Findings of phase 1 of a study of the 1979-1980 Basic Educational Opportunity Grants validation, edits, and application processing system are presented. The study was designed to: assess the impact of the validation effort and processing system edits on the correct award of Basic Grants; and assess the characteristics of students most likely to misreport information on their applications. Included is an in-depth examination of the edits and application processing system, including analysis of applicants' behavior in response to various types of comments and changes in applicant eligibility status. Also considered is the effectiveness of pre-established criteria (PEC) in identifying groups of students most likely to make post-selection corrections resulting in student eligibility index changes. A comparison is made of corrections behavior, eligibility status and rejection rates, and key demographic characteristics of applicants by application source. Three recommendations concerning edits and three recommendations concerning PEC are offered. Comments generated for applicants that are related to critical fields of the applications are appended, along with a list of the reject reasons and their corresponding comments. A list of PEC and a glossary are also included, along with information on study objectives, the study population, and the research methodology. (SW)