteria that decide if the student is considered independent of their parents for aid
eligibility. Note that a student reaching the age of 18 or 21 or living apart from their parents does not on its own affect
their dependency status.
Questions 5 and 6, along with information from other FAFSA questions, are used to determine if a student meets eligibility
criteria to be considered independent and not required to submit information about their parents. If a student is
considered a dependent of their parents, the parents' must include their financial information on the FAFSA form. The FPS
will calculate a parent contribution and add it to the student9s contribution to derive an SAI.
For the 2025-26 year, a student who meets one or more of the following criteria is independent:
From Question 1:
Undergraduate student definition
34 CFR 668.2(b) <Undergraduate student=
Graduate student definition
34 CFR 668.2(b) <Graduate or professional student=
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The student was born before January 1, 2002.
From Question 3:
The student is married (not separated) or remarried as of the application date.
From Question 4:
The student is a graduate or professional student during the award year.
From Question 5:
The student is currently serving on active duty in the U.S. armed forces for purposes other than training.
The student is a veteran of the U.S. armed forces.
The student has children or dependents other than a spouse (see note below for an explanation of why an individual
may not be asked this question, even if they appear to have children or dependents included in their family size).
The student is (or was at any time after reaching the age of 13) an orphan, ward of the court, or in foster care.
The student is (or was when the student reached the age of majority) a legally emancipated minor or in a legal
guardianship (with someone other than their parent or stepparent), as determined by a court in the student9s state of
legal residence.
From Question 6:
The student was at any time on or after July 1, 2024, determined to be unaccompanied and (1) homeless or (2) self-
supporting and at risk of being homeless with a determination from one of the entities listed on the FAFSA form.
In unusual circumstances, an aid administrator can determine that a student who doesn9t meet any of the criteria listed
above should still be treated as an independent student. A student may indicate that they have an unusual circumstance
by selecting <Yes= to Question 7 on the FAFSA form. The student may then skip the parent sections of the form. Students
who select <Yes= to this question will be given provisional independent student status and directed to provide
documentation to their financial aid office for determination. (See <Unusual Circumstances= in Chapter 5.)
Active Duty in the U.S. Armed Forces
Note: The FAFSA Simplification Act required ED to limit or eliminate unnecessary questions from the FAFSA form.
If the answer to a question is not necessary to determine a student9s eligibility for federal student aid or if the
answer is available or derivable from answers to other questions, the Department is not permitted to require the
student to provide an answer.
For example, when completing the FAFSA form online, applicants are only asked if they have children or
dependents other than a spouse if they are under the age of 24. A student aged 24 or older will not have the
opportunity to answer this question as they are independent by age, making this question unnecessary. In FPP,
the answer to this question will be <Blank=; on the student9s ISIR, the answer to this question will be <No=.
Therefore, you should not assume that a <Blank= or <No= indicates the student does not have children or other
dependents. It is possible for an applicant to have a <No= or <Blank= response to this question and report a family
size that appears to include dependents other than a spouse. This is not, on its own, conflicting information.
Independent Student Determination
HEA Sec. 480(d)
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Persons on active duty in the U.S. Armed Forces (the Army, Navy, Air Force, Marines, Space Force, or Coast Guard) for
purposes other than training are independent.
Veteran of the U.S. Armed Forces
The FAFSA Simplification Act aligns the definition of veteran with the definition used by the U.S. Department of Veterans
Affairs (VA) to determine veterans9 benefits. The Act cites Title 38 of the U.S. Code for the definition of a veteran.
Generally, a veteran is an individual who:
Served on active duty in the U.S. Armed Forces (the Army, Navy, Air Force, Marines, Space Force, or Coast Guard) for
other than training and who was discharged or released under a condition other than <dishonorable=; or
Served on active duty for training or inactive duty for training in the U.S. Armed Forces and was disabled from injury
incurred or aggravated in the line of duty.
Members of the National Guard or Reserves are only considered veterans if they were called up to active federal duty by
presidential order for a purpose other than training. It does not matter how long the active duty lasted or if the student
returned to reserve status afterward, but, as with the other qualifying veterans, the student must have had a character of
service that was not <dishonorable.=
The FAFSA form also tells students to answer <Yes= to the question about veteran status if they aren9t yet a veteran but
will be by June 30, 2026.
Students serving in ROTC or currently attending a U.S. military academy are not veterans. Additionally, students who
attended a U.S. military academy or military academy preparatory school but were discharged prior to commission
(commonly known as <early exit cadets=) are not veterans.
If a student indicates they are a veteran in Question 5, the FPS performs a match with VA records to confirm that status.
The VA sends the result back, which appears as a match flag in the FAA Information section of the output document. For
VA Match Flags 2, 3, and 4 (listed below), a comment and a C flag will appear on the FAFA Submission Summary only if
veteran status is the sole reason that the student would be independent. See
Volume 7 of the 2025-26 FAFSA
Specifications Guide for additional details.
VA Match Flag 1: Confirmed 3 There won9t be any comments on the output document if the VA confirms that the
student is a veteran.
VA Match Flag 2: Not a Qualifying Veteran 3 A student will receive this flag if the VA database indicates they are not a
veteran.
VA Match Flag 3: Not found by VA 3 A student will receive this flag if the student is not in the VA database.
VA Match Flag 4: Active Duty 3 If the student is currently on active duty, they are not a veteran yet. However, if their
active duty will end by June 30, 2026, they count as a veteran for purposes of determining dependency status.
Because the student should have answered <Yes= to the active-duty question, they would be independent by that
criterion and wouldn9t have to resolve this situation.
A student who receives a VA Match Flag of 2 or 3 and is independent for reasons other than being a veteran can receive
aid as an independent student without resolving the problem with their veteran status, although the student should have
the VA correct its database if it has incorrect information. If the student is not independent for reasons other than being a
veteran, the student must either resolve the problem with their veteran status or correct their FAFSA form.
If the student is a veteran, they should correct any problem with the VA or provide documentation showing they are a
Veteran Definition
38 USC 101: Definitions
38 CFR 3.1(d)
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veteran, or will be one by June 30, 2026. Students should provide the financial aid office at their school a copy of their
DD214 (the Certificate of Release or Discharge from active duty, with <Character of Service= as anything but
<dishonorable=). If it shows that the student is a veteran, they can receive aid as an independent student. If a National
Guard member or a reservist who served on active duty (for other than training) did not receive a DD214 but can obtain a
letter from a superior officer that documents the call-up to active duty and that classifies the character of service as
anything but <dishonorable,= the student will be considered a veteran for FSA purposes. If the VA match problem is due to
an error in the VA9s database, the student should contact the VA and correct the error. Once the error is corrected, you
may request to resend the application to agency matches on the FAFSA Partner Portal. A subsequent transaction will then
reprocess the match with the VA.
If the student is not a veteran and will not be one by June 30, 2026, they must correct their answer to Question 5 and
invite at least one parent to contribute to their FAFSA form.
Children and Legal Dependents
Students who have legal dependents are independent. Legal dependents include children or other people (except a
spouse) who meet all the following criteria:
They live with the student (or, in the case of children, live apart from the student due to a qualifying temporary
absence under IRS code, such as living apart due to college enrollment).
They currently receive more than half of their support from the student.
They will continue to receive more than half of their support from the student between July 1, 2025, and June 30,
2026
If one or both of a student9s parents are directly or indirectly providing more than 50% support in cash or other assistance
to the student9s child, then the student could not claim to have a legal dependent who receives more than half of their
support from the student. <Indirect support= includes support that a parent gives to the student on behalf of the child. If
the student is living with a parent who is paying for most of the household expenses, the parent would usually be
considered the primary source of support to the student9s child, and the student should not indicate they have legal
dependents. However, there may be some cases where the student can demonstrate that they provide more than half of
their child9s support even while living at home with their parents, in which case the student could indicate they have legal
dependents.
If the student receives money or other support for the legal dependent from sources other than their parents, the student
may count it as part of their support to the child. Sources include government programs, such as Temporary Assistance
for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP), that provide benefits for dependent
children. So, a student may be considered independent when the benefit they receive is the primary support for the child.
However, child support received from a noncustodial parent cannot be counted as part of the student9s support to the
child.
When a student completes a FAFSA form after the award year has begun and indicates they have a legal dependent who
is not the student9s child, the support already given by the student during the award year plus the future support for the
remainder of the award year must total more than 50% for the whole award year for the individual to meet the definition
of a legal dependent.
Legal Dependent Examples
AVG, Chapter 2, Example 1: A student and their disabled sibling currently live together. The sibling receives a
small disability payment each month, but the student provides more than 50% support for the sibling and expects
to continue to do so through the award year. The sibling is considered a dependent of the student and can be
included in the student9s family size on the FAFSA form. The student is also an independent student due to having
a legal dependent.
AVG, Chapter 2, Example 2: The same student and disabled sibling currently live together and expect to
continue to do so through the award year. The sibling receives a small disability payment AND a pension payment
each month. The combination of the pension and the disability payment will be enough that the student won9t be
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Orphan, Ward of the Court, or in Foster Care
A student who is an orphan 3 both parents are dead 3 when 13 or older is independent even if the student has
subsequently been adopted. Likewise, a student who was, at any time since the age of 13, in foster care or a ward of
the court is independent even if their status changed later.
A student is a ward of the court if a court has assumed legal custody of the student. In some states the court may impose
its authority over a juvenile who remains in the legal custody of their parents; such a student is not a ward of the court.
Also, incarceration of a student does not qualify the student as a ward of the court. In some states the phrase <ward of the
state= is used; if it is not due to incarceration, this is considered the same as a ward of the court for dependency status.
If an institution requires that a student provide documentation that they were in foster care at age 13 or older, you must
consider any of the following documentation to be adequate:
providing more than half of the sibling9s support. Therefore, the student won9t be able to include the sibling in
their family size. Additionally, the student may or may not be independent, depending on their responses to other
dependency questions.
AVG, Chapter 2, Example 3: A student is appointed legal guardian of their minor cousin, who lives with the
student. The cousin receives Social Security benefits, which are paid to the student since the cousin is a minor.
These benefits provide more than half of the cousin9s support. Because the cousin lives with and is supported by
the student (through the Social Security benefits) throughout the award year, the student indicates they have a
legal dependent on the FAFSA form and is an independent student. However, if the cousin did not live with the
student, the student can't indicate they have a legal dependent and would only be independent if they meet other
independent circumstances.
AVG, Chapter 2, Example 4: A student and their partner live together but are not married. The student pays
$1,500 per month to support their partner. The partner also has earned income of $2,000 per month and receives
$200 per month from their parents. The partner uses all of this for their support. The student cannot consider their
partner a legal dependent since the $1,500 they provide is not more than half of the partner9s total support of
$3,700.
AVG, Chapter 2, Example 5: In April 2025, a student applies for aid for both 2024-25 and 2025-26 award years.
One month prior to that, their parent moved in with the student. The parent is undocumented and does not work
or qualify to receive other federal benefits. Even though the student provides all their parent9s support, the
months of support for March through June 2025 (the end of the 2024-25 award year) would not be more than 50%
for 2024-25 award year. Therefore, the student cannot claim their parent as a legal dependent on their 2024-25
FAFSA form. If the parent had moved in before the midpoint of the year, the student would have been able to
count the parent as a dependent for 2024-25. However, because the two plan to live together and the student
plans to provide more than 50% support at least through June 2026, the student can count the parent as a
dependent for 2025-26.
AVG, Chapter 2, Example 6: A student lives alone with their infant child. The infant child9s other parent pays
$200 per month in child support to the student. The student also receives the equivalent of $500 per month from
government assistance programs for the child. The student provides the remainder of the child9s support through
part-time work. The student can consider the child a legal dependent as they live together and the student
provides more than 50% of the child9s support.
AVG, Chapter 2, Example 7: A student lives alone with their infant child. The child9s other parent shares
custody of the child and pays $1,000 per month in child support to the student. The student receives the
equivalent of $500 per month from government assistance programs for the child. The student does not work and
relies on the child support and government assistance to support the child. The student cannot consider the child
a legal dependent, even though the child lives with the student, because the student does not provide more than
50% of the child9s support. If the student is not otherwise independent, the student will need to provide parent
information on the FAFSA form. If the child9s other parent is also a student, they could consider the child a legal
dependent on their FAFSA form if the child lived with them and they provide more than 50% of the child9s support.
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Submission of a court order or official state documentation that the student received federal or state support in
foster care.
A documented phone call, written statement, or verifiable electronic data match from
a state, county, or tribal agency administering a program under part B or E of Title IV of the Social Security Act
(42 U.S.C. 621 et seq. and 670 et seq.);
a state Medicaid agency; or
a public or private foster care placing agency or foster care facility or placement.
A documented phone call or a written statement from an attorney, guardian ad litem, or Court Appointed Special
Advocate.
Verification of the student9s eligibility for an education and training voucher under the John H. Chafee Foster Care
Program under section 477 of the Social Security Act (42 U.S.C. 677).
A documented phone call or written statement from a financial aid administrator who documented the student9s
circumstance in the same or a prior award year.
Emancipation and Legal Guardianship
Students are independent if they are, or were upon reaching the age of majority, legally emancipated minors (released
from control of their parent or guardian) or in legal guardianship, both as adjudicated by a court of competent jurisdiction
in their state of legal residence at the time of the adjudication. The emancipation must be determined by a court, not by
an attorney, though the basis for it can vary by state.
Students placed in legal guardianship to their parents4e.g., if they are disabled adults and under their parents9 care4are
not independent for Title IV program purposes. Similarly, guardianship of a person9s estate does not qualify as a legal
guardianship of the student for this purpose. If the student9s documentation says <custody= instead of <guardianship,=
they should contact you for additional guidance. Most states have a clear definition of legal guardianship that is distinct
from custody, but if a given state does not, ask your school9s legal counsel for help with this question.
Unaccompanied Homeless Youth
A student is independent if, at any time on or after July 1, 2024, the student is determined to be an unaccompanied youth
who is homeless or is self-supporting and at risk of being homeless. In determining independence due to homelessness,
you must consider documentation from any of the following entities4provided through a documented phone call, written
statement, or verifiable electronic data match4to be adequate:
A local educational agency homeless liaison (or designee), as designated by the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11432(g)(1)(J)(ii)).
The director (or designee) of an emergency or transitional shelter, street outreach program, homeless youth drop-in
center, or other program serving individuals who are experiencing homelessness.
The director (or designee) of a Federal TRIO program or a Gaining Early Awareness and Readiness for Undergraduate
program (GEAR UP) grant.
A financial aid administrator at another institution who documented the student9s circumstance in the same or a prior
award year.
In the absence of a determination by the entities above, you, the FAA, must make a case-by-case determination of
homeless youth status (see Chapter 5) based upon a written statement from, or a documented interview with, the student
that confirms that they are an unaccompanied homeless youth, or unaccompanied, at risk of homelessness, and self-
supporting.
Apply for a Direct Unsubsidized Loan Only (8)
A student whose parents are unwilling to provide their information on the student9s FAFSA form but who does not have an
unusual circumstance (as defined in Question 7) may request that an FAA review their eligibility for only a Direct
Unsubsidized Loan by selecting <Yes= to this question.
Family Size (9)
Under the FAFSA Simplification Act, family size (formerly <household size=) aligns with the number of exemptions (which
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equal the tax filer(s) plus dependents) claimed on an individual9s tax return. Individuals who complete the FAFSA form
online, provide the required consent and approval to retrieve and use IRS FTI, and have their tax data successfully
transferred via the FA-DDX will not be asked to report the size of their family as their family size will be derived from that
FTI. Instead, these individuals will be asked if their family size is different from the number of individuals claimed on their
tax return. If they indicate there was a change, they will be asked to manually report their number of dependents in a
follow-up question.
On the paper (PDF) FAFSA form, family size appears in both the student and parent contributor sections. Dependent
students are instructed to skip Question 9 on the paper (PDF) FAFSA form. Dependent students completing the online
FAFSA form will not see the family size question in the student section.
The following persons are included in the family size of an independent student:
The student and their spouse, unless the spouse has died or is not living in the household due to separation or
divorce.
The student9s dependent children, if they live with the student (or live apart from the student due to a qualifying
temporary absence under IRS code, such as living apart due to college enrollment) and will receive more than half of
their support from the student (and spouse) from July 1, 2025, through June 30, 2026. Unborn children should not be
included in the family size, though the family size can be updated if the child is born and will receive more than half
of their support from the student (and spouse) during the award year.
Other persons, who live with and receive more than half their support from the student and will receive more than
half support for the entire award year. For FAFSA forms submitted after the start of the year, see the relevant
paragraph and example about legal dependents provided earlier in this chapter under the <Children and Legal
Dependents= section.
Number in College (10)
While number in college is no longer used to calculate a student9s SAI, the FAFSA Simplification Act requires the question
to be included on the FAFSA form. Schools can use the information provided to perform a special circumstance adjustment
for a student. See <Professional Judgment= in Chapter 5 of this volume for additional information.
The student is always included in the number in college. Also included are those in the family size who are or will be
enrolled at least half time during the award year in a degree or certificate program at a Title IV-eligible school.
Student Demographic Information (11) and Student Ra ce and Ethnicity (12)
These questions collect sex/gender and race/ethnicity information about the student. The answers to these questions will
not affect the student9s eligibility for federal student aid, be used in any calculations, or be shared with the schools to
which the student applies. They will be used for research purposes only.
Student Citizenship (13)
Family Size Example
AVG, Chapter 2, Example 8: A married student recently separated from their spouse, and they are no longer
living together. They have a child together who is currently living with the student9s spouse. The student is paying
child support to the spouse, but it isn9t enough to provide more than half the child9s support. The spouse and child
cannot be included in the student9s family size, even though the student and spouse are not yet legally divorced.
However, the student9s nephew lives with the student and receives more than half of their support from the
student (and will do so for the award year). The student can count the nephew in their family size, which is two.
The nephew, who recently turned 24, is an independent student on his own FAFSA form and his household size is
one.
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Examples of eligible noncitizen categories are given in the FAFSA instructions, and a detailed discussion of citizenship
issues can be found in Volume 1 of the FSA Handbook. Only U.S. citizens or certain classes of noncitizens are eligible for
Title IV aid; however, other students can still submit the FAFSA form because they might be eligible for aid from
institutional, state, or private sources that do not have the same requirements but use FAFSA information.
Students who select <Eligible noncitizen= should include their A-Number, if they have one.
Student State of Legal Residence (14)
This is used to determine which poverty guideline to use when evaluating eligibility for a Maximum or Minimum Pell Grant
for an independent student.
This is also used to determine which state agency should receive the student9s FAFSA information. States have varying
criteria for determining whether the student is a resident for purposes of their financial aid. However, residing in one state
for five years (or more) will meet any state9s criteria.
Parent Education Status (15)
Some state agencies and institutions use this information to award grants and scholarships.
Parent Killed in the Line of Duty (16)
A student may be eligible for a Maximum Pell Grant if they have a parent or guardian who died in the line of duty while
either (1) serving on active duty as a member of the U.S. armed forces on or after September 11, 2001, or (2) performing
official duties as a public safety officer. You should evaluate students who select <Yes= to this question for additional Pell
Grant eligibility under HEA Sec. 401(c). See Volume 7 of the FSA Handbook for additional guidance.
Student High School Information (17)
The student indicates one of the following high school completion statuses:
High school diploma
State-recognized high school equivalent (e.g., GED certificate)
Homeschooled
None of the previous
A foreign secondary education credential typically counts as a high school diploma.
A state-recognized high school equivalent is what students receive after passing a <state authorized examination.= This
includes tests comparable to the GED4i.e., those created and distributed by a test publisher4such as the High School
Special Rule
HEA Sec. 401(c), as amended by the FAFSA Simplification Act
Foreign High School Diploma
FHD-Q1 on the program integrity website
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Equivalency Test (HiSET) or the Test Assessing Secondary Completion (TASC), as well as those established by states, for
example, the California High School Proficiency Exam (CHSPE). California considers a passing grade on the CHSPE to be
equivalent to a diploma.
<None of the previous= includes those who have the recognized equivalent of a high school diploma other than a state-
recognized certificate or who may qualify under the Ability-to-Benefit (ATB) alternatives (see
Volume 1, Chapter 1 of the
FSA Handbook for additional information on ATB alternatives).
If the student selects <High School Diploma,= they must include the name, city and state (or FC for foreign country) where
the student received or will receive their diploma. On the FAFSA website, the student can use city and state to search for
their high school. If they are unable to find their high school using the search functionality, they can manually enter the
high school information. If the student selects <State-recognized high school equivalent,= they must indicate the
equivalent type (GED, TASC, HiSET, or Other) and the issuing state. See Volume 1, Chapter 1 of the FSA Handbook,
regarding a school9s policy about checking the validity of a high school diploma.
Federal Benefits Received (18)
A student may be eligible to have their assets excluded from the SAI calculation if they (or someone in their family)
received one (or more) of the following federal benefits during the 2023 or 2024 calendar years.
Earned income credit (EIC)
Federal housing assistance
Free or reduced-price school lunch*
Medicaid
Refundable credit for coverage under a qualified health plan (QHP)
Supplemental Nutrition Assistance Program (SNAP)
Supplemental Security Income (SSI)
Temporary Assistance for Needy Families (TANF)
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
*Some individuals may receive free or reduced-price school lunch due to community eligibility rather than household
eligibility. Students should only indicate they received free or reduced-price school lunch on the FAFSA form if they meet
the income eligibility guidelines published by the U.S. Department of Agriculture.
Student Tax Filing Status (19)
This three-part question asks the following:
1. If the student did (or will) file a 2023 IRS 1040 or 1040-NR.
2. Whether the student either (1) earned income in a foreign country in 2023, (2) worked for an international
organization in 2023 and was not required to report income on any tax return, or (3) filed a 2023 tax return in Puerto
Rico or another U.S. territory.
3. Finally, married students are asked if they filed their 2023 tax return with their current spouse.
Unmarried students who answer <no= to the first two parts of the question are considered non-tax filers and, if
independent, do not need to answer any additional questions about income or assets. Married students who answer <no=
to the first two parts of the question will still need to provide identity and contact information about their spouse.
Recognized Equivalent of a High School Diploma
34 CFR 600.2
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Dependent students who answer <no= to the first to parts of the question will still need to provide answers to questions
about their assets if their parents are required to provide financial information.
Independent students are automatically eligible for a Maximum Pell Grant if they (and their spouse, if married) are not
required to file a 2023 federal tax return. Such students will be assigned an SAI of -1,500 and will not be required to
provide any further financial information on the FAFSA form.
Individuals who were married and filed jointly with the IRS and are no longer married to the spouse on the applicable tax
return, and/or who have married a different spouse, will be required to manually enter their income and tax information.
See the <Joint Return Filers Who Are No Longer Married= section in Chapter 4 for additional information on separating tax
return and income information.
Individuals who only file foreign tax returns will also be unable to use the FA-DDX since it does not link to foreign tax
authorities. They will instead need to manually input their income and tax data by converting foreign currency to U.S.
dollars and entering the resulting amounts in the comparable fields from U.S. tax returns.
Puerto Rico and Other U.S. Territory Residents
Some individuals who reside in Puerto Rico or another U.S. territory may use an IRS Form 1040 or 1040-NR but file their
taxes with their local tax authority, not the IRS. These individuals should answer <No= to the question <Did or will the
student file a 2023 IRS form 1040 or 1040-NR?= and <Yes= to the subsequent question to indicate they filed a tax return
with Puerto Rico or another U.S. territory.
Additionally, some individuals who live and work in Puerto Rico may file two tax returns 3 one with the IRS and one with
the Puerto Rico tax authority. If they are filing electronically and FTI is available via the FA-DDX, only their tax information
filed with the IRS will be imported to the FAFSA form. They will not be able to manually enter the information from their
tax return filed with Puerto Rico. If the FAA is aware of this dual filing scenario, the FAA should evaluate the applicant9s
information and determine if the information from the Puerto Rico tax return should replace the information imported
from the IRS. FAAs who determine that the information from the Puerto Rico tax return should be on the FAFSA should
update the appropriate FAFSA fields and set the <Professional Judgment= indicator. While this is not a PJ, the changes to
the FAFSA application system require this work-around to override the IRS-transferred FTI with the manually updated FTI.
FSA is working on system changes for future application cycles to allow for these updates without setting the <Professional
Judgment= indicator. See
Electronic Announcement GENERAL-23-118 for additional information.
Nontax Filers, Foreign Countries, and International Organizations
In some countries the tax system does not operate as it does in the U.S., and people in those countries can earn a
substantial amount of income and pay taxes without having to file a return. These individuals should answer <No= to the
question <Did or will the student file a 2023 IRS form 1040 or 1040-NR?= and <Yes= to the subsequent question to indicate
they earned income in a foreign country. While these individuals did not file taxes in the U.S., they are not eligible for an
automatic Maximum Pell Grant and must manually enter income and tax information.
In some instances, employees of certain international organizations, such as the United Nations, the International
Monetary Fund, the World Bank, and others, might not be required to file a return. These individuals should answer <No=
to the question <Did or will the student file a 2023 IRS form 1040 or 1040-NR?= and <Yes= to the subsequent question to
indicate they worked for an international organization. Like foreign non-filers described above, these individuals will be
required to manually enter income and tax information, as they are not eligible to receive an automatic Maximum Pell
Grant as a non-filer.
Individuals who earn income in a foreign country or as an employee of an international organization (e.g., World Bank,
United Nations, and International Monetary Fund) and are not required to file a tax return should fill out the FAFSA form in
the following way using U.S. dollars:
For filing status, select <Single= if you9re single or <Married filing separately= if you9re married.
For AGI, include all wages, dividends, capital gains, business income, retirement distributions, and other income on
which you may have paid taxes.
For income tax paid, include any income taxes you paid on income in your AGI. If your AGI only shows your net
income after paying taxes, enter zero for income tax paid.
For income earned from work, enter the income from your AGI that you earned from working at a job (e.g., your
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wages and business and farm income) only. This may be the same number as your AGI.
Fiscal Year Tax Returns
For a fiscal year (rather than calendar year) tax return, the individual should use information from the return that includes
the greater length of time in 2023. For example, an individual who files a fiscal year tax return that begins in September
would have two tax returns that overlap the 2023 calendar year 3 September 1, 2022, thru August 31, 2023, (FY23) and
September 1, 2023, thru August 31, 2024, (FY24). Since the FY23 tax return covers 8 months of the 2023 calendar year
and the FY24 tax return covers 4 months of the 2023 calendar year, the individual should use the FY23 tax return that
begins on September 1, 2022, to complete the FAFSA form.
Note: There are more days in the year between July 1 and December 31 (184 days) than between January 1 and June 30
(181, or 182 in a leap year). Keep that in mind when determining the length of time attributed to a fiscal year tax return
that begins on July 1.
Student 2023 Tax Return Information (20)
For U.S. tax filers, much of the information in Question 20 will be transferred directly from the IRS via the FA-DDX.
However, as noted previously, there will be instances where manual entry of tax information will be necessary.
This information comes directly from the 2023 federal tax return of the student9s (and the student9s spouse, if married
and filed jointly with their current spouse). Non-tax filers will not be required to provide this information. The first list
below is data elements that will transfer via the FA-DDX, if available. The second list is data elements that the student
must enter manually.
FA-DDX Transferred Data
Filing status. Single, head of household, married filing jointly, married filing separately, or qualifying surviving
spouse.
Income earned from work. From IRS Form 1040 (or IRS Form 1040-NR): line 1z + Schedule 1: lines 3 + 6.
Tax exempt interest income. From IRS Form 1040: line 2a.
Untaxed portions of IRA distributions. The filer reports the full amount, including rollovers, of the untaxed
portion, which is determined from IRS Form 1040: line 4a minus 4b. Rollover amounts are manually entered
separately and excluded in the SAI formula calculation.
Untaxed portions of pensions. The filer reports the full amount, including rollovers, of the untaxed portion, which
is determined from IRS Form 1040: line 5a minus 5b. Rollover amounts are manually entered separately and
excluded in the SAI formula calculation.
Adjusted gross income. From IRS Form 1040 (or IRS Form 1040-NR): line 11. Amount can be negative.
Income tax paid. From IRS Form 1040: line 24
IRA deductions and payments to self-employed SEP, SIMPLE, and qualified plans. From IRS Form 1040
Schedule 1: total of lines 16 + 20.
Education credits. Includes American Opportunity (AOTC) and Lifetime Learning (LLC) credits. From IRS
Form 1040: line 29 + IRS Form 1040 Schedule 3: line 3.
Schedules filed. Did the tax filer file a Schedule A, B, D, E, F, or H?
Net business profit or loss. From IRS Form 1040 Schedule C: line 31. Amount can be negative.
Manually Entered Data/Manually Provided Tax-Payer Data
IRA rollover into another IRA or qualified plan. Typically indicated as "ROLLOVER" on IRS Form 1040-line 4.
Pension rollover into an IRA or other qualified plan. Typically indicated as "ROLLOVER" on IRS Form 1040-line
5.
Earned income credit (EIC) received. IRS Form 1040: line 27.
Taxable grants, scholarships, or AmeriCorps benefits. This question is optional. The student should report only
the amount of grants and scholarships received (by the student and the student9s spouse, if applicable) that was
reported as taxable income on the return. This includes grant and scholarship (not employment) portions of
fellowships and assistantships, as well as taxable stipends and employer tuition reimbursements. Include AmeriCorps
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benefits (awards, living allowances, and interest accrual payments) except those for health care or childcare.
Employers may help with education costs by paying stipends or reimbursing employees for classes taken. These
benefits count as other financial assistance (or reduce the cost of attendance) even if they aren9t received until the
end of the class(es) and are contingent on earning a minimum grade. Any taxable portion should be included in this
field.
Foreign earned income exclusion. From IRS Form 1040 Schedule 1: line 8d. This amount is typically a negative
value on the tax return. The SAI formula will consider the absolute value of any negative value reported.
Annual Child Support Received (21)
Annual child support received is included as an asset of the recipient in the SAI formula. If an independent student (and
their spouse, if married) received child support in the last complete calendar year, they should enter the total amount
received for all children in the family size in this question.
Student Assets (22)
An asset is property that the family owns and has an exchange value. The FAFSA form collects current data (as of the day
the FAFSA form is signed) about cash, savings and checking accounts; investments and real estate; and businesses and
investment farms.
Most assets are investments such as qualified education benefits or savings accounts, Coverdell education savings
accounts, real estate, installment and land sale contracts (including mortgages held), trust funds, mutual funds, money
market funds, Uniform Gifts and Uniform Transfers to Minors (UGMA and UTMA) accounts, certificates of deposit, stocks,
stock options, bonds, commodities, and precious metals. If the asset isn9t a business or farm, it is reported as an
investment.
The FAFSA form asks for the net worth of investments, which is their total current market value minus their associated
debts. If their net worth is negative, zero should be reported.
Applicants will be asked to report the net worth of all businesses and farms, regardless of the size of the enterprise,
location of the family9s residence on the property, or number of employees. The current net worth (the current market
value minus the debt owed on it) is reported for land, buildings, machinery, equipment, livestock, unharvested crops, and
inventories. However, the value of a family9s primary residence is still excluded, even if the residence is on the farm
property or used to run the business. Applicants should determine the total net value of all farm assets and subtract the
net value of their principal residence to determine the final value of their farm assets. The principal residence may include
the family9s home, as well as structures and land adjacent to the home that are not being used, stored, or sold for farming
or other commercial activities. Property values are generally assessed at a rate that considers the use of the property and
the value of the land. Applicants and their families may refer to their property tax assessments from municipal, county, or
state governments to help determine and separate the value of their principal residence from other property.
Qualified education benefits or education savings accounts include Coverdell savings accounts, 529 college
savings plans, and the refund value of 529 prepaid tuition plans. For an independent student, the accounts owned by the
student (and/or the student9s spouse) are reported as student investments. For a dependent student, an account is
reported as a parental investment if the account is designated for the dependent student (accounts designated for other
children in the family are not included). If the student is the beneficiary (but not the owner) of the account, the value is
not reported as a student asset.
States, their agencies, and some colleges sponsor qualified tuition programs (QTPs). The IRS mentions two types of
QTPs that are commonly called prepaid tuition plans and college savings plans. States may offer both types, but colleges
may only sponsor prepaid tuition plans.
Prepaid tuition plans allow a person to buy tuition credits or certificates, which count as units of attendance. The number
of units doesn9t change even though tuition will likely increase before the beneficiary uses the tuition credits. They are an
asset of the plan owner, and their worth is the refund value of the credits or certificates.
College savings plans allow a benefactor to deposit money into an account that will be used for the beneficiary9s college
expenses. The buyer does not pre-purchase tuition credits as with a prepaid tuition plan. Rather, this type of plan is
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essentially a savings account, and its value as an asset is the current balance of the account.
Coverdell education savings accounts, or ESAs, are another tax-advantaged savings vehicle for college education. They
are treated the same as college savings plans: the current balance is an asset of the account owner.
If distributions from QTPs and ESAs do not exceed the qualified education expenses for which they are intended, they are
tax-free, so they will not appear in the next year9s AGI. They should not be treated as other financial assistance (OFA). For
more information on these benefits, see the IRS9s Publication 970, Tax Benefits for Education.
Rental properties are an asset. A unit within a family home that has its own entrance, kitchen, and bath (therefore a
rented bedroom would not count) and that is rented to someone other than a family member counts as an asset. To
calculate its net value, multiply the net value of the entire structure by the fraction the rented space represents. Similarly,
if a family owned a 10-unit apartment building and lived in one of the apartments, 9/10 or 90% of the net value of the
building would be an asset.
Take-back mortgage value should be reported as an asset. In a take-back mortgage, the seller of a house finances a
portion of its cost for the buyer, who repays this additional mortgage to the seller. The seller reports the interest part of
any payments received from the buyer on Schedule B of IRS Form 1040. Therefore, if such interest is reported on a tax
return, it likely indicates an asset that should be reported on the FAFSA form: the value of the take-back mortgage. There
would be no debt reported against this asset. For example, if an individual sold their house for $200,000 and financed a
take back mortgage of $40,000 to the buyer, the seller should report $40,000 as the net worth of the investment. The
worth will decrease each year depending on how much of the principal the buyer paid back that year. This concept applies
to other forms of seller financing of the sale of a home or other property.
Virtual currency (or cryptocurrency) such as Bitcoin is considered an asset. The value (in U.S. dollars as of the day the
FAFSA form is completed) of virtual currency must be reported on the FAFSA form. If the owner sells virtual currency and
has a capital gain from the sale, the taxable portion will be in the AGI for the year it is reported on the tax return, and the
AGI will then be included on the associated FAFSA form. For more information on how the IRS treats virtual currencies,
please see the
IRS virtual currency webpage.
Uniform Gifts and Uniform Transfers to Minors Acts (UGMA and UTMA) allow the establishment of an account for
gifts of cash and financial assets for a minor without the expense of creating a trust. Because the minor is the owner of
the account, it counts as the minor9s asset on the FAFSA form, not the asset of the custodian, who is often the parent.
Trust funds are considered an asset of the named beneficiary of the trust, even if the beneficiary9s access to the trust is
restricted. If the settlor of a trust has voluntarily placed restrictions on its use, then the beneficiary should report its
present value as an asset, as discussed below. If a trust has been restricted by court order, however, the beneficiary
should not report it. An example of such a restricted trust is one set up by court order to pay for future surgery for the
victim of a car accident.
How the trust must be reported depends on whether the beneficiary receives or will receive the interest income, the trust
principal, or both. In the case of a divorce or separation where the trust is owned jointly and ownership is not being
contested, the property and the debt are equally divided between the owners for reporting purposes unless the terms of
the trust specify some other method of division.
If a beneficiary receives interest only from the trust, any interest received in the base year must be reported as income.
If the interest accumulates and is not paid out, the recipient must report an asset value for the interest they will receive.
The trust officer can usually calculate the value of the interest the person will receive while the trust exists. This value
represents the amount a third person would be willing to pay for the interest income.
The person who will receive principal only from the trust must report the present value of his or her right to that
principal as an asset. For example, if a $10,000 principal reverts to a student9s parent when the trust ends in ten years
and the student is receiving the interest, the student would report the interest received as income and the present value
of the student9s parent9s rights to the principal is reported as an asset of the parent (if the student is required to report
parental data) on the student9s FAFSA form. The present value of the principal can be calculated by the trust officer; it9s
the amount that a third person would pay for the right to receive the principal ten years from now4basically, the amount
that one would have to deposit now to receive $10,000 in ten years.
If a beneficiary receives both interest and principal from the trust, the beneficiary should report the present value of
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both interest and principal, as described in the discussion of principal only. If the trust is set up so that the interest
accumulates within the trust until it ends, the beneficiary should report the present value of the interest and principal that
they are expected to receive when the trust ends as an asset.
In some cases, ownership of an asset may be divided or contested, which can affect how the owner reports the asset. If
the owner has only part ownership of an asset, the owner should report only the owned part. Generally, the value of an
asset and debts against it should be divided equally by the number of people who share ownership unless the share of the
asset is determined by the amount invested or the terms of the arrangement specify some other means of division.
If ownership is contested, the asset should not be reported on the FAFSA form. For instance, if a couple is separated
and can9t sell or borrow against jointly owned property because it9s being contested, the net worth of the property would
not be reported as an asset. If ownership of an asset is resolved after the initial application is filed, the value cannot be
updated. If there9s a lien against the asset, the net value of the asset is determined by subtracting any associated debt
and the amount of the lien from its total value. If foreclosure of an asset is imminent, the net value of the asset would still
be reported until the party making the foreclosure completes legal action to take possession of the asset. If the status of
the property changes after the application is filed, the value cannot be updated.
Excluded Assets
The following are excluded assets and should not be reported on the FAFSA form:
Possessions such as a car for personal use, a sound system, clothes, or furniture.
A family9s principal place of residence, even if it is part of a business or farm property.
Retirement and life insurance plans and ABLE accounts. An ABLE account is a tax-advantaged savings account
for a disabled person and their family; its value does not count as an asset on the FAFSA form. The value of
retirement plans4401(k) plans, pension funds, annuities, noneducation IRAs, Keogh plans, etc.4also is not counted
as an asset, but distributions do count as income. An exception to reporting pension distributions is when they are
rolled over into another retirement plan in the same tax year (rollover). Similarly, the cash value or equity of a whole
life insurance policy isn9t reported as an asset, but an insurance settlement may count as income if it is included in
the student9s AGI.
Excluded assets for Native American students. The law excludes reporting any income and asset of $2,000 or
less per individual payment (any amount over $2,000 is reported as an asset of the recipient) received under the Per
Capita Act or the Indian Tribal Judgment Funds Use or Distribution Act. It also excludes any income received under
the Alaska Native Claims Settlement Act or the Maine Indian Claims Settlement Act. Per capita distributions or the
proceeds received from the Land Buy-Back Program for Tribal Nations4a tribal purchase of fractionated lands
because of the Cobell settlement under the Claims Resolution Act of 2010 (42 U.S.C. 1305)4should also be excluded.
Colleges (23)
For a school to be able to receive the student's data, the student must list the college9s federal school code (not the OPE
ID) or enter its complete name, address, city, and state. There is a federal school code search in the online FAFSA form,
and the entire list of school codes is available as a Microsoft Excel spreadsheet and an Adobe PDF document on the
Knowledge Center website under the Library section9s <Publications by Resource Type= area.
The student can list up to 10 schools on the paper (PDF) FAFSA form and 20 on the web (at least one school is required). If
a student wants their information to be available to more schools, they can change the schools listed online or use their
FAFSA Submission Summary. The FPS will send data to no more than 20 (10 with the PDF FAFSA form) schools at a time.
Chapter 4 explains how students can add or change schools.
Excluded assets for Native American Students
HEA Sec. 479C
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The ISIR will only display the federal school code of the receiving school. The information of other schools the student
included on the FAFSA form will not appear except on the FAFSA Submission Summary and on ISIRs sent to state grant
agencies. See Volume 6 of the 2025-26 FAFSA Specification Guide.
Student Consent, Approval, and Signature (24)
Every student must provide the following to be eligible for Title IV aid:
Consent 3 The student must consent to the disclosure of certain identifying information to the IRS.
Approval 3 The student must affirmatively approve that the U.S. Department of Education may receive, use, and
redisclose to certain entities their federal tax information (FTI).
Signature 3 The student9s FSA ID (account username and password) will serve as their signature on the online
FAFSA form. Paper (PDF) FAFSA form filers will provide a physical signature on their form.
In addition to certifying that the data on the FAFSA form is correct, the student is also signing a statement of educational
purpose, which is required to receive Title IV funds. Among other things, the student agrees to spend Title IV funds only
on educational expenses and affirms that they are not in default on a federal loan and do not owe a grant overpayment.
FAFSA Submission
Students who do not have any other required contributors now have a complete FAFSA form. Students who complete and
submit their FAFSA form online will receive an email version of their confirmation page. When the applicant9s FAFSA form
is processed, students who provided an email address will receive an email notification of processing with instructions to
access their FAFSA Submission Summary. Students who do not provide an email address will receive a paper copy of their
FAFSA Submission Summary. Applicants with additional required contributors will need these individuals to contribute to
their FAFSA form, as described next.
Contributor: Student Spouse
This section consists of five questions related to the student9s spouse. The student9s spouse is a required contributor on
the FAFSA form if the student is married and did not file a 2023 tax return jointly with their current spouse.
If a married student is completing the FAFSA form online and the student9s spouse is identified as a required contributor,
the student will be prompted to enter their spouse9s identity information (name, Social Security number, date of birth, and
email address) to invite them to contribute to their FAFSA form. The student spouse will be notified by email that they
have been invited to contribute to the student9s FAFSA form. The spouse should use their own StudentAid.gov account
username and password to access the student9s FAFSA form and complete their portion of the form. If the student9s
spouse is not a required contributor, the student will enter the same identifying information and email address, but the
student9s spouse will not be invited to contribute to the student9s FAFSA form.
If the student is completing the paper (PDF) FAFSA form, they will have their spouse complete the student spouse
contributor section.
Student Spouse Identity Information (25)
Like the student, the student spouse identity information should match what appears on their social security card. If the
student spouse does not have a Social Security number and is completing their section of the form online, the SSN field
will be blank, based on their StudentAid.gov account information. If they are completing their section on the paper (PDF)
FAFSA, they should enter all zeros in the SSN field. In both application methods, the student spouse should enter their
ITIN, if they have one, in the ITIN field.
Student Spouse Contact Information (26)
This is the student spouse9s current mobile phone, email address, and permanent home address.
Student Spouse Tax Filing Status (27)
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This question asks if a 2023 IRS Form 1040 or 1040-NR was (or will be) completed. It also asks about income earned in a
foreign country or if the student spouse filed a tax return in a U.S. territory. See the <Student Tax Filing Status (19)=
question for additional information.
Student Spouse 2023 Tax Return Information (28)
This information comes directly from the student spouse9s 2023 tax return. See the discussion of tax return data in the
<Student 2023 Tax Return Information (20)= question for a list of data elements that will transfer via the FA-DDX or be
manually entered by the student spouse. Unlike the student, the student9s spouse will not be asked to report taxable
college grants, scholarships, or AmeriCorps benefits. If the student or spouse had an amount to report, the student should
have reported the joint total in the student section. The spouse will also not be asked about receipt of the earned income
tax credit (EITC). Receipt of the EITC is used to determine if the student (or parent) is a single parent. If the student (or
parent) is married, they are not a single parent, which makes it unnecessary to ask the spouse about the EITC.
Student Spouse Consent, Approval, and Signature (29 )
Every student spouse contributor must provide the following for the student to be eligible for Title IV aid:
Consent 3 The student spouse contributor must consent to the disclosure of certain identifying information to the
IRS.
Approval 3 The student spouse contributor must affirmatively approve that the U.S. Department of Education may
receive, use, and redisclose to certain entities their federal tax information (FTI).
Signature 3 The student spouse contributor9s FSA ID (username and password) will serve as their signature on the
online FAFSA. Paper (PDF) FAFSA filers will provide a physical signature on their form.
FAFSA Submission
Married, independent students who did not file a 2023 tax return jointly with their current spouse now have a complete
FAFSA ready for submission. The student will receive an email confirmation that the form was submitted. The spouse will
see an abbreviated confirmation that the form is complete and that the student has been notified. Applicants who provide
an email address will receive email notification when their form is processed with instructions to access their FAFSA
Submission Summary. Students who do not provide an email address will receive a paper copy of their FAFSA Submission
Summary.
Contributor: Parent
This section consists of 12 questions related to the parent of a dependent student.
Dependent students will always have at least one parent contributor. If the student is completing the FAFSA form online,
they will be prompted to enter their parent9s identity information (name, Social Security number, date of birth, and email
address) to invite them to contribute to their FAFSA form. The parent will be notified by email that they have been invited
to contribute to the student9s FAFSA form. The parent should use their own StudentAid.gov account username and
password to access the student9s FAFSA form and complete their portion of the form. If the student9s parent is married
and filed their 2023 taxes jointly with their current spouse, only one parent contributor is required. If the student9s parent
is either (1) married or remarried, or (2) unmarried and living together, and did not file their 2023 taxes jointly with their
current spouse or partner, the parent9s spouse or partner will be a required contributor on the student9s FAFSA form.
If the student is completing the paper (PDF) FAFSA form, they will have their parent complete the parent section.
Who Counts as a Parent on the FAFSA?
In most cases, it9s clear who the parents are. A parent is a biological or adoptive parent, or a person that the state has
determined to be a parent (for example, when a state allows another person9s name to be listed as a parent on a birth
certificate). A stepparent is considered a parent if married to a biological or adoptive parent and if the student counts
them in their family size. Biological and adoptive parents who are unmarried and living together select that as their
marital status, and both report their information on the FAFSA form.
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However, a stepparent who did not adopt the student cannot be the sole parent for determining dependency status. If one
parent dies, the student is still a dependent of the remaining biological or adoptive parent, not the stepparent.
If parents are divorced or never married and not living together, the parent on the FAFSA form should be the parent who
provided more than 50% of the financial support for the student during the last 12 months. This may be different from the
parent the student lived with during that same period. If one parent pays child support and/or alimony to the other parent,
the amount paid counts for the payer when determining which parent provided more than 50% of the student9s financial
support and is a required contributor on the FAFSA form. Once the parent who provides more than 50% of the financial
support for the student has been determined, that parent (and their current spouse, if applicable) should report their
financial information on the student9s FAFSA form as a contributor.
If neither parent provided more than 50% of the financial support for the student (including when neither parent provided
support for the student) during the last 12 months, the parent with the greater income and assets is a required
contributor on the FAFSA form. Once the parent with the greater income and assets has been determined, that parent
(and their current spouse, if applicable) should report their financial information on the student9s FAFSA form.
Note: It is not typical that a student will receive support from both parents exactly equally. Usually, you can determine
that the student received more than half support from one of the parents.
A foster parent or a legal guardian is not treated as a parent for Title IV purposes. If at any time since the age of 13 both
student9s parents were dead (and they did not have an adoptive parent at that time) or the student was in foster care,
they are independent. If the student is now or was when they became an adult an emancipated minor or in legal
guardianship, the student is independent.
If a student is living with their grandparents or other relatives, their data should not be reported on the FAFSA form as
parental data unless they have adopted the student.
Parent Identity Information (30)
Like the student, the parent identity information should match what appears on their social security card. If the parent
Surviving Parent and Stepparent Example
AVG, Chapter 2, Example 9: A dependent student9s parents divorced when the student was five years old. The
student9s mother remarried, and the student lived with her and the student9s stepfather, who did not adopt the
student. The student9s mother died last year, but the student9s biological father is still living. The student does not
meet any of the criteria to be independent. Because the student9s biological father is the only surviving parent,
the student needs to report the biological father9s information on the FAFSA form, even if the student is still living
with and being supported by the stepfather.
Student Living With Relatives Example
AVG, Chapter 2, Example 10: A student9s father is dead, and the student9s mother can9t support the student,
so the student is living with their grandparents. The student9s mother doesn9t pay any money for the student9s
support. The student doesn9t meet any of the independence criteria, so the student must provide parental
information. Because the student9s grandparents haven9t adopted the student, they are not the student9s parents.
The student will have to provide information about their mother on the form unless there are unusual
circumstances that would warrant a dependency override or the student may elect to receive only unsubsidized
loans. See Chapter 5 for additional guidance on unusual circumstances.
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does not have a Social Security number and is completing their section of the form online, the SSN field will automatically
be blank, based on the information in the StudentAid.gov account. If the parent is completing their section of the form
using the paper (PDF) FAFSA, they should enter all zeros in the SSN field. In both application methods, the parent should
enter their ITIN, if they have one, in the ITIN field.
Parent Contact Information (31)
This is the parent9s current mobile phone, email address, and permanent home address.
Parent Current Marital Status (32)
This is the parent9s marital status <as of today= 3 the day the application is signed. Marital status cannot be projected. It
can be updated in limited circumstances; see Chapter 4.
A student9s parent in a relationship that meets the criteria for common-law marriage in their state of legal residence
should select <married=. If the state doesn9t consider their situation to be a common-law marriage or doesn9t recognize
common-law marriage, then they aren9t married; parents would report that they are unmarried and living together. Check
with the appropriate state agency concerning the definition of a common-law marriage.
Parent State of Legal Residence (33)
This is used to determine which poverty guideline to use when evaluating eligibility for a Maximum or Minimum Pell Grant
for a dependent student.
Family Size (34)
See <Family Size (9)= in the student section for further explanation of family size for online filers.
For paper (PDF) FAFSA filers, family size appears in both the student and parent contributor sections of the form. The
information reported in the parent section of the paper (PDF) FAFSA form will supersede information reported in the
student section, if applicable.
The following persons are included in the family size of a dependent student:
The student
The parent (and their spouse or partner)
The parent9s dependent children, (even if they live apart from the parents due to a qualifying temporary absence
under IRS code, such as living apart due to college enrollment) who will receive more than half of their support from
the parent (and spouse or partner) from July 1, 2025, through June 30, 2026. Unborn children should not be included
in the family size, though the family size can be updated if the child is born and will receive more than half of their
support from the parent (and spouse or partner) during the award year.
Other persons who live with and receive more than half their support from the parent (and spouse or partner) and
will receive more than half support for the entire award year.
Number in College (35)
While number in college is no longer used to calculate a student9s SAI, the FAFSA Simplification Act requires the question
to be included on the FAFSA form. Schools can use the information provided to perform a special circumstance adjustment
for a student. See <Professional Judgment= in Chapter 5: Special Cases of this volume for additional information.
The student is always included in the number in college. Also included are those in the family size who are or will be
enrolled at least half time during the award year in a degree or certificate program at a Title IV-eligible school.
Federal Benefits Received (36)
A student may be eligible to have their and their parents9 assets excluded from the SAI calculation if they (or someone in
their family) received one (or more) federal benefits during the 2023 or 2024 calendar years. See the <Federal Benefits
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Received (18)= question for a list of these federal benefits.
Parent Tax Filing Status (37)
This question asks if the parent filed (or will file) a 2023 IRS 1040 or 1040-NR. If the answer is <no=, the parent will be
asked to select one of the following reasons for not filing:
1. The parent filed or will file a tax return with Puerto Rico or another U.S. territory.
2. The parent filed or will file a foreign tax return.
3. The parent either earned income in a foreign country but did not and will not file a foreign tax return, or worked for
an international organization and was not required to report income on any tax return.
4. The parent, even though they earned income in the U.S., did not and will not file a U.S. tax return because their
income was below the filing threshold.
5. The parent did not and will not file a U.S. tax return for reasons other than low income.
6. The parent did not and will not file any tax return because they did not earn any income or they were not required to
file under the Internal Revenue Code.
The purpose of these questions is to determine if a parent was either (1) required to file a 2023 U.S. federal tax return and
did not or (2) has income from a foreign country that must be manually entered on the FAFSA form.
A dependent student will be automatically eligible for a Maximum Pell Grant if their parent (and parent9s spouse or
partner) is subject to the U.S. Tax Code but is not required to file a 2023 U.S. federal tax return. The student will be
assigned an SAI of -1,500 and will not be required to provide any further financial information on the FAFSA form.
Finally, married parents are asked if they filed their 2023 tax return with their current spouse. Individuals who were
married and filed jointly with the IRS and are no longer married to the spouse on the applicable tax return, or who have
married a different spouse, will be required to manually enter their income and tax information. See the <Joint Return
Filers Who Are No Longer Married= section in Chapter 4 for additional information on separating tax return and income
information.
Individuals who only file foreign tax returns will also be unable to use the FA-DDX since it does not link to foreign tax
authorities. They will instead need to manually input their income and tax data by converting foreign currency to U.S.
dollars and entering the resulting amounts in the comparable fields from U.S. tax returns. See the <Student Tax Filing
Status (19)= question for additional information.
If the parent indicates they earned income in a foreign country but did not file a foreign tax return, or worked for an
international organization, such as the United Nations, World Bank, or International Monetary Fund (option 3), they will
need to manually input their income and tax data, similar to individuals who file foreign tax returns. See <Non-tax filers,
foreign countries, and international organizations= under <Student Tax Filing Status (19)= for additional guidance.
If a parent indicates they did not file a U.S. tax return for reasons other than low income (option 5), you should treat this
as conflicting information and request documentation to resolve it, which may include requiring the individual to file a tax
return and present sufficient documentation of filing to you.
If a parent indicates they did not file any tax return because they did not earn any income (option 6) and their state of
legal residence is a foreign country, you must determine if the parent has foreign untaxed income that, when included in
the SAI calculation, impacts a student9s Pell Grant eligibility. Comment code 303 on the student9s ISIR should prompt you
to request additional documentation. If your inquiry into the parents9 financial situation shows that the student might be
eligible for less or no Pell grant funds, you may use PJ to account for the parents9 untaxed income and assets, similar to
the action you might take when there is a substantial foreign earned income exclusion on a U.S. tax return that can affect
a student9s Pell eligibility.
Parent 2023 Tax Return Information (38)
For U.S. tax filers, much of the information in Question 38 will be transferred directly from the IRS via the FA-DDX.
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However, there will be instances where manual entry of tax information will be necessary.
This information comes directly from the 2023 federal tax return of the parent9s (and parent9s spouse if married and filed
jointly with their current spouse). See the discussion of tax return data in the <Student 2023 Tax Return Information (20)=
question for a list of data elements that will transfer via the FA-DDX or be manually entered by the parent.
Annual Child Support Received (39)
Annual child support received is included as an asset of the recipient in the SAI formula. If a dependent student9s parent
(and their spouse or partner) received child support in the last complete calendar year, they should enter the total
amount received for all children in the family size in this question.
Parent Assets (40)
An asset is property that the family owns and has an exchange value. The FAFSA form collects current data (as of the day
of signing the FAFSA form) about cash, savings, and checking accounts; investments; real estate; businesses; and
investment farms. See the <Student Assets (22)= question for additional discussion of assets.
Parent Consent, Approval, and Signature (41)
Every parent contributor must provide the following for the student to be eligible for Title IV aid:
Consent 3 The parent contributor must consent to the disclosure of certain identifying information to the IRS.
Approval 3 The parent contributor must affirmatively approve that the U.S. Department of Education may receive,
use, and redisclose to certain entities their federal tax information (FTI).
Signature 3 The parent contributor9s FSA ID (username and password) will serve as their signature on the online
FAFSA. Paper (PDF) FAFSA filers will provide a physical signature on their form.
FAFSA Submission
A dependent student with a single parent now has a complete FAFSA ready for submission. A dependent student with
married parents who filed their 2023 tax return jointly with their current spouse will need to provide the parent9s spouse9s
identity and contact information. If all required information is provided and the FAFSA form is submitted, the student will
receive an email confirmation. The parent will see an abbreviated confirmation, letting them know that the form is
complete and that the student has been notified. Applicants who provide an email address will receive email notification
when their form is processed with instructions to access their FAFSA Submission Summary. Students who do not provide
an email address will receive a paper copy of their FAFSA Submission Summary.
Contributor: Parent Spouse or Partner
This section consists of five questions related to the spouse or partner of a parent of a dependent student. If the student9s
parent is married, the spouse9s information is always required on the FAFSA form. If the student9s parent is unmarried and
living with a partner, the partner9s information is only required on the FAFSA form if the partner is also the student9s legal
parent.
The parent spouse or partner is only a required contributor on the FAFSA form if the parent is either (1) married or
remarried and did not file taxes jointly with their current spouse in 2023, or (2) unmarried and living with the student9s
other legal parent. If the parent contributor is completing the FAFSA form online and the parent9s spouse is identified as a
required contributor, the parent will be prompted to enter the parent spouse9s or partner9s identity information (name,
Social Security number, date of birth, and email address) to invite them to contribute to the student9s FAFSA form. The
parent spouse or partner will be notified by email that they have been invited to contribute to the student9s FAFSA form.
The spouse or partner should use their own StudentAid.gov account username and password to access the student9s
FAFSA form and complete their portion of the form. If the parent9s spouse is not a required contributor, the parent will
enter the same identifying information and email address, but the parent9s spouse will not be invited to contribute to the
student9s FAFSA form.
If the student is completing the paper (PDF) FAFSA form, they will have their parent9s spouse or partner complete the
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parent spouse or partner contributor section.
Parent Spouse or Partner Identity Information (42)
Like the student, the parent spouse or partner identity information should match what appears on their social security
card. If the parent spouse or partner does not have a Social Security number and is completing their section of the form
online, the SSN field will automatically be blank based on the information in their StudentAid.gov account. If the parent
spouse is completing their section using the paper (PDF) FAFSA, they should enter all zeros in the SSN field. In both
application methods, the parent should enter their ITIN, if they have one, in the ITIN field.
Parent Spouse or Partner Contact Information (43)
This is the parent spouse9s or partner9s current mobile phone, email address, and permanent home address.
Parent Spouse or Partner Tax Filing Status (44)
This question asks if the parent spouse or partner filed (or will file) a 2023 IRS 1040 or 1040-NR. It also asks about income
earned in a foreign country or if the parent spouse or partner filed a tax return in a U.S. territory. See the discussion of tax
return data in the <Student 2023 Tax Return Information (20)= question for a list of data elements that will transfer via the
FA-DDX or be manually entered by the parent spouse or partner.
Parent Spouse or Partner 2023 Tax Return Informatio n (45)
This information comes directly from the parent spouse9s or partner9s 2023 federal tax return. See the discussion of tax
return data in the <Student 2023 Tax Return Information (20)= question for a list of data elements that will transfer via the
FA-DDX or be manually entered by the parent spouse or partner. Unlike the parent, the parent spouse or partner will not
be asked to report either (1) taxable college grants, scholarships, or AmeriCorps benefits, or (2) receipt of the earned
income credit. See <Student Spouse 2023 Tax Return Information (28)= for further explanation of these two excluded
elements.
Parent Spouse or Partner Consent, Approval, and Sig nature (46)
Every parent spouse or partner contributor must provide the following for the student to be eligible for Title IV aid:
Consent 3 The parent spouse or partner contributor must consent to the disclosure of certain identifying information
to the IRS.
Approval 3 The parent spouse or partner must affirmatively approve that the U.S. Department of Education may
receive, use, and redisclose to certain entities their federal tax information (FTI).
Signature 3 The parent spouse or partner contributor9s FSA ID (username and password) will serve as their
signature on the online FAFSA. Paper (PDF) FAFSA filers will provide a physical signature on their form.
FAFSA Submission
A dependent student with (1) unmarried parents living together or (2) a married or remarried parent who did not file their
2023 tax return jointly with their current spouse now have a complete FAFSA form ready for processing. The student will
receive an email confirmation that their FAFSA form is complete. The parent spouse or partner will see an abbreviated
confirmation that the form is complete, and that the student has been notified. If the applicant provided an email address,
they will receive an email when the FAFSA form is processed with instructions for accessing their FAFSA Submission
Summary. Applicants without an email address will receive a paper copy of their FAFSA Submission Summary.
Role: Preparer
If someone other than the student, student spouse, parent, or parent spouse or partner completed a portion of the FAFSA
form on the applicant9s behalf, that person must complete the Preparer section. Paid preparers are prohibited. This
section consists of three questions related to the unpaid preparer.
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Preparer Identity Information (47)
First name, last name, and either Social Security number (SSN) or Employer Identification Number (EIN).
Preparer Contact Information (48)
This is the preparer9s affiliation or organization and mailing address.
Preparer Signature (49)
The preparer must sign and date the FAFSA form.
Note: This section appears on the paper (PDF) FAFSA form, but the Preparer role will not be available in the online
FAFSA form for the 2025-26 award year.
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Chapter 3
Student Aid Index (SAI) and Pell Grant Eligibility
A student may qualify for a Pell Grant in one of three ways:
Maximum Pell Grant (Max Pell)
Minimum Pell Grant (Min Pell)
Calculated Pell Grant, based on SAI (Calculated Pell = Max Pell minus SAI)
The first two paths to Pell Grant eligibility are briefly discussed below. See Volume 7 of the FSA Handbook for additional
information on Pell Grant eligibility. Most of this chapter is spent discussing how the SAI is calculated.
General Information
The FAFSA Processing System (FPS) uses data provided by the applicant and contributors on the FAFSA form to determine
Max or Min Pell Grant eligibility and calculate the SAI.
Maximum Pell Grant Eligibility Criteria
A student is eligible for a Maximum Pell Grant if any of the following is true:
Dependent Student
The student9s parent(s) is not required to file a federal income tax return; or
The student9s parent is a single parent and has an AGI greater than zero and less than or equal to 225% of the
poverty guideline for the applicant9s family size and state of residence; or
The student9s parent is not a single parent and has an AGI greater than zero and less than or equal to 175% of the
poverty guideline for the applicant9s family size and state of residence.
Independent Student
The student (and spouse, if applicable) is not required to file a federal income tax return; or
The student is a single parent and has an AGI greater than zero and less than or equal to 225% of the poverty
guideline for the applicant9s family size and state of residence; or
The student is not a single parent and has an AGI greater than zero and less than or equal to 175% of the poverty
guideline for the applicant9s family size and state of residence.
SAI for Maximum Pell Grant Recipients
A dependent student whose parents are not required to file a federal income tax return OR an independent student (and
spouse, if applicable) who is not required to file a federal income tax return for the prior-prior tax year is assigned an SAI
equal to -1500. Other students eligible for a Maximum Pell Grant will be assigned an SAI equal to 0 or a calculated SAI,
whichever is less.
Minimum Pell Grant Eligibility Criteria
Maximum Pell Grant Eligibility
HEA Sec. 401(b)(1)(A)
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A student who does not qualify for a Maximum Pell Grant or for a calculated Pell Grant because the SAI is too high can still
be eligible for a Minimum Pell Grant if any of the following is true:
Dependent Student
The student9s parent is a single parent and has an AGI less than or equal to 325% of the poverty guideline for the
applicant9s family size and state of residence; or
The student9s parent is not a single parent and has an AGI less than or equal to 275% of the poverty guideline for the
applicant9s family size and state of residence.
Independent Student
The student is a single parent, and the AGI is less than or equal to 400% of the poverty line; or
The student is a parent and is not a single parent, and the AGI is less than or equal to 350% of the poverty guideline
for the applicant9s family size and state of residence; or
The student is not a parent, and the student9s (and spouse9s if applicable) AGI is less than or equal to 275% of the
poverty guideline for the applicant9s family size and state of residence.
SAI for Minimum Pell Grant Recipients
Students eligible for a Minimum Pell Grant under this guidance retain their calculated SAI.
Student Aid Index (SAI) Formulas
The SAI formulas use income, assets, and the number of persons in the family size for the award year.
The law gives three SAI formulas:
1. Formula A 3 Dependent students,
2. Formula B 3 Independent students without dependents other than a spouse, and
3. Formula C 3 Independent students with dependents other than a spouse
Tables used in the computation of the SAI are updated annually and published on the Knowledge Center in a Federal
Register. The Department9s 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide is also updated annually and
available at fsapartners.ed.gov/knowledge-center in the Library section under Resource Type > Handbooks, Manuals, or
Guides.
The FAFSA Simplification Act eliminated the simplified needs test and automatic zero provisions. However, some
applicants will be exempt from reporting assets and/or will have assets excluded from consideration in the SAI formula.
Minimum Pell Grant Eligibility
HEA Sec. 401(b)(1)(C)
SAI Formulas
HEA Sec. 474-479
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Applicants Exempt From Asset Reporting
A dependent student is exempt from asset reporting if they meet one of the following criteria.
1. The applicant qualifies for a Maximum Pell Grant
2. The applicant9s parents9 2023 combined AGI is less than $60,000 and they do not file a Schedule A, B, D, E, F, or H,
AND
a. They do not file a Schedule C, OR
b. They file a Schedule C with net business income of not more than a $10,000 loss or gain.
3. The applicant or applicant9s parent received a benefit under a means-tested Federal benefit program during the 2023
or 2024 calendar year.
Exception: A dependent student is not exempt from asset reporting if their parents (1) live outside the U.S. or (2) do not
file taxes in the U.S. or a U.S. territory, unless their nonfiling is due to having income below the filing threshold.
An independent student is exempt from asset reporting if they meet one of the following criteria.
1. The applicant qualifies for a Maximum Pell Grant
2. The applicant9s (and applicant9s spouse, if applicable) 2023 combined AGI is less than $60,000 and they do not file a
Schedule A, B, D, E, F, or H, AND
a. They do not file a Schedule C, OR
b. They file a Schedule C with net business income of not more than a $10,000 loss or gain.
3. The applicant or applicant9s spouse received a benefit under a means-tested federal benefit program during the 2023
or 2024 calendar year.
Means-Tested Federal Benefits Programs
The means-tested federal benefit programs are listed in Chapter 2. A person need not have received the benefit for an
entire year; receiving it at any time in the base or following year qualifies. Also, an FAA may use professional judgment
(PJ) to count a benefit if a person did not receive it during those 24 months but is receiving it now.
No Prorated SAIs
The FAFSA Simplification Act does not allow schools to use alternate or prorated SAIs when packaging students for periods
other than 9 months. Therefore, you should use the calculated SAI to package a student, regardless of the length of time
of the student9s enrollment.
The SAI Worksheets
The 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide contains SAI worksheets and tables for each formula
(A, B and C), which can be used to manually calculate an SAI or to see how the SAI is determined for each of the formulas.
The following information provides additional insight into the SAI calculation process and may prove helpful when
reviewing the SAI worksheets in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide.
Formula A 3 Dependent Students
The SAI for a dependent student is calculated using the FAFSA data for the student and their parents. The FPS calculates
the parents9 contribution from income and assets, the student9s contribution from income, and the student9s contribution
from assets; the SAI is the sum of these three values.
Parents9 Contribution From Available Income and Ass ets
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Parents9 available income. The parents9 available income is calculated by subtracting certain allowances from the
parents9 total income. These allowances account for certain nondiscretionary expenses, such as taxes and basic living
expenses. Once a minimum level of support has been offset for those expenses, the formula assumes that the remaining
income is available for discretionary purposes, including paying for a postsecondary education. The available income can
be a negative number.
The total income is the sum of the taxable and untaxed income, minus amounts reported in the income but excluded from
the formula.
Parents9 taxed/untaxed income. The sum of following items, reported on a U.S. tax return, increases the parents9 total
income:
Parents9 AGI
Parents9 deductible payments to self-employed SEP, SIMPLE, Keogh, and other qualified retirement accounts
Tax-exempt interest
Untaxed IRA/pension distributions (excluding rollovers)
Foreign income exclusion
Parents9 income offsets. The sum of the following items decreases the parents9 total income:
Parents9 taxable college grant and scholarship aid (included as income). This amount is self-reported on the
FAFSA form.
Parents9 education credits. Use the amount reported on the FAFSA form.
Parents9 Federal Work-Study (FWS). Schools annually report FWS earnings by individual earners to the
Department. ED will then use this information to report FWS on the individual earner9s FAFSA form.
Parents9 income allowances. The sum of the following allowances reduces the parents9 total income:
U.S. income tax paid. Use the amount reported on the FAFSA form.
Parents9 payroll tax allowance. Use <Table A1:Payroll Tax Allowance= in 2025-26 Student Aid Index (SAI) and Pell
Grant Eligibility Guide. Apply the rates shown in each step of the table to the total income earned from work in 2023
for both parents (as reported on the FAFSA form). The total allowance for payroll taxes is never less than zero.
Income protection allowance. Use <Table A2: Income Protection Allowance= in the 2025-26 Student Aid Index
(SAI) and Pell Grant Eligibility Guide. This allowance is for the basic living expenses of a family. It varies according to
the number in the parents9 family size, as reported on the FAFSA form. In general, a school can assume that 30% of
the income protection allowance amount is for food, 22% for housing, 9% for transportation expenses, 16% for
clothing and personal care, 11% for medical care, and 12% for other family consumption.
Employment expense allowance. This allowance recognizes extra expenses incurred by families with working
parents. The maximum allowance is updated annually. See the 2025-26 Student Aid Index (SAI) and Pell Grant
Eligibility Guide for the current year allowance amount. The employment expense allowance is never less than zero.
Parents9 contribution from assets. The full formula uses the assets of parents of a dependent student and determines
a <contribution from assets.= This amount is combined with available income to quantify the family9s financial strength.
First, the parents9 net worth is calculated by adding the following assets reported on the FAFSA form.
Cash, savings, checking, time deposits, and money market funds. Use the amount reported on the FAFSA
form.
Net worth of investments. Includes real estate (excluding primary residence), vacation homes, income producing
property, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, and qualified education benefits.
Adjusted net worth of business and/or investment farm. Use <Table A3: Business/Farm Net Worth Adjustment=
in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide to adjust the total reported on the FAFSA.
Child support received. Use the amount reported on the FAFSA form. Child support received should be reported as
the total amount received in the most recently completed calendar year. For example, if the FAFSA form is
completed in January 2024, the amount of child support received should be the total for the 2023 calendar year.
Second, the parents9 discretionary net worth is calculated by subtracting the asset protection allowance (<Table A4:
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Asset Protection Allowance= in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide) from the parents9 net
worth. Discretionary net worth may be less than zero.
Finally, the discretionary net worth is multiplied by the conversion rate of 12% to get the parents9 contribution from
assets, which represents the portion of parental assets considered available to help pay for the student9s college
education. If the contribution from assets is negative, it is set to zero.
Calculation of parents9 contribution. This is the final step in determining the parents9 contribution. The parents9
available income and contribution from assets are added together to determine the parents9 adjusted available income,
which can be a negative number. The total parents9 contribution from adjusted available income is calculated from the
amounts and rates in <Table A5: Parents9 Contribution from Adjusted Available Income= in the 2025-26 Student Aid Index
(SAI) and Pell Grant Eligibility Guide. The rates in Table A5 increase from 22% to 47% as the adjusted available income
increases. This is based on the principle that as income increases beyond the amount needed to maintain a basic
standard of living, the portion used for family maintenance decreases and the portion available for discretionary purposes
increases. Therefore, a progressively larger amount of income may be contributed toward postsecondary educational
costs. The parents9 contribution from adjusted available income may be negative.
Student9s Contribution From Income
Student9s available income. The student9s available income is calculated by subtracting certain allowances from the
student9s total income. These allowances account for certain nondiscretionary expenses, such as taxes and basic living
expenses. Once a minimum level of support has been offset for those expenses, the formula assumes that the remaining
income is available for discretionary purposes, including paying for a postsecondary education.
The student9s available income is the sum of the taxable and untaxed income, minus amounts reported in the income but
excluded from the formula (offsets and allowances).
Student9s taxed/untaxed income. The sum of the following items, reported on a U.S. tax return, is the student9s total
income:
Student9s AGI
Student9s deductible payments to self-employed SEP, SIMPLE, Keogh, and other qualified retirement accounts
Student9s tax-exempt interest
Student9s untaxed IRA/pension distributions (excluding rollovers)
Student9s foreign income exclusion
Student9s income offsets. The sum of the following items decreases the student9s total income:
Student9s taxable college grant and scholarship aid (included as income). This amount is self-reported on
the FAFSA form.
Student9s education credits. Use the amount reported on the FAFSA form.
Student9s Federal Work-Study (FWS). Schools annually report FWS earnings by individual earners to the
Department. ED will then use this information to report FWS on the individual earner9s FAFSA form.
Student9s income allowances. The sum of the following allowances reduces the student9s total income:
U.S. income tax paid. Use the amount reported on the FAFSA form.
Student9s payroll tax allowance. Use <Table A1: Payroll Tax Allowance= in the 2025-26 Student Aid Index (SAI)
and Pell Grant Eligibility Guide. Apply the rates shown in each step of the table to the total income earned from work
in 2023 for the student (as reported on the FAFSA form). The total allowance for payroll taxes is never less than zero.
Income protection allowance. This amount is set annually. See the 2025-26 Student Aid Index (SAI) and Pell Grant
Eligibility Guide for the current year allowance amount.
Allowance for parents9 negative adjusted available income. If the parents9 adjusted available income is
negative, enter the amount as a positive amount in the calculation. If the value is positive, set this allowance to 0.
Finally, the student9s available income is multiplied by the assessment rate of 50% to determine the student9s
contribution from income, which may be a negative number (as low as -1,500).
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Student9s Contribution From Assets
The full formula uses the student9s assets and determines a <contribution from assets.=
First, the student9s net worth is calculated by adding the following assets reported on the FAFSA form.
Cash, savings, checking, time deposits, and money market funds. Use the amount reported on the FAFSA
form.
Net worth of investments. Includes real estate (excluding primary residence), vacation homes, income producing
property, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, and qualified education benefits.
Adjusted net worth of business and/or farm. Use <Table A3: Business/Farm Net Worth Adjustment= in the 2025-
26 Student Aid Index (SAI) and Pell Grant Eligibility Guide to adjust the total reported on the FAFSA form.
Second, the student9s net worth is multiplied by the conversion rate of 20% to get the student9s contribution from
assets. If the contribution from assets is negative, it is set to zero.
SAI Calculation 3 Dependent Student
The student9s SAI is determined by adding the parents9 contribution, the student9s contribution from available income,
and the student9s contribution from assets. The SAI may be negative (but not less than -1,500).
Formula B4Independent Student Without Dependents Other Than a
Spouse
The SAI for an independent student without dependents other than a spouse is calculated using FAFSA data for the
student and spouse. The FPS calculates a contribution from available income and a contribution from assets; the SAI is the
sum of these two values.
Contribution From Available Income
Student9s (and Spouse9s) available income. The student9s (and spouse9s) available income is calculated by
subtracting certain allowances from the student9s (and spouse9s) total income. These allowances account for certain
nondiscretionary expenses, such as taxes and basic living expenses. Once a minimum level of support has been offset for
those expenses, the formula assumes that the remaining income is available for discretionary purposes, including paying
for a postsecondary education. The available income can be a negative number.
The student9s (and spouse9s) available income is the sum of the taxable and untaxed income minus amounts reported in
the income but excluded from the formula (offsets and allowances).
Student9s (and spouse9s) taxed/untaxed income. The sum of the following items, reported on a U.S. tax return, is the
student9s (and spouse9s) total income:
Student9s (and spouse9s) AGI
Student9s (and spouse9s) deductible payments to self-employed SEP, SIMPLE, Keogh, and other qualified retirement
accounts
Student9s (and spouse9s) tax-exempt interest
Student9s (and spouse9s) untaxed IRA/pension distributions (excluding rollovers)
Student9s (and spouse9s) foreign income exclusion
Student9s (and spouse9s) income offsets. The sum of the following items decreases the student9s (and spouse9s) total
income:
Student9s (and spouse9s) taxable college grant and scholarship aid (included as income). This amount is
self-reported on the FAFSA form.
Student9s (and spouse9s) education credits. Use the amount reported on the FAFSA form.
Student9s (and spouse9s) Federal Work-Study (FWS). Schools annually report FWS earnings by individual
earners to the Department. ED will then use this information to report FWS on the individual earner9s FAFSA form.
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Student9s (and spouse9s) income allowances. The sum of the following allowances reduces the student9s (and
spouse9s) total income:
U.S. income tax paid. Use the amount reported on the FAFSA form.
Student9s (and spouse9s) payroll tax allowance. Use <Table B1: Payroll Tax Allowance= in the 2025-26 Student
Aid Index (SAI) and Pell Grant Eligibility Guide. Apply the rates shown in each step of the table to the total income
earned from work in 2023 for the student (and spouse) as reported on the FAFSA form. The total allowance for
payroll taxes is never less than zero.
Income protection allowance. This amount differs for unmarried students (single, separated, divorced, or
widowed) and married students (married or remarried). See the 2025-26 Student Aid Index (SAI) and Pell Grant
Eligibility Guide for the current year allowance amount.
Employment expense allowance. If the student is not married (single, separated, divorced, or widowed) this
allowance is $0. If the student is married (or remarried), this allowance is 35% of the student and spouse9s combined
earned income or maximum allowance, whichever is less. The allowance is updated annually. See the 2025-26
Student Aid Index (SAI) and Pell Grant Eligibility Guide for the current year allowance amount. The employment
expense allowance is never less than zero.
Finally, the student9s (and spouse9s) available income is multiplied by the assessment rate of 50% to determine the
student9s contribution from income, which may be a negative number.
Student9s (and Spouse9s) Contribution From Assets
The full formula uses the student9s (and spouse9s) assets of the and determines a <contribution from assets.=
First, the student9s (and spouse9s) net worth is calculated by adding the following assets reported on the FAFSA form:
Cash, savings, checking, time deposits, and money market funds. Use the amount reported on the FAFSA
form.
Net worth of investments. Includes real estate (excluding primary residence), vacation homes, income producing
property, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, and qualified education benefits.
Adjusted net worth of business and/or investment farm. Use <Table B2: Business/Farm Net Worth Adjustment=
in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide to adjust the total reported on the FAFSA form.
Second, the student9s (and spouse9s) discretionary net worth is calculated by subtracting the asset protection
allowance (<Table B3: Asset Protection Allowance= in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide)
from the student9s (and spouse9s) net worth.
Finally, the student9s (and spouse9s) net worth is multiplied by the conversion rate of 20% to determine the student9s
contribution from assets. If the contribution from assets is negative, it is set to zero.
SAI Calculation 3 Independent Student Without Depen dents Other Than a
Spouse
The student9s SAI is determined by adding the student9s contribution from income and the student9s contribution from
assets. The SAI may be negative (but not less than -1,500).
Formula C4Independent Student With Dependents Other Than a Spouse
The SAI for an independent student with dependents other than a spouse is calculated using FAFSA data for the student
and spouse. The FPS calculates a contribution from available income and a contribution from assets; the SAI is the sum of
these two values.
Contribution Fom Available Income
Student9s (and Spouse9s) available income. The student9s (and spouse9s) available income is calculated by
subtracting certain allowances from the student9s (and spouse9s) total income. These allowances account for certain
nondiscretionary expenses, such as taxes and basic living expenses. Once a minimum level of support has been offset for
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those expenses, the formula assumes that the remaining income is available for discretionary purposes, including paying
for a postsecondary education. The available income can be a negative number.
The student9s (and spouse9s) available income is the sum of the taxable and untaxed income minus amounts reported in
the income but excluded from the formula (offsets and allowances).
Student9s (and spouse9s) taxed/untaxed income. The sum of the following items, reported on a U.S. tax return, is the
student9s (and spouse9s) total income:
Student9s (and spouse9s) AGI
Student9s (and spouse9s) deductible payments to self-employed SEP, SIMPLE, Keogh, and other qualified retirement
accounts
Student9s (and spouse9s) tax-exempt interest
Student9s (and spouse9s) untaxed IRA/pension distributions (excluding rollovers)
Student9s (and spouse9s) foreign income exclusion
Student9s (and spouse9s) income offsets. The sum of the following items decreases the student9s (and spouse9s) total
income:
Student9s (and spouse9s) taxable college grant and scholarship aid (included as income). This amount is
self-reported on the FAFSA form.
Student9s (and spouse9s) education credits. Use the amount reported on the FAFSA form.
Student9s (and spouse9s) Federal Work-Study (FWS). Schools annually report FWS earnings by individual
earners to the Department. ED will then use this information to report FWS on the individual earner9s FAFSA form.
Student9s (and spouse9s) income allowances. The sum of the following allowances reduces the student9s (and
spouse9s) total income:
U.S. income tax paid. Use the amount reported on the FAFSA form.
Student9s (and spouse9s) payroll tax allowance. Use <Table C1: Payroll Tax Allowance= in the 2025-26 Student
Aid Index (SAI) and Pell Grant Eligibility Guide. Apply the rates shown in each step of the table to the total income
earned from work in 2022 for the student (and spouse) as reported on the FAFSA form. The total allowance for
payroll taxes is never less than zero.
Income protection allowance. Use <Table C2: Income Protection Allowance 3 Married with Dependents= in the
2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide for married or remarried students. Use <Table C3:
Income Protection Allowance 3 Single with Dependents= for unmarried students (single, separated, divorced, or
widowed) and married students (married or remarried).
Employment expense allowance. The allowance is 35% of the student9s (and spouse9s) income earned from work
or a maximum allowance, whichever is less. The maximum allowance is updated annually. See the 2025-26 Student
Aid Index (SAI) and Pell Grant Eligibility Guide for the current year allowance amount. The employment expense
allowance is never less than zero.
Student9s (and Spouse9s) Contribution From Assets
The full formula uses the student9s (and spouse9s) assets and determines a <contribution from assets.=
First, the student9s (and spouse9s) net worth is calculated by adding the following assets reported on the FAFSA form.
Cash, savings, checking, time deposits, and money market funds. Use the amount reported on the FAFSA
form.
Net worth of investments. Includes real estate (excluding primary residence), vacation homes, income producing
property, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, and qualified education benefits.
Adjusted net worth of business and/or farm. Use <Table C4: Business/Farm Net Worth Adjustment= in the 2025-
26 Student Aid Index (SAI) and Pell Grant Eligibility Guide to adjust the total reported on the FAFSA form.
Second, the student9s (and spouse9s) discretionary net worth is calculated by subtracting the asset protection
allowance (<Table C5: Asset Protection Allowance= in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide)
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from the student9s (and spouse9s) net worth.
Finally, the student9s (and spouse9s) net worth is multiplied by the conversion rate of 7% to get the student9s
contribution from assets. If the contribution from assets is negative, it is set to zero.
SAI Calculation - Independent Student With Dependen ts Other Than a
Spouse
This is the final step in determining the student9s SAI. The student9s available income and contribution from assets are
added together to determine the student9s adjusted available income, which can be a negative number. The total
student9s contribution from adjusted available income is calculated from the amounts and rates in <Table C6: Assessment
from Adjusted Available Income= in the 2025-26 Student Aid Index (SAI) and Pell Grant Eligibility Guide. The rates in Table
C6 increase from 22% to 47% as the adjusted available income increases. This is based on the principle that as income
increases beyond the amount needed to maintain a basic standard of living, the portion used for family maintenance
decreases and the portion available for discretionary purposes increases. Therefore, a progressively larger amount of
income may be contributed toward postsecondary educational costs. The number resulting from the assessment
according to Table C6 is the student9s SAI and may be negative.
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Chapter 4
Verification, Updates, and Corrections
Because students sometimes make errors on their application, there is a process for verifying applications and making
corrections. The FAFSA Processing System (FPS) selects which applications are to be verified, but you also have the
authority to verify additional students.
You must verify applications selected by the FPS of students who will receive or have received subsidized Title IV aid, as
defined below. Verification is not required for students who are only eligible for unsubsidized Title IV aid (however, see
<Verification exclusions= later in this chapter for an important caveat). While graduate students are ineligible for most
types of subsidized Title IV aid, they are eligible for Federal Work-Study and would need to complete verification if they
are selected and receive that aid. Students who are eligible for both subsidized and unsubsidized Title IV aid may not
avoid verification by accepting only unsubsidized aid; they must complete verification to receive any Title IV aid (see the
<Disbursing unsubsidized aid= section later in this chapter for more information).
Required Policies and Procedures
Your school must have written policies and procedures about the following:
The time in which students must submit verification documentation;
The consequences for failing to submit those documents in time;
The method you use to notify students if their Student Aid Index (SAI) and Title IV aid amounts change;
The procedures you or students follow to correct FAFSA data; and
The procedure you follow to refer a student to the Office of Inspector General (OIG) (see Chapter 5 of this volume).
Your school must provide the following to students selected for verification in a timely manner:
A clear explanation of their role in the process,
A list of documents they need to submit, and
Deadlines they must meet and the consequences of failing to meet them.
The FSA Assessments are located as additional resources in the FSA Handbook portion of the Knowledge Center. You can
use the verification assessment to evaluate your verification process. In addition, the Department has a list of questions
and answers about verification located within our Program Integrity Q & A website.
Subsidized student financial assistance programs
34 CFR 668.52 <Subsidized student financial assistance programs=
Unsubsidized student financial assistance programs
34 CFR 668.52 <Unsubsidized student financial assistance programs=
Policies and Procedures
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Verification Selection and Professional Judgment (PJ)
You must complete verification for a selected student before you exercise professional judgment (PJ) to adjust any values
used to calculate the SAI. But a PJ adjustment does not require you to verify an application not selected for
verification.
Once the Department selects a FAFSA application for verification, every subsequent transaction for that award year, even
one resulting from PJ, will indicate that the student is selected for verification.
If a FAFSA that is not selected for verification is later corrected, that can result in the application being selected. However,
when professional judgment is used to adjust an application that is not selected for verification and the FAA correctly
indicates the PJ flag on the ISIR, the FPS prevents the subsequent transaction from being selected for verification.
Applications and Information to be Verified
A menu of potential verification items for each award year will be published in the Federal Register. The Department
published 2025-26 FAFSA information to be verified and acceptable documentation in the September 4, 2024 Federal
Register Notice (89 FR 71893).
A student9s FAFSA Submission Summary and Institutional Student Information Record (ISIR) will indicate if a student is
selected for verification. On the FAFSA Submission Summary, there will be an asterisk (*) next to the SAI and a comment
in the <Application Status= section informing the student that their school has the authority to ask for additional
documentation to complete verification. Applicants will need to verify all the FAFSA items that apply to them. On the ISIR,
you will see a verification indicator tracking flag set to a value of <Y= and a verification tracking group (V1, V4, or V5) to
indicate placement in one of the verification tracking groups.
34 CFR 668.53
Verification and PJ
34 CFR 668.53(c)
Verification items
34 CFR 668.56
Acceptable documentation
34 CFR 668.57
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School-Selected Verification
In some cases, you (the school) may choose to select a student for verification. You must verify any information you have
reason to believe is incorrect on an application. You may also, at your discretion, require a student to verify any FAFSA
information and provide reasonable documentation according to consistently applied school policies. In either case you
may, but are not required to, include any of the FPS verification items not already included. Students selected for
verification by the school are subject to the same verification requirements as FPS-selected applications, including
deadlines, allowable tolerances, and interim disbursement rules.
When schools choose to verify an item other than those the Department selects, they may delay disbursing Title IV aid
until verification is completed if the school-selected item can affect the student9s Title IV eligibility, such as an item about
dependency status. But schools cannot delay disbursing Title IV funds when the item has no bearing on Title IV aid. For
example, if your school is verifying home equity of a family9s primary residence to determine student eligibility for school
or state aid, you may not delay Title IV disbursements as the value of the family9s primary residence is excluded from
assets in the SAI formula.
Verification Tracking Groups
Students who are selected for verification by the Department will be placed in one of three verification groups (V1, V4, or
V5) to determine which FAFSA information must be verified. Groups V2, V3, and V6 are reserved for future use by the
Department.
V14Standard Verification Group
Tax filers (student, student spouse, parent, and parent spouse/partner, as applicable) must verify the following:
Adjusted gross income
Income earned from work
U.S. income tax paid
Untaxed portions of IRA distributions
Untaxed portions of pensions
IRA deductions and payments
Tax exempt interest income
Education Credits
Foreign income exempt from federal taxation
Family size
Non-tax filers (student, student spouse, parent, and parent spouse/partner, as applicable) must verify the following:
Income earned from work
Family size
V44Custom Verification Group
Students must verify the following:
Identity
Statement of educational purpose (SEP)
V54Aggregate Verification Group
This group is essentially a combination of V1 and V4. Tax filers and non-tax filers must verify the items listed in the
Standard Verification Group (V1). Students must also verify their identity and sign a statement of educational purpose.
Changing Tracking Groups
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A student may move from Verification Tracking Group V1 or V4 to group V5 based on corrections made to their FPS record
or on other information available to the Department. If verification was already completed for the previous group, the
student is only required to verify the V5 information that was not already verified. If verification was not completed for the
previous group, the student needs to verify all the V5 information.
No disbursements of Title IV aid may be made until the V5 verification is satisfactorily completed. If the student doesn9t
complete verification, the school is not liable for any Title IV aid it disbursed prior to receiving the group V5 ISIR. The
student is liable for the full amount because without verification there is no evidence they were eligible for that aid. See
the October 31, 2016 Electronic Announcement for more information about disbursements and potential return of funds
when students are selected for verification.
Reporting Results for Groups V4 and V5
You must report the verification results of identity for any student for whom you (1) receive an ISIR with tracking flag V4
or V54as selected by the FPS, not your school4and (2) request verification documentation.
You are required to report results no more than 60 days following your first request to the student for documentation of
identity. Inaccurate and untimely reporting may subject your school to findings on your annual compliance audit or a
program review. If there is a change in a result you have already submitted, you can submit the new code using the
above process and must make that change within 30 days of becoming aware that a change occurred. The most recent
submission will supplant prior award year submissions.
Individual Reporting
When the Verification of Identity function is available in the FAFSA Partner Portal (FPP), you will see a list of applications
who were selected for either V4 or V5 identity verification who also listed your school on their FAFSA form. You can filter
the list by Name or SSN or sort the records alphabetically, in ascending or descending order. You can select from the
following dropdown options:
Display all 3 Default option;
Display not submitted 3 Displays only applicants for whom no results have been provided; or
Display submitted 3 Displays only the applicants for whom results have been provided.
For the 2025-26 award year, you will then enter one of the following numeric codes that most applies:
1-Verification completed in person, no issues found
2-Verification completed remotely, no issues found
3-Verification attempted, issues found with identity. (You did not receive acceptable documentation for the SEP or
identity.)
5-No response from applicant or unable to locate
Note: Numeric codes 4 and 6 are reserved by the Department for future use.
Batch Reporting
Batch reporting may not be available at the time you are required to begin reporting identity verification for the 2025-26
award year. However, these instructions are provided for future use when this functionality becomes available.
Note: The following section provides guidance based on the assumption that the Verification of Identity
functionality is available in the FAFSA Partner Portal (FPP). However, this functionality was delayed and may not
be available. The Department provided flexibility to report any V4 or V5 initial identity outcomes or changes within
60 days or 30 days respectively of the normal timeframe requirement or when the FPP Verification of Identity
function becomes available, whichever is later. See Electronic Announcement GENERAL-24-63 for additional
information.
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You can submit verification results by uploading a .CSV file with the data for up to 2,000 students. Each row must contain
only one record and have the following elements, each in their own column:
Applicant9s nine-digit Social Security number;
Last name; and
Verification of identity result numeric code from above.
Verification Exclusions
There are times when you don9t need to verify a student9s application. You are, however, still required to resolve
conflicting information (except when a student dies during the award year or when they are no longer enrolled and will
not re-enroll; see Chapter 5). You must document the basis for the verification exclusion. Other information not excluded
must still be verified according to all other requirements.
You don9t have to verify FAFSA information of a student in the following situations:
Death of the student. You don9t have to continue verification if you made an interim disbursement and the student
died before verification was completed. You cannot make any additional disbursements, except for FWS funds
already earned, to any of the student9s beneficiaries. You cannot originate or disburse their Direct Subsidized Loan.
Further, you cannot consider any interim disbursement you made of Pell or FSEOG funds or provisional FWS
employment to be an overpayment.
Not an aid recipient. The student won9t receive Title IV aid for reasons other than a failure to complete verification.
This includes being ineligible for that aid and withdrawing without receiving it.
The applicant is eligible to receive only unsubsidized student financial assistance. However, students
selected for V4 or V5 verification should complete it in accordance with the answer to DOC-Q18 on the Program
Integrity Questions and Answers 3 Verification page.
Applicant verified by another school. The student completed verification for the current award year at another
school before transferring. Their FAFSA data must be the same as it was at the previous school, and you must get a
letter from that school stating that it verified the student's application and providing the transaction number of the
pertinent valid ISIR.
Post enrollment. The student was selected for verification after ceasing to be enrolled at your school, they do not
intend to reenroll for the award year, and no further (including late) disbursements will be made.
Unless you have reason to believe it is inaccurate, you don9t have to verify the reported FAFSA information of the parents
of a dependent student if any of the following apply (including in cases where there is only one parent):
Both parents are mentally incapacitated.
Both parents, or the custodial parent, has died.
The parents are residing in a country other than the United States and can9t be contacted by normal means.
The parents can9t be located because the student does not have and cannot get their contact information.
Unless you have reason to believe it is inaccurate, you don9t have to verify the reported FAFSA information of the spouse
of an independent student if any of the following apply:
The spouse has died.
The spouse is mentally incapacitated.
The spouse is residing in a country other than the United States and can9t be contacted by normal means.
The spouse can9t be located because the student does not have and cannot get their contact information.
Verification Exemption Example
AVG, Chapter 4, Example 1: A student is enrolled in their local community college and their application is
selected for verification. The student provides their spouse9s information on the application but now explains that
the spouse recently moved out and is unreachable. The student provides their school documents to show that
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Verification Following Disasters
The Dear Colleague Letter GEN-17-08 gives general guidance for awarding aid in federally declared disasters. It states
that the Secretary will not enforce the verification requirements during the award year for applicants whose records were
lost or destroyed because of a disaster if the school has tried to preserve and reconstruct any records. The school must
document when it does not perform verification for this reason and use status code <S= when reporting the disbursement
of Pell Grants to affected students. Also, the requirement for dependent students to submit a statement signed by a
parent regarding family size is waived if the parents cannot provide the signature due to the disaster. The school must
note why no parent was able to provide the statement.
Schools that experience a local disaster (rather than a federally declared one) that affects Title IV administration should
consult their regional school participation division.
Acceptable Documentation
The FAFSA Simplification Act requires that, wherever possible, the Department use data received directly from the IRS to
calculate a student9s SAI and Pell Grant award. The Fostering Undergraduate Talent by Unlocking Resources for Education
Act (FUTURE Act) requires the Department of Education to access tax information held by the IRS pertaining to FAFSA
applicants4and, where applicable, their parents and spouses4through a secure method: the FUTURE Act Direct Data
Exchange (FA-DDX). The FUTURE Act amended the Internal Revenue Code (IRC) to mandate the disclosure of FTI directly
from the IRS to the Department with an individual9s consent and approval. The FUTURE Act also made providing consent
and approval for the exchange of FTI a requirement for receiving federal student aid.
Applicants and contributors will be required to provide consent and approval to retrieve FTI directly from the IRS. When
FTI is received from the IRS via the FA-DDX, the FTI received is considered verified and no additional documentation is
necessary. As a result, the FA-DDX is the fastest, easiest, and most secure method of meeting income and tax verification
requirements. The September 4, 2024 Federal Register Notice gives the documentation required for verifying 2025-26
application data, which depends on the item verified, as explained in this section.
If you use a verification document, be sure that it is signed, that all required sections are completed, and that any
relevant tax or alternative documents are attached. Copies of original documents are acceptable. An original signature on
an original document, an original signature on a copy of a document, and a copy of a document with an original signature
on it are all valid signatures, unless specifically noted in this chapter. If a copy of the tax return is used, the filer (or at
least one of the filers of a joint return) must sign it or the tax preparer must provide their name and SSN, EIN, or PTIN.
Suggested Verification Text
The Department has developed suggested text that you may use to create a verification document and to verify non-tax
items, such as family size. To review the suggested text for 2025-26, please see Dear Colleague Letter GEN-24-10. The
suggested text fulfills verification requirements, but schools do not have to use it, except as noted below. Instead, they
may develop and use their own (or someone else9s) text, forms, documents, statements, and certifications that are
specific to the items required to be verified for a particular student or group of students at the school. However, schools
they tried to locate their estranged spouse. The school determines that the student doesn9t need to verify their
spouse9s tax and income information. However, the student must still verify their own information. The school
may also choose to use professional judgment to remove the spouse9s information from the student9s FAFSA form.
Verification Exclusions
34 CFR 668.54(b)
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must not put the seal of the Department of Education on any verification documents.
The one exception is that schools must use the exact language provided in the <Statement of Educational Purpose= for
students who are placed in verification tracking groups V4 or V5. This does not include the accompanying notary9s
certificate of acknowledgment; for that the school may use some other form, such as the one its state uses.
Income Information for Tax Filers
As already noted, the importation of IRS tax data (FTI) via the FA-DDX serves as verification documentation. Applicants
and contributors will not see or be given the option to change FTI imported directly from the IRS via the FA-DDX. Data
transferred in this manner is considered verified, but there may be other data elements that must still be verified with
additional documentation.
FAFSA
Information
Acceptable Documentation
(a) Adjusted
Gross
Income
(AGI)
(b) Income
Earned from
Work
(c) U.S.
Income Tax
Paid
(d) Untaxed
Portions of
IRA
Distributions
(e) Untaxed
Portions of
Pensions
(f) IRA
Deductions
and
Payments
(g) Tax
Exempt
Interest
Income
(h)
Education
Credits
(i) Foreign
Income
Exempt
from Federal
Taxation
Items (a) through (h), if transferred directly from the IRS and unchanged, do not need to be verified.
When information is not transferred from the IRS, and for item (i), the following documentation is
sufficient for verification:
(1) A transcript obtained at no cost from the IRS or other relevant tax authority of a U.S. territory
(Guam, American Samoa, the U.S. Virgin Islands) or commonwealth (Puerto Rico and the Northern
Mariana Islands), or a foreign government, that lists 2023 tax account information of the tax filer; or
(2) A signed copy of the income tax return)and the applicable schedules that were filed with the IRS
or other relevant tax authority of a U.S. territory, or a foreign government that lists 2023 tax account
information of the tax filer.
(3) If item (d) or (e) contains a rollover, a signed statement confirming the amount of the rollover in
the untaxed pension or IRA distribution. Note that even if (d) or (e) are transferred as FTI, rollovers
still need to be verified as they are manually entered.
Qualified rollovers from one retirement account to another are not taxable, and they should not be counted as untaxed
income (Untaxed portions of IRA distributions (d) or Pensions (e) above). Since neither a tax transcript nor FTI transferred
via the FA-DDX identifies rollovers, you must get documentation from the tax filer. This could be a signed statement with
the rollover amount or a notation by the filer on the tax transcript or return that includes the word <rollover= beside any
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applicable item, like the instruction the IRS gives for Form 1040. The annotation must be signed and dated by the filer.
See VI-Q4 on the Program Integrity Questions and Answers 3 Verification.
Income Information for Non-Tax Filers
FAFSA
Information
Acceptable Documentation
Income
Earned from
Work
For an individual who has not filed and, under IRS or other relevant tax authority rules (e.g., the Republic
of the Marshall Islands, the Republic of Palau, the Federated States of Micronesia, a U.S. territory or
commonwealth or a foreign government), is not required to file a 2023 income tax return4
(1) A signed and dated statement certifying4
a. That the individual is not required to file a 2023 income tax return; and
b. The sources and amounts of earnings, other income, and resources that supported the individual(s)
for the 2023 tax year;
(2) For individuals without a Social Security number (SSN), Individual Taxpayer Identification Number
(ITIN), or Employer Identification Number (EIN), that they do not have an SSN, ITIN, or EIN;
(3) A copy of IRS Form W-2 for each source of 2023 employment income received or an equivalent
document; and
(4) Except for dependent students, verification of non-filing)for individuals who would file a return with
a relevant tax authority other than the IRS dated on or after October 1, 2024.
For non-tax filers/you must request a W-2 form for each source of 2023 employment income and a signed statement
certifying that the person has not filed and is not required to file a 2023 tax return. You must also get a signed statement
giving the sources and amounts of the person9s income earned from work not found on W-2s. Students may sign on a
nonfiling spouse9s behalf.
For residents of the Freely Associated States, a copy of the wage and tax statement from each employer (substitute for W-
2s) and a signed statement identifying any other employment income for the year not identified on the wage and tax
statement is acceptable. Persons from a U.S. territory, commonwealth, or a foreign country who are not required to file a
tax return can provide a signed statement, as well as any supporting documentation they might have (e.g., a form
comparable to a U.S. W-2), certifying their income.
The collection of documentation to verify income earned from work is used to determine if the applicant (and the
applicable spouse or parent) was required to file a U.S. income tax return (or a return with a relevant tax authority) for the
2023 tax year. If the individual should have filed but failed to do so, that is conflicting information that you must resolve.
If a W-2 is not Available
If an individual who is required to submit an IRS Form W-2 did not save a copy, they should request a replacement W-2
from the employer who issued the original. A W-2 transcript from the IRS is also acceptable though it generally is not
available until the year after the W-2 information is filed with the IRS (e.g., 2025 for 2023 information filed in 2024). If
they are unable to obtain one in a timely manner, you may permit them to provide a signed statement that includes the
AGI and Income Tax Documentation
34 CFR 668.57(a)
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amount of income earned from work, the source of that income, and the reason why the W-2 is not available in a timely
manner.
Family Size
Since family size is based on the number of individuals listed and claimed on the IRS tax return, if transferred directly
from the IRS and used, family size does not need to be verified. However, when information is not transferred from the
IRS, or if the applicant updated their family size when presented with the opportunity to do so on their FAFSA, the
following documentation is sufficient for verification:
A statement signed by the applicant and, if the applicant is a dependent student, by one of the applicant's parents,
that lists the name and age of each family member for the 2025326 award year and the relationship of that family
member to the applicant.
For a dependent student, you don9t have to verify family size in the following situations:
The family size is reported as two with a single, divorced, separated, or widowed parent; or
The family size is reported as three with parents who are married or are unmarried and living together.
For an independent student, you don9t have to verify family size in the following situations:
The family size is reported as two if the student is married; or
The family size is reported as one if the student is single, divorced, separated, or widowed.
Additionally, you don9t need to verify family size if the applicant manually updated their family size and the number is the
same as the family size derived from data transferred directly from the IRS.
Keep in mind that family size needs to align with the answers to the relevant dependency status questions, such as the
one about having dependents other than a spouse. If verification reveals that answers do not match, the FAFSA form
needs to be corrected so that the information is in alignment.
Identity and Statement of Educational Purpose
Students should appear in person at your school and present a valid, unexpired, government-issued photo identification
(ID) such as a U.S. passport, a driver9s license, or other state-issued ID. <Unexpired= means the ID has not expired at the
time it is checked, even if it will expire before the end of the award year. A valid government-issued photo identification is
one issued by the U.S. government, any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, a
federally recognized American Indian and Alaska Native Tribe, American Samoa, Guam, the Virgin Islands, the
Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia,
or the Republic of Palau.
You must maintain an annotated copy of that ID that includes the date it was received and the name of the person your
school authorized to receive it. Your school may determine which of its staff are authorized to review an applicant9s
identity. We recommend that the person(s) be full-time staff and the school keep a record of who they are.
The following are not sufficient for identity verification:
An ID issued by a state university or college.
A military ID (18 U.S. Code § 701 prohibits it from being photocopied).
Family Size Documentation
34 CFR 668.57(b)
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Students must also sign (it must be a <wet= signature) a statement of educational purpose that certifies who they are and
that the federal student aid they may receive will only be used for educational purposes and for the cost of attending the
school for the 2025-26 year. Unlike the other suggested text provided in Dear Colleague Letter GEN-24-10 the text for the
<Statement of Educational Purpose= is not suggested4you must use the exact language given (though the student9s
identification number is optional if collected elsewhere on the same page as the statement). After examining the
statement, you may convert it into an electronic record. You must keep that or the original for at least the required Title IV
record retention period.
A student who is unable to appear at your school must go to a notary public and sign the statement of educational
purpose (see <Verification for Confined or Incarcerated Individuals= for an exception to this requirement). They must
submit to your office that signed statement (again, with the <wet= signature), a certification from the notary that they
appeared before the notary and presented a government-issued photo ID confirming their identity, and a copy of the
same ID. Currently the Department does not authorize the use of online notary services as an alternative to traditional, in-
person notary services.
The
REAL ID Act affects people entering certain restricted areas where identification is required: federal facilities,
nuclear power plants, and federally regulated commercial airplanes. Because there are currently no restrictions under the
act on agencies accepting an ID that is not compliant with the act (typically one marked <not for federal identification=)
for other purposes, such an ID is acceptable for verification of identity/statement of educational purpose. It must be a
government-issued ID that has not expired and includes the student9s photo and name.
Reviewing and Using Documentation
Using the Tax Return
Although FTI transferred via the FA-DDX or an IRS tax transcript are preferable for completing verification, students can
also submit a copy of the tax return and any applicable schedules. However, see the guidance under <victims of identity
theft= later in this volume for an important caveat. The tax return will likely have been filed electronically with one of a
variety of methods. These include do-it-yourself methods as well as completion by a tax preparer. Each method should
permit printing of a paper copy of the return, though the e-file format might not contain every line item, showing instead
only the data the tax filer provided. For example, if Item 2b, <Taxable interest,= does not appear on such a return, that
means no taxable interest income was reported.
You can accept a paper or electronic copy of the return if it contains a signature. Acceptable examples would include, but
are not limited to:
A signed paper return that the student either mailed or brought to the school.
A signed paper return that the student faxed or scanned and emailed.
An electronic copy that the student signed with a stylus or finger.
An electronic copy that we consider signed because it has an image of the student9s signature attached.
However, a signature on Form 8879, the IRS e-file Signature Authorization, is not an acceptable substitute for a signature
on the tax return.
For persons who have a tax professional prepare their return, instead of a copy of the return with the filer9s signature, you
may accept one that has the name and PTIN of the preparer or has their SSN or EIN and has been signed, stamped, typed,
or printed with their name and address. Note that the IRS requires paid preparers to have a PTIN.
If a person did not retain a copy of their 2023 tax information and it cannot be located by the IRS or the relevant
government agency, they must submit a signed statement indicating that they did not keep a copy of their tax
information as well as documentation from the taxing authority indicating that the information cannot be located. Also,
you must accept for an IRS filer either a copy of Form W32 for each source of employment income received for 2023 or, if
they are self-employed, a signed statement certifying the amount of AGI and taxes paid. For someone who filed an
income tax return with a government of a U.S. territory or commonwealth or a foreign central government, accept a copy
of a wage and tax statement or a signed statement certifying the amount of AGI and taxes paid for 2023.
The following chart shows the tax form line numbers for the required verification items from IRS Form 1040 (or IRS Form
1040-NR).
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Item 2023 IRS Form 1040 (or 1040-NR)
AGI Line 11
Income earned from work* Line 1z + Schedule 1: Lines 3 + 6
U.S. income tax paid Line 24
Untaxed portions of IRA distributions (excluding rollovers) Lines 4a minus 4b
Untaxed portions of pensions (excluding rollovers) L ines 5a minus 5b
IRA deductions and payments Schedule 1: Lines 16 + 2 0
Tax exempt interest income Line 2a
Education credits Line 29 + Schedule 3: Line 3
Foreign income exempt from federal taxation Schedule 1: Line 8d
*Note: Negative values should be set to zero when calculating Income Earned from Work. For example, if IRS Form 1040,
line 1z is $50,000 and Schedule 1, line 3 is -$10,000, the income earned from work value should be $50,000.
Using the Tax Transcript
If applicants or contributors are unable to transfer data via the FA-DDX, the student, spouse, and/or parents, as
applicable, can use an IRS tax return transcript to document information from the tax return. Before requesting a
transcript, they should allow enough time to pass after filing the return; it takes the IRS two to four weeks to process
returns filed electronically and six to eight weeks for mailed returns. Tax transcripts submitted to your school for
verification do not need to be signed by the tax filer (but it is encouraged) unless you have reason to doubt their
authenticity.
There are a few ways to request a tax return transcript. The IRS provides instructions on all options at
www.irs.gov/individuals/get-transcript. Per the IRS, the fastest and easiest way is to access personal tax records online,
which allows the tax filer to get a real-time, electronic transcript. Tax filers who opt to request transcripts by mail or
phone will receive a mailed transcript in return. Schools can accept and copy transcripts originally obtained from the IRS.
The IRS9s Income Verification Express Service (IVES) allows a third party to request and receive a tax filer9s transcript. The
IVES participant submits a 4506-C form, signed by the tax filer, and receives the transcript from the IRS, which charges a
small fee for the service. Schools may apply to participate in IVES. They may also use a transcript from another IVES
participant (which is not considered a third-party servicer in this case) for verification if they have no reason to doubt its
authenticity. Schools may not pass on the charge for using this service to the student.
To combat identity theft, the IRS masks much of the personally identifiable information on the transcript. For example,
only the last four digits of any SSN or account or telephone number are displayed. When requesting a transcript,
taxpayers will be prompted to create a <customer file number= which appears on a requested transcript to help facilitate
identification. This can be something like a student9s college ID number or some other number (but not an SSN). See the
October 4, 2018, announcement and the IRS news release for more information.
Each year the Department provides a tax return transcript matrix to assist schools with reviewing tax data. Specifically,
the tax return transcript matrix consists of a chart of the FAFSA and ISIR tax items used for verification and their
corresponding line items from the various IRS tax returns and the tax transcript for the appropriate award year. At the
time the 2025-26 Application and Verification Guide was published, the 2023 tax return transcript matrix had not been
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posted to FSA9s Knowledge Center. Please stay tuned to the electronic announcement section in the Knowledge Center for
the latest information.
The tax return transcript may show a per computer amount for some tax data that is different from what the filer
reported to the IRS. The per computer amount should be used because it corrects mathematical errors and is more
accurate than what appears on the original return. Also, if a transcript indicates <recomputed <tax return item> per
computer,= that amount may be ignored for verification.
Schools may accept for verification any IRS tax transcript that includes all the necessary information: adjusted gross
income, income earned from work, U.S. income tax paid, untaxed IRA distributions, untaxed pensions, education credits,
IRA deductions, tax exempt interest, and foreign income exempt from federal taxation. Because the <record of account
transcript= and the <tax return transcript= include all the above information, either may be used for verification. The
<wage and income transcript= only provides wage information and therefore can only be used in lieu of a W-2 form.
Filers of non-IRS tax returns. You may accept a transcript from a government of a foreign nation or a U.S. territory or
commonwealth that has all the filer9s income and tax data to be verified. You may also accept a copy of the tax return,
which must be signed by the filer or one of the filers of a joint return. Use the income and tax data that most closely
corresponds to what is on the IRS tax return and convert monetary amounts into U.S. dollars as appropriate. If you
question the accuracy of the information on the signed copy of the return, the filer must provide you with a copy of the
tax account information issued by the tax authority. See DOC-Q28 on the Program Integrity Questions and Answers 3
Verification.
Unique Situations and Exceptions
Joint Return Filers Who Are No Longer Married
When a student, or parents of a dependent student, filed a joint return and have separated, divorced, married someone
else, or been widowed, the student must submit the following:
A transcript obtained from the IRS or other relevant tax authority that lists 2023 tax account information of the tax
filer(s); or
A copy of the income tax return and the applicable schedules that were filed with the IRS or other relevant tax
authority that lists 2023 tax account information of the tax filer(s); and
A copy of IRS Form W-2 for each source of 2023 employment income received or an equivalent document.
Using a Joint Return to Figure Individual AGI and Taxes Paid
If the filer of a joint return has become widowed, divorced, or separated since filing the return, it may be necessary to
determine the individual9s income and taxes paid using the joint return and W-2 forms. If a W-2 is not available (the filer is
self-employed, for example) or if a duplicate copy from the employer who issued the original W-2 is not available in a
timely manner, the school may permit the filer to provide a signed statement that certifies the base year AGI and U.S.
taxes paid.
Add the income amounts from the individual9s W-2 forms to any other income that can be extracted from the joint return.
Any interest or business income earned on joint accounts or investments should be assessed at 50%. The same procedure
should be used to divide business or farm profits or losses. Also, if the AGI listed on the joint return was adjusted, you
should reduce the individual9s AGI by the portion of the adjustment that applies solely to individual on the FAFSA form.
Using the Tax Transcript
February 23, 2017 Electronic Announcement
IRS Transcript types
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Use one of the following methods to figure the individual9s taxes paid:
Tax table (preferred method). Using the IRS Tax Table or Tax Rate Schedule for the appropriate year, calculate
the amount of tax that would have been paid if a separate return had been filed. Use the deductions the individual
could have claimed if the individual had filed a separate return. (If itemized deductions were taken, count only the
portion of those deductions that could have been claimed on a separate tax return.)
Proportional distribution. Determine what percentage of the joint AGI was attributable to the individual, and then
assess the joint taxes paid by that same percentage.
Individuals With Filing Extensions
The IRS may grant a filing extension (beyond the automatic six-month extension) to an individual required to file a 2023
IRS income tax return. For an individual who receives such a filing extension, the student must submit the following:
A signed statement listing the sources of any 2023 income and the amount of income from each source;
A copy of the IRS's approval of an extension beyond the automatic six-month extension for tax year 2023;)
A copy of IRS Form W-2 for each source of 2023 employment income received or an equivalent document; and
If self-employed, the signed statement must indicate the amount of estimated AGI and U.S. income tax paid for tax
year 2023.
You may require individuals with a filing extension to provide final income information to you after the return has been
filed. If you do that, you must reverify the income information. If the student does not provide final income information,
see the guidance described under the <Deadlines and Failure to Submit Documentation= section later in this chapter on
failing to complete verification. See DOC-Q16 on the Program Integrity Questions and Answers 3 Verification.
For a person called up for active duty or qualifying National Guard duty during a war, another military operation, or a
national emergency, a school must accept a statement from the person certifying that they have not filed an income tax
return or a request for a filing extension because of that service.
Filers of Amended Returns
Separating a Joint Return Example
AVG, Chapter 4, Example 2: A student9s application is selected for verification. The student filed joint return
with their spouse in 2023 but have now divorced. The AGI on the student9s FAFSA matches the AGI of $56,500 on
the 2023 tax return, which means it9s wrong because it includes the student9s former spouse's income.
The student9s W-2 shows that their income for 2023 was $25,900, and the tax return shows $400 in interest.
Because it was interest on a joint savings account, the aid administrator adds $200 of it to the student9s income
and submits $26,100 as the corrected income.
The aid administrator then determines that if the student had filed their tax return as single in 2023, their
standard deduction would have been $13,850 (instead of $27,700 for married filers). The student9s income of
$26,100 minus $13,850 for the standard deduction results in $12,250 in taxable income.
The aid administrator uses the 2023 tax table to determine how much tax the student would have paid on this
amount, considering any applicable credits reported on the original return. With a taxable income of $12,250, the
tax amount from the tax schedule is $1,253.
To use the proportional distribution method instead, the aid administrator figures out what percentage of the joint
AGI student9s income represents. The percentage is 46% (26,100 ÷ 56,500 is .4619). The aid administrator then
multiplies the income tax paid as reported on the tax return ($3,019 for this example) by this percentage. The
student9s income tax by using this method is $1,394 (.46 x $3,019).
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Students or parents who file an amended return (IRS Form 1040X) and provide consent and approval to retrieve FTI via
the FA-DDX will not have their amended information transferred to the FAFSA form. The IRS will transfer only original tax
information to the FAFSA form via the FA-DDX. However, there is currently no indicator on the FAFSA form that the tax
return was amended and the original data may be inaccurate. If you are aware that an applicant or contributor filed an
amended return, you must update or correct the applicant9s FAFSA form. You must also check the PJ flag on the corrected
ISIR transaction so that FPS recalculates the student9s SAI and Pell Grant eligibility using the manually entered tax
information (instead of the FTI received via the FA-DDX).
If the applicant is selected for verification and you are aware that the applicant or a contributor has filed an amended
return, you must use the amended return information to complete verification. However, if you were not previously aware
that an applicant or contributor filed an amended return, you are not required to confirm whether an amended return was
filed as part of the verification process. You may still consider the FTI transferred from the IRS to be verified if you have no
reason to believe the applicant or a contributor filed an amended return.
Applicants or contributors may submit a signed copy of the filed 1040X form and one of the following documents to
complete verification:
Income and tax information from the IRS on an ISIR record with all tax information from the original tax return;
A transcript obtained from the IRS that lists 2023 tax account information of the tax filer(s); or
A signed copy of the 2023 IRS Form 1040 and the applicable schedules that were filed with the IRS.
Because the tax return transcript does not reflect changes to the original return by the filer or the IRS, it is, by itself, not
sufficient.
When an amended return was filed, you must submit any changes to nondollar items and to single monetary items of $25
or more.
Note that there may be instances when a student, spouse, or parent did not file a 1040X with the IRS but had their tax
and income information amended by the IRS. In such a case a school may accept one of the items mentioned above plus
documentation showing the IRS9s change(s).
Victims of Tax-Related Identity Theft
Individuals who are victims of tax-related identity theft cannot get a return transcript or have their FTI transferred via the
FA-DDX.
In the past we have requested individuals who are victims of IRS tax-related identity theft to obtain a Tax Return
DataBase View (TRDBV) transcript from the IRS for verification purposes. However, the Department is aware that TRDBV
transcript requests have been taking over a year to process. Due to the long processing time, we will instead require
individuals who are victims of IRS tax-related identity theft to provide a copy of the following:
A signed copy of the 2023 income tax return and applicable schedules the individual filed with the IRS; and
An IRS 4674C letter (a letter from the IRS acknowledging the identity theft) or a statement signed and dated by the
tax filer indicating that he or she was a victim of IRS tax-related identity theft, and the IRS is aware of it.
This change to required documentation was provided in Dear Colleague Letter GEN-24-10.
Verification for Confined or Incarcerated Individua ls
Confined or incarcerated individuals enrolled in approved prison education programs (PEPs) are eligible for Federal Pell
Grants.
For the 2025-26 award year, a confined or incarcerated individual as indicated through the incarcerated applicant flag will
only be required to verify their identity and statement of educational purpose if selected for Verification Tracking Group
V4 or V5. In addition, institutions are not required to verify a confined or incarcerated individual selected under
Verification Tracking Flag V1.
If a confined or incarcerated student is unable to submit a signed and notarized statement of educational purpose, a
school may accept a signed statement from an authorized official who works for the correctional facility or the oversight
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entity confirming to the school that the individual who completed the FAFSA form and was selected for verification is the
person signing the Statement of Educational Purpose.
Immigrants and Tax Filing
Immigrants are not exempt from tax filing. The IRS is more concerned whether a person is a resident or nonresident
rather than a legal or illegal alien. An alien is anyone who is not a U.S. citizen or national. A resident alien is one who
either is a permanent resident or has resided in the U.S. for a specific minimum amount of time (has met the substantial
presence test). All others are nonresident aliens. Resident aliens9 income is generally subject to tax in the same manner
as U.S. citizens9, and they file Form 1040. Nonresident aliens who are required to file a return submit Form 1040NR, which
is acceptable documentation for verification.
Immigrants who do not have an SSN and are unable to get one can apply with the IRS for an individual taxpayer
identification number (ITIN). The ITIN is only for tax purposes. It does not authorize a person to work, endorse his or her
legal status, or entitle them to the earned income credit or Social Security benefits.
See the IRS9s
Publication 519, U.S. Tax Guide for Aliens at www.irs.gov for more information.
Interim Disbursements
Interim disbursements are allowed either prior to completing verification or after verification but before receiving the
corrected FAFSA Submission Summary or ISIR. If you have no reason to question the accuracy of the information on the
FAFSA form, prior to completing verification you may at your discretion:
Make one disbursement of Pell and FSEOG funds for the applicant9s first payment period;
Permit FWS employment for the first 60 consecutive days after the student enrolls for the award year; or
Originate but not disburse a Direct Subsidized Loan.
If verification results in changes to the FAFSA information that you determine will not alter award amounts, you may at
your discretion also disburse a Direct Subsidized Loan prior to receiving the corrected valid FAFSA Submission Summary
or ISIR (defined as a FAFSA Submission summary or ISIR on which all the information reported on a student9s FAFSA form
is accurate and complete as of the date the application is signed).
Overpayments From Interim Disbursements
If you make an interim disbursement of Pell or FSEOG funds prior to verification and the student9s eligibility for Title IV
funds changes after you complete verification, your school is liable for any resulting overpayment. If you can9t eliminate it
by reducing subsequent disbursements or having the student return the money, your school must use its own funds to
Verification for Confined or Incarcerated Individua ls
34 CFR Part 668 Subpart P
Dear Colleague Letter GEN-24-10
Interim Disbursements
34 CFR 668.58
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reimburse the appropriate program by the earlier of 60 days after the student9s last day of attendance or the last day of
the award year.
If your school permits provisional FWS employment of students for up to 60 days prior to verification, your school is liable
for any overpayment it can9t recover by adjusting other aid, and it must reimburse the FWS account from its own funds.
Students must be paid for all work performed out of your school9s payroll account4they can9t be required to repay FWS
wages earned except when they are proven guilty of fraud.
Because the school made interim disbursements at its discretion, the school is ultimately responsible for repaying any
overpayment. Therefore, in this situation, a student does not owe a
Title IV overpayment and the school must not report
an overpayment to NSLDS or refer it to the Department for collection.
If you make an interim disbursement after completing verification but prior to receiving a correct valid FAFSA Submission
Summary or ISIR, and you fail to receive the FAFSA Submission Summary or ISIR within the deadlines discussed later in
this chapter, your school must use its own funds to reimburse the appropriate program and pay the student under your
own payroll account for all work performed.
Schools that Can9t Make Interim Disbursements
Schools on the Heightened Cash Monitoring 2 (HCM2) and Reimbursement payment methods (see Volume 4, Chapter 1 of
the FSA Handbook) must, as part of their request for Title IV funds from the Department, submit documentation showing
that students were eligible to receive the funds disbursed to them (and for which the schools are seeking reimbursement).
Because final determination of student eligibility includes completing verification, HCM2 and reimbursement schools may
not make interim disbursements.
Updating Information
Generally, a student cannot update information that was correct as of the date the application was signed because the
FAFSA form is a <snapshot= of the family9s financial situation as of that date. For example, if the student9s family sold
some stock after the student signed the FAFSA form and spent the money on an unreported asset such as a car, they
cannot update their information to show a change in assets. After the FAFSA form is signed, only certain items can be
updated under the following conditions:
All applicants whose dependency status changes must update that and the related FAFSA information
throughout the award year except when the update is due to the student9s marital status changing.
All applicants selected by the Department or a school for verification of family size must update family
size to be correct as of the date of verification unless the update is due to a change in the student9s marital status.
Applicants selected for verification are not required to document family size in a subsequent verification in the same
year if the information has not changed.
At your discretion you may update either dependency status or family size, even if the update is due to a change in the
student9s marital status, if you deem it necessary to address an inequity or to reflect more accurately the student's ability
to pay. Such a decision must be on a case-by-case basis, and you must document your reasons for it. You must also
update all other pertinent information, such as spousal income and taxes paid, to be consistent with the new marital
status. If you change the student's status to unmarried and that makes them dependent (because they were independent
only due to marriage), the student9s FAFSA form must be updated with their parents9 information. If the student is
selected for verification, update the application first, then complete verification of the updated application. Your school
may have a policy of not considering such updates after a specific census date.
Recovery of Funds From Interim Disbursements
34 CFR 668.61
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However, you cannot update the marital status of an already independent student whose dependency status has not
changed because of their marriage or divorce and who was not selected for verification. In such a case you must select
the student for verification if you want to exercise your discretion to update their marital status and all other associated
information.
Parent Post-Application Marriage
While the applicant does not typically update family size because of a change in their marital status, if the applicant is a
dependent student and their parent marries or remarries between application and verification, the student must update
family size to include the new stepparent. However, the student would not count the new stepparent9s income and assets.
A school can use professional judgment to include the stepparent9s income or to otherwise account for the change.
Birth of a Child
The number of dependents included in the family size is based on the number of individuals who are claimed as
dependents on either the applicant9s (if independent) or parent9s (if dependent) U.S. federal tax return. Therefore, unborn
children are not included in the family size, though the family size can be updated if the child is born and will receive
more than half of their support from the student (and spouse, if applicable) or parent (and parent spouse, if applicable)
during the award year.
When the child is born, you may update the family size in two circumstances:
1. If the addition of the newborn changes the student9s dependency status from dependent to independent, you must
update both the dependency status and family size.
2. If the applicant is selected for verification, you should update the family size to be accurate at the time you complete
verification. The newborn can be included in the family size if the child could be claimed as a dependent on the
student9s (if independent) or parent9s (if dependent) U.S. federal tax return.
If an update is not allowed under one of these two options, you may choose to exercise professional judgment on a case-
by-case basis to add the newborn to the family size if you determine that the student (or contributor) has a special
circumstance. See Chapter 5 of this volume for further discussion of professional judgment and special circumstances.
Correcting Errors
As explained in the last section, you only make updates in specified situations, but for students who are not selected for
verification, you or they must correct and submit for processing any errors reported on the original FAFSA form that would
change the SAI or the students9 eligibility for Title IV aid.
Changes in a Selected Applicant's FAFSA Form
For students who are selected for verification and receiving subsidized student aid, changes to any non-dollar item and to
any dollar item of $25 or more must be submitted for processing. Also, if you are required to submit any change through
FPS because of verification, you must submit all changes, including amounts that are below $25.
Updating information
34 CFR 668.55
Changes to FAFSA Information
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Pell Changes
If FAFSA data changes, recalculate the Pell Grant using the information on the corrected valid FAFSA Submission Summary
or ISIR. You can only pay an increased Pell Grant if you have that output document, and it supports an increased Pell
award.
If the FAFSA data change results in reduced Pell Grant eligibility and the student received an interim disbursement, adjust
subsequent disbursements as necessary to eliminate the overpayment. Failing that, the student should reimburse the Pell
Grant Program, or, if they do not return the overpayment, your school must reimburse the Pell program with its funds. If
the student received Pell Grant money as a regular disbursement, they are responsible for repaying the overpayment. See
Volume 4, Chapter 3 of the FSA Handbook for information on overpayments.
Campus-Based and Direct Loan Changes
If the correction results in a change in the SAI and the student received subsidized Title IV aid other than Pell Grant funds,
then adjust the student's aid package using the information on the corrected valid FAFSA Submission Summary or ISIR. If
there was an interim disbursement, comply with the relevant rules if the package must be reduced. If there was a regular
disbursement and the package must be reduced, comply with FSEOG overpayment rules or with the rules for managing
excess loan proceeds for Direct Subsidized Loans.
Selection After Disbursement
A student9s application might be selected for verification after corrections are submitted and the student has been paid
based on the previous unselected FPS transaction. You must verify their application before making further disbursements.
If verification does not justify aid already disbursed, then the student is responsible for repaying all aid for which they are
not eligible, though the student may keep any Direct Loan money they received and FWS wages earned. See the guidance
described under the <Deadlines and Failure to Submit Documentation= section later in this chapter for what happens if the
student fails to complete verification.
Disbursing Unsubsidized Aid
For students who are selected for Group V1 and are eligible for both subsidized and unsubsidized aid, a school may, on a
case-by-case basis and with proper documentation, disburse Direct Unsubsidized and PLUS loans prior to completing
verification that will be delayed. To avoid exceeding the student9s financial need, the school must consider the subsidized
aid they will receive and adjust the aid amounts after verification if necessary.
If the student never completes V1 verification, the student may keep the Direct Unsubsidized and PLUS loan aid that was
disbursed. However, if the institution determines that the student was ineligible when they received aid, see the relevant
34 CFR 668.59
Verification Selection After Disbursement Example
AVG, Chapter 4, Example 3: A student9s application isn9t selected for verification and they received Pell Grant
and Direct Loans in the fall. In December, the student submits a correction on their FAFSA Submission Summary
that causes the subsequent transaction to be selected for verification. The aid administrator at the student9s
school tells the student to submit verification documents to receive aid for the spring and keep the Pell funds the
student received for the fall. However, the student doesn9t submit the documents. The student does not have to
repay the Direct Loan they received in the fall, but the student does have to return the Pell Grant, and the school
must cancel the student9s aid package for the spring.
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guidance on returning aid in such situations in Volume 4, Chapter 3 of the FSA Handbook.
After Documentation Is Complete
When you have obtained all necessary verification documents from the student, you should compare them to the FAFSA
Submission Summary or ISIR you are reviewing for payment. If all the student9s information is correct or has been
corrected and there are no outstanding issues or unresolved conflicting information, you may award and disburse aid for
which the student is eligible.
Sometimes schools ask if even further verification is needed to resolve discrepancies between the ISIR and what the
student provided for verification. The answer is no unless you have reason to doubt the accuracy of the verification
information. Acceptable documentation either confirms that an item was right on the ISIR, or it is used to correct that
item. That is the purpose of verification; continued fact-finding is not necessary.
How to Submit Corrections and Updates
Corrections and updates can be submitted by the student on the FAFSA Submission Summary or the web or by the school
using the FAFSA Partner Portal or the Electronic Data Exchange (EDE). In addition to the following information, see also
Volume 3 of the 2025-26 FAFSA Specifications Guide.
Online FAFSA Form. Students and other contributors can correct previously submitted data that was not imported from
the IRS.
FAFSA Partner Portal or EDE. An FAA can submit corrections to a student9s application data using the FAFSA Partner
Portal. Your school can submit corrections and updates electronically by entering the data manually in the FAFSA Partner
Portal or by transmitting it to the FAFSA Processing System. However, you cannot update an applicant9s or contributor9s
personally identifiable information (PII) or consent and approval using EDE, a third-party software, or the FAFSA Partner
Portal.
If your school isn9t listed on the transaction you want to correct, the student must provide you with the DRN printed on the
FAFSA Submission Summary. You can then add your school in the next available institution field and gain electronic
access to the resulting corrected transaction. If all the fields are filled, the student must add your school code using the
FAFSA online.
Corrections and updates sent by a school must be based on reliable documentation in its possession that supports the
changes to applicant data or signed documentation from the student or contributor. Examples of reliable documentation
include applications for admission, acceptance letters, course registration information, or academic transcripts. Examples
of signed documentation from a student or contributor on which corrections and updates may be based include a FAFSA
Submission Summary, a copy of the correction or update, student/contributor statement, verification documents, or
copies of tax returns or transcripts. These do not have to be wet signatures.
The FPS will process the change, send an ISIR to the school, and send the student an updated FAFSA Submission
Note: Batch corrections and updates may not be available at the time you need to begin making such corrections
or updates. However, these instructions are provided for future use when this functionality becomes available.
Note: Some student-initiated corrections have been flagged incorrectly as school-initiated corrections on the
resulting ISIR transaction. The Department is aware of this defect and working to find a resolution. If your school is
aware of a transaction that is flagged incorrectly as a school-initiated correction, you should notate the student9s
file. You are not required to collect documentation unless you have conflicting information or reason to believe the
information on the ISIR transaction is incorrect.
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Summary or, if the FPS has the student9s email address, an email with a link to view the student9s updated FAFSA
Submission Summary on the web.
Paper FAFSA Submission Summary. Students who received a paper FAFSA Submission Summary may make
corrections or updates on it, then sign and return it to the FAFSA processor at the address given at the end of the FAFSA
Submission Summary. If a contributor9s information is updated or corrected, that contributor also must sign the FAFSA
Submission Summary before submitting it for processing.
Students who applied electronically are encouraged to return to their Dashboard on StudentAid.gov to make corrections.
Students who applied electronically but would like to make corrections via paper may have a paper FAFSA Submission
Summary mailed to them by calling the FSAIC at 1-800-4-FED-AID and providing their name, SSN, and date of birth,
though this feature may not be available until later in the application cycle.
Adding Schools and Changing a Student9s Address
As with other changes, a student can add schools or change their address, email address, or telephone number online or
on a paper FAFSA Submission Summary. A student can also update these items over the phone by calling 1-800-433-3243
and providing their DRN, though this feature may not be available until later in the application cycle. You can submit
those changes for the student through the FAFSA Partner Portal if your school is listed on the student9s application, or you
have the student9s DRN.
The FAFSA form has limited space for a student to list schools that will receive the application data: 10 schools can be
listed on the paper application; 20 schools can be listed on the online FAFSA form. If the student wants information sent to
more schools, the student can use any of the methods listed previously to replace some or all the original schools. If the
student originally listed 20 schools on the application and then replaced two schools with two new ones, those that were
replaced will not receive an ISIR from this correction or any subsequent correction on which they did not appear.
Signatures
Any required signatures, such as those on worksheets or on copies of tax returns, must be collected at the time of
verification4they cannot be collected after the verification deadline for that award year.
For verification documentation, a school may collect an electronic signature for an applicant, parent, or spouse if the
process includes an assurance of the identity of the person signing. This is often accomplished with a PIN or password that
is assigned only after the identity of the signer has been authenticated (see DOC-Q12 on the Program Integrity Questions
and Answers 3 Verification).
Deadlines and Failure to Submit Documentation
You must require students selected for verification4either by your school or the Department4to submit the
documentation by the date specified by your school (for Campus-Based and Direct Loans) or the Department (for Pell).
Campus-Based and Direct Loans
If a student doesn9t provide verification documentation within your school9s established, reasonable timeframe, you
cannot:
Disburse more FSEOG funds,
Employ or permit further FWS employment, or
Failure to Submit Documentation
34 CFR 668.60
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Originate or disburse any additional Direct Loans (subsidized, unsubsidized, or PLUS).
The student must repay any FSEOG funds received that year. If the student fails to complete verification within your
school9s established timeframe and if you received any Direct Subsidized Loan funds for the student that you did not
disburse, you must return some or all those funds under the excess cash tolerance regulation (see Volume 4, Chapter 1 of
the FSA Handbook).
If the student provides the required documentation after your school9s deadline, you may, at your discretion, provide aid if
still within the Department9s overall verification deadlines.
Pell Grants
A student selected for verification may submit a valid FAFSA Submission Summary or a school can receive a valid ISIR
after the Pell deadline but before the verification deadline published in the Federal Register. If a student does not provide
the verification documentation or you do not receive the valid FAFSA Submission Summary or ISIR (if necessary) within
this additional time, they lose their Pell Grant eligibility for the award year and must return any Pell money already
received for that year.
Other Considerations
The Department may determine not to process the FAFSA form of an applicant who has been requested to provide
documentation until they do so, or the Department decides there is no longer a need for it.
A Pell applicant selected for verification must complete the process by the deadline published in the Federal Register. The
notice for the 2024-25 award year was published on September 18, 2024. The deadline for the 2024-25 award year is
September 20, 2025, or 120 days after the last day of the student9s enrollment, whichever is earlier. When the notice for
2025-26 is published, the corresponding deadline date is expected to be mid-September 2026. Applicants to Campus-
Based programs and the Direct Loan program must complete verification by the same deadline or by an earlier one your
aid office establishes.
Verification is complete when you have all the requested documentation and a valid ISIR or FAFSA Submission Summary
(one on which all the information is accurate and complete). This includes any necessary corrections, which must be made
by the
Federal Register deadlines for submitting paper or electronic corrections.
Late and Post-Withdrawal Disbursements
Generally, a student ceases to be eligible for aid once they have finished the payment period and/or is no longer enrolled.
However, the student may submit verification documentation and receive a late disbursement after that time if the
Department processed a FAFSA Submission Summary or ISIR with an official SAI while they were still enrolled. For
information on late disbursements, see Volume 4 of the FSA Handbook; for more information on post-withdrawal
disbursements, see Volume 5.
Verification Status Codes
When you disburse a Pell Grant, you must report the student9s verification status through the Common Origination and
Disbursement (COD) System even if they were not selected for verification.
V4You have verified the student. This includes students selected by the FPS and those your school chose to verify
based on its own criteria.
Verification Completed Within Additional Time for P ell
34 CFR 668.60(c)(1)
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