CEP Financial Aid and Scholarships 2 — Questions and Answers
Question 1: A student's EFC on the FAFSA is $0. Which federal grant provides the maximum award to this student?
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- Pell Grant (Correct answer)
- TEACH Grant
- Iraq and Afghanistan Service Grant
Correct answer: Pell Grant
The Pell Grant is the primary federal need-based grant, and an EFC of $0 qualifies a student for the maximum Pell award.
Question 2: What is the primary purpose of the CSS Profile compared to the FAFSA?
- It is used exclusively for federal aid programs
- It collects more detailed financial information for institutional aid decisions (Correct answer)
- It replaces the FAFSA at private colleges
- It is required only for graduate school applications
Correct answer: It collects more detailed financial information for institutional aid decisions
The CSS Profile gathers more comprehensive financial data—including home equity and non-custodial parent information—to help colleges determine their own institutional aid awards.
Question 3: Under the simplified needs test on the FAFSA, which asset is excluded from the calculation?
- Savings accounts
- Investment real estate
- 529 college savings plans
- Small business assets for businesses with fewer than 100 employees (Correct answer)
Correct answer: Small business assets for businesses with fewer than 100 employees
Small businesses with fewer than 100 full-time employees are excluded from FAFSA asset reporting under the simplified needs test.
Question 4: A parent owns a rental property worth $200,000. How does FAFSA treat this asset?
- It is excluded as a primary residence
- It is assessed at up to 5.64% as a parent asset (Correct answer)
- It is assessed at 20% as a student asset
- It is not reported on the FAFSA
Correct answer: It is assessed at up to 5.64% as a parent asset
Investment real estate (excluding the primary home) is reported as a parent asset and assessed at no more than 5.64% in the federal aid formula.
Question 5: What does 'verification' mean in the federal financial aid process?
- The college confirms a student's acceptance decision
- The Department of Education or school checks FAFSA data accuracy against supporting documents (Correct answer)
- A student verifies their enrollment status each semester
- The IRS confirms that tax returns were filed correctly
Correct answer: The Department of Education or school checks FAFSA data accuracy against supporting documents
Verification is the process by which a college reviews and confirms the accuracy of FAFSA information using documents such as tax transcripts and W-2s.
Question 6: Which of the following best describes a 'merit-based' scholarship?
- Aid awarded based solely on family financial need
- Aid awarded based on academic, athletic, or other non-need criteria (Correct answer)
- A federally funded loan program for high-achieving students
- A grant requiring community service in exchange for funding
Correct answer: Aid awarded based on academic, athletic, or other non-need criteria
Merit-based scholarships are awarded for achievements such as GPA, test scores, athletic talent, or leadership, independent of financial need.
Question 7: A college's financial aid award letter shows $15,000 in 'grants,' $3,500 in 'subsidized loans,' and $2,000 in 'work-study.' What is the student's true gift aid total?
- $20,500
- $15,000 (Correct answer)
- $17,000
- $18,500
Correct answer: $15,000
Gift aid includes only grants and scholarships; loans must be repaid and work-study requires employment, so only the $15,000 in grants is free money.
CEP Financial Aid and Scholarships 2
A student's EFC on the FAFSA is $0.
Which federal grant provides the maximum award to this student?