Lisa Hoskins - UMKCDaniel Holt – William Jewell College

Professional Judgment: Case Studies

Cases for discussionWhat the law says vs. What you should

know

What the law says Higher Education Act of 1965,

As Amended

Section 479A: Discretion of Student Financial Aid Administrators(a) General – Nothing in this part shall be

interpreted as limiting the authority of the financial aid administrator, on the basis of adequate documentation, to make adjustments on a case-by-case basis to the cost of attendance or the values of the data items required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances. However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances.

Section 479A (cont.) Special Circumstances include: Tuition expenses at an

elementary or secondary school,

Medical or dental expenses not covered by insurance,

Unusually high child care costs,

Number of parents enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation agreement under section 487,

Recent unemployment of a family member or an independent student,

A family member who is a dislocated worker (as defined in section 101 of the Workforce Investment Act of 1998),

A change in housing status that results in an individual being homeless (as defined in section 103 of the McKinney-Vento Homeless Assistance Act),

Other changes in a family’s income, a family’s assets, or a student’s status.

Section 479A (cont.)The underlined text (previous slide) of Section

479A was added by the College Cost Reduction and Access Act (CCRAA). Although the need analysis amendments made by the CCRAA have an effective date of July 1, 2009, the examples in Section 479A should be viewed as guidance about appropriate situations in which a FAA could exercise professional judgment. The statute does not prohibit FAA from exercising professional judgment before July 1, 2009, in situations described by the additional language.

FAAs must make all PJ decisions on a case-by-case basis and with appropriate documentation of the existence of an extenuating circumstance.

Special CircumstancesSpecial circumstances differentiate an

individual student from a class of students rather than conditions that exist across a class of students.

Section 479A: Discretion of Student Financial Aid Administrators(b) Adjustments to Assets Taken into

Account – A student financial aid administrator shall be considered to be making a necessary adjustment in accordance with subsection (a) if – the administrator makes adjustments excluding

from family income any proceeds of a sale of farm or business assets of a family if such sale results from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or an involuntary liquidation; or

the administrator makes adjustments in the award level of a student with a disability so as to take into consideration the additional costs such student incurs as a result of such student’s disability.

HEROES ActHigher Education Relief Opportunities Act of 2003 September 30, 2007 Defines “affected individuals” as Title IV applicants

and recipients who:Are serving on active duty during a war or other

military operation or national emergency;Are performing qualifying National Guard duty during

a war or other military operation or national emergency;

Reside or are employed in an area that is declared a disaster are by any federal, state, or local official in connection with a national emergency; or

Suffer direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.

What you should knowBest Practices

Create an office Policy and/or ProcedureEach individual should maintain ConsistencyDocument as much as possible

Overrides and Professional Judgment

The phrase “professional judgment” is commonly used for the discretion that FAAs apply to

dependency overrides and to data adjustments in the application. It is important to note that the

provisions for these two types of changes are in separate places in the HEA.

The citation for dependency overrides is in Sec. 480(d)(7); the citation for data adjustments is in

Sec. 479A and is copied in to a margin note in the last chapter

of this guide. - FSA Handbook AVG p. 25

Student # 1SITUATION:• Independent Student • Married, with 2 children• Reported AGI of $75,856• EFC of 6,839• COA of 29,841• Student only earned $1,600 in 2007• Student and spouse are divorcing• Children are enrolled in private secondary

school

Student #1SOLUTION:• Reduction of AGI– Required Docs: 2007 1040; Student’s W-2;

Divorce documentation; personal letter– ISIR correction

• Secondary School Tuition– Required Docs: Letter and/or receipt from

secondary school including amount of tuition charged

– Increase of COA• Outcome = Approved

Student #2SITUATION:• Dependent Student• EFC of 1,606 • COA of 26,156• Mother has had job instability• Appeal Form indicated disputing amounts re:

mother’s estimated 2008 AGI – Original AGI: $23,292– Estimated AGI: $17,144 (mom’s report) and

$25,082 (employer’s report)

Student # 2SOLUTION:• Reduction of Parent’s AGI– Required Docs: 2007 1040; Letter from

mother’s employer; letter from mother; estimated 2008 AGI figures

– ISIR correction• Outcome = Denied– Since employer’s figures were greater than

current AGI, did not adjust. However, student was given additional aid

Student #3SITUATION:Dependent StudentEFC of 19,121COA of 26,156Troubled relationship with mother- multiple

suicide attempts, identity theft, and gambling problem

Student #3SOLUTION:Dependency Override

Requested official documentation:Student couldn’t access private medical

documentsCould not document gambling issueCould not document identity theftStudent submitted his 2007 1040, a personal

letter, and a letter from his auntISIR correction

Outcome = Approved after deliberation

Student #4SITUATION:• Dependent student• EFC of 11,606• COA of 44,836• Parents made one-time withdrawal from 401K,

reported as income on 2007 1040• Other children are enrolled in private

secondary school• Student purchased personal PC

Student #4SOLUTION:• Reduction of AGI– Required Docs: 2007 1040 (amount is listed

on line 16); personal letter– ISIR correction

• Secondary School Tuition & Personal PC– Required Docs: receipt for purchase and

letter and/or receipt from secondary school– Increase of COA

• Outcome = Approved

Student #5SITUATION:Dependent StudentCompleted FAFSA using guardian’s income

infoEFC: 5430COA of 26,156Student is estranged from birth parents,

but had seen them once every few years

Student #5SOLUTION:Dependency Override

Collected student’s income information, personal letter, letter from case worker, documentation of guardianship

ISIR CorrectionOutcome = Approved

Student #6Dependent StudentCompleted FAFSA, but selected for

verificationStudent is estranged from parents over a

religious disagreementDisagreement is less than 1 year old

Student #6SOLUTION:Dependency Override

Student turned in letter requesting overrideOutcome = Denied

Disagreement was less than 1 year old and there was no proof of other abuse

Student chose to borrow a private loan

Student #7Dependent studentEFC 14,500Parents AGI $70,000$6,000 Unreimbursed medical expenses

Student #7SOLUTION:Income protection allowance (11% of

income is protected)Approved:

However, only lowered EFC to 13,173Did become AMG eligible.

Student #8Dependent StudentEFC 99,999Claiming one-time capital gain exceeding $

500,000No assets reportedNo earned income from work in ‘07Estimating low income for ’08 (less than

$30,000)

Student #8SOLUTION (or lack thereof)Used money to purchase new home (but no

income to maintain home)Ongoing approval/denial

Requested additional information; including ‘08 tax return (not yet filed)

How are they supporting household of 3 with 27,000 in income; but a half a million dollar home.

Questions or Scenarios?

Resources & ReferencesNASFAA MonographsFinaid.org online resourcesFederal Student Aid Handbook- Application

& Verification GuideDept of Ed’s Counselor Handbook