Professional Judgment in Student Financial Aid

What We’ll Talk About

oWhat is “professional judgment?”oWhere can you exercise your professional judgment?oWhere can you not exercise your professional judgment?oA few case studies

What is Professional Judgment?

oThe authority provided under the Higher Education Act for financial aid administrators to exercise discretion in student aid administrationoSection 484C of HEAoThe purpose is to allow the financial aid administrator

the opportunity to evaluate a family’s true need by considering unusual or extenuating circumstances

HEA Section 479ANothing 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 value 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. Special circumstances may include tuition expenses at an elementary or secondary school, medical, dental, or nursing home expenses not covered by insurance, unusually high child care or dependent care costs, recent unemployment of a family member or an independent student, a student or family member who is a dislocated worker (as defined in section 101 of the Workforce Investment Act of 1998), the number of parents enrolled at least half-time in a degree, certificate, or other program leading to recognized educational credential at an institution with a program participation agreement under section 487,

HEA Section 479Aa change in housing status that results in an individual being homeless (as defined in section 103 of the McKinney-Vento Homeless Assistance Act), or other

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

circumstances shall be conditions that differentiate an individual student from a class of students rather than conditions that exist across a class of students. Adequate documentation for such adjustments shall substantiate such special circumstances of individual students. In addition, nothing in this title shall be interpreted as limiting the authority of the student financial aid administrator in such cases (1) to request and use supplementary information about the financial status or personal circumstances of eligible applicants in selecting recipients and determining the amount of awards under this title, or (2) to offer a dependent student financial assistance under section 428H or Federal Direct Unsubsidized Stafford Loan without requiring the parents of such student to file the financial aid form prescribed under section 483 if the student financial aid administrator verifies that the parent or parents of such student have ended financial support of such student and refuse to file such form. No student or parent shall be charged a fee for collecting, processing, or delivering such supplementary information.

PJ Policies &Procedures

oWhat unusual circumstances may trigger a PJ?oHow are requests made?oDo you have processes to identify potential PJ

situations?oWhat documentation (about the situation) do you

require?oHow do you document the PJ decision?oWho can make a decision?

oWhat changes are made – to need analysis data – to awards?

Where Can You Exercise Your Professional Judgment?

oDependency statusoSome data elements used to calculate the EFCoCost of AttendanceoSatisfactory Academic ProgressoDenial or reduction of eligibility for Direct LoansoUnsubsidized Stafford Loan eligibility for dependent

students whose parents refuse to complete the FAFSA and borrow a PLUS

Where Can You NOT Exercise Your Professional Judgment?oChange a student from independent to dependentoCreate a new category of costsoAdjust the bottom-line EFCoChange the need analysis formulaoMake an otherwise ineligible student eligible for Title IV aidoCircumvent the intent of the law or regulationsoCircumvent FSEOG selection criteriaoInclude post-enrollment expenses (other than the on-time cost of

obtaining a first professional credential in program requiring professional licensure or certification)

Dependency OverridesoUnusual circumstancesoTwo situations identified by Department of Education

oAbusive family environmentoAbandonment by parents

oThese situations do NOT qualify as unusual circumstancesoParents refuse to contribute to student’s educationoParents unwilling to provide information for FAFSA or

verificationoParents do not claim the student on federal income tax

formoStudent is self-sufficient

Dependency OverridesoGeneral recommendation is to collect third-party written

documentation about the situationoBe sure to document the decision made and the

circumstances considered when making the decisionoMust make this determination on an annual basisoMay use the decision made at another institution during

the same year (not prior year)

Change in Dependency due to Marriage

oAt your discretion, you may update a student’s dependency status due to a change in marital statusoIf deemed necessary to address an inequity oroTo more accurately reflect the student’s ability to pay

oCase-by-case basis and must be documentedoMust update other relevant data – spouse’s income, taxes,

etc.oYou may have a policy of not considering such updates

after a specific date.

Adjusting Data ElementsoThe purpose of the adjustment is to impact the EFCoExamples of data elements that may be adjustedoAdjusted Gross IncomeoTaxes PaidoAssets

oSubmit adjustments to CPS for recalculation of EFC if Federal Pell Grant is impactedoMust use the resulting EFC for all Federal Student Aid

programs

Cost of Attendance Adjustments

oCost of attendance components may be adjusted to reflect unusual, individual circumstancesoMust use the categories already defined by lawoTuition and feesoRoom and boardoBooks and suppliesoTransportation, Personal, and Miscellaneous expenses

oCan either increase or decrease costs

Some Possible PJ SituationsoLoss of income for parent(s), student, or spouseoElementary or secondary education expensesoUnusually high dependent care expensesoUnusually high medical and/or dental expenses not

covered by insuranceoElder care, including nursing home expenses, not covered

by insurance

Satisfactory Academic Progress

oHEA 484(c) says a school may waive requirement for undue hardship based onoDeath of a relative of the studentoPersonal injury or illness of studentoSpecial circumstances as determined by school

oYou can review a student’s appeal and redefine satisfactory academic progress for that student, based on her “mitigating circumstances”oYou determine what is “mitigating” – on a case-by-case

basis

Reducing or Denying a LoanoHEA 479 (c ) says a school can deny or reduce the amount

of a student’s eligibility for a Direct LoanoCase-by-case basisoProvide decision in writing to the borrower (student or

parent)oKeep documentation supporting the determinationoReasons may includeoYou believe the borrower is unwilling to repay the debtoHigh debt burden

Unsubsidized Direct Loan Flexibility

oYou can award Unsubsidized loan to a dependent student without parental data ifoParent certifies cessation of support for the studentoParent refuses to complete the FAFSA (Remember, the

parent can then NOT turn around and borrow a PLUS)oNo circumstances warrant a dependency override

oStudent files FAFSA without parental data to determine eligibility for Federal aid

“Technical” Issues to Remember

oSubmit data element changes to CPSoSelect “EFC Adjustment Requested” in PJ fieldoMake sure you have the updated ISIR before awarding

aidoImportant that FSA can distinguish PJ adjustments from

corrections

“Technical” Issues to Remember

oIf student is selected for verification, you must complete it before exercising PJoYou are NOT required to verify a student who is NOT

selected for verification before exercising PJ

Case Study 1

oAbby lives with her grandmother, who completed the FAFSA as Abby’ parent. She had NOT legally adopted, Abby’s mother’s whereabouts are unknown and her father is deceased. oDoes Abby have unusual circumstances?oWhat documentation would you collect?oLetters from student, grandmother and others (not

in the family) – counselors, clergy, etc.?oWould you do a dependency override for Abby?

Case Study 2oKeisha and her brother are in college. Her parents are

married. Her father loses his job in May. Her mother does not work outside the home. Would you make an adjustment for the upcoming year?oDoes Keisha have unusual circumstances?oWhat documentation might you collect?oWage statement, letter from employer, other?oInformation about unemployment benefits?

oWhat adjustment would you make?oAGI? Earnings? Taxes Paid?

Case Study 3oTony is a design major. Your COA budget allows $800 per

year in books and supplies for design majors. He spent an additional $500 in books and supplies.oDoes Tony have unusual circumstances?oWould you change his cost of attendance?oWhat documentation would you collect?oReceipts?oStatements that these books and supplies are

required?

Case Study 4oZelda’s parents support Zelda and her grandmother, Zola.

They help pay Zola’s mortgage, utility bills ($500 per month) and her real estate taxes ($800 annually). The family provides documentation of the expenses. oDoes Zelda have unusual circumstances?oIf yes, what action would you take?oIncrease taxes paid by the amount of support?oOther?

References

oFederal Student Aid HandbookoSearch “PJ” on IFAP.ED.GOVoTraining Session (Podcast) from 2011oISIR Analysis TooloP&P TemplateoIFAP iLibrary lists resources available

oYour campus P&P manual

Rose Mary StelmaVice President, CFI919.835.2402Rosemary.stelma@cfi.org

NCASFAA would like to thank our Professional Affiliates!

NCASFAA Fall Conference – November 1-4, 2015 26