October 4, 2015

Sara Beth HolmanFinancial Aid Director Lawrence University

Nick PrewettFinancial Aid DirectorUniversity of Missouri-Columbia

Definition of Professional Judgment

PJ is the discretion granted to financial aid administrators by law to override dependency status and make adjustments to need analysis, including data elements used to calculate the expected family contribution (EFC) and costs within the cost of attendance (COA) components

The Statute: HEA Section 479A

Section 479A of the Higher Education Act of 1965, as amended (HEA) establishes the authority for the financial aid administrator (FAA) to exercise discretion in a number of areas when an applicant has special or unusual circumstances

More about PJ

The U.S. Department of Education (ED) encourages the use of PJ for affected individuals under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003

More about PJ

• PJ is not regulated by ED• The law does NOT

• Restrict your authority to exercise PJ• Require you to exercise PJ when you

encounter special circumstances

However, you cannot

• Use PJ to circumvent the law

• Use PJ to waive student eligibility requirements

Principles of PJ

Professional Judgment

Need and action require

adequate documentation

Must be administered on a Case-by-

Case basisSimilar

situations require

individual documentation

& review

Across the board changes NOT permitted

P&P should establish policy

Should include policies that

provide framework for

triggering review

Extends authority to

request supplemental information

FAA must make and document

their own decision

An institution may NOT

automatically accept

another’s adjustmentsMay arrive at

same conclusion, but must document

Ethics in PJ

• Focus on unique circumstance that impacts family’s ability to pay

• Review entire situation – are there items that offset the circumstance?

• Are there others on campus you might reach out to for more information about the student’s situation?

• Are you satisfied with the documentation you have received?• Look at each request independently, but be consistent• PJ should not be used as a rationing device for awarding limited

funds.

Objectivity

• What should you do if personal prejudices or assumptions get in the way of performing a PJ?

• How do different staff members handle certain situations?

• Are you requiring similar documentation from all students?

Subjectivity

• Discretionary vs. non-discretionary • Necessity vs. lifestyle choices• Can you make a logical argument for the

PJ?

Areas to Perform PJ

Professional Judgment

Need Analysis Cost of Attendance

Dependency Override

Satisfactory Academic Progress

Refusal or Adjustment of

Loan Certification

Areas to Perform PJ: Need Analysis

Need Analysis

May make changes to income, assets, exclusions, family size & number in

college

Income adjustment can be for any 12 month period that most accurately reflects situation

May NOT Directly change formula

May NOT directly adjust EFC

Needs Analysis: Questions to Consider:

• What constitutes unusual circumstances?

• Is the student and/or family actually experiencing unusual circumstances?

• Is special treatment warranted?

• What should the special treatment be?

• What documentation is needed?

Would you consider a PJ for:

• Loss of income due to lay off?• Loss of income due to retirement?• Loss of income due to voluntary resignation?

Would you consider a PJ for:

• Gambling winnings?• Reduction in overtime pay?• One-time bonus?• Reducing student’s income if they help

with household expenses?

EFC – Income Example• On New Year’s eve, Gena decided she’d had

enough and quit working as an exotic dancer at the truck stop at exit 186. Last year she made $47,000 during her part time work as she went to school. In March, she got a job at the Mule Trading Post and will make $8.95 per hour, 20 hours per week as she finishes her degree.

• Would you make an adjustment?• What information would you collect?

EFC – Income Example• Kristen is a Senior at 4-year private school. She

has always received the Pell Grant on her award letter, except for this year. She hit a progressive slots jackpot in Booneville and brought home $25,000 in winnings, which is 4 times what she makes in a normal year. She used the money on medical bills, taxes, and a two week adventure in Colorado that she doesn’t remember, but now gets lots of coupons from Taco Bell. What would you do?

EFC Example• Drew, a dependent student, realizes that he did not get as

much financial aid this year as he did in the previous year. His mom submits a special circumstance form claiming a forced reduction in hours for all employees. She includes a copy of a company wide letter as well as paystubs of before and after that verify the reduction. She also asks that you exclude the $14,000 withdrawal from her retirement account as her income has not been enough to sustain her living expenses. She explained that this is primarily due to high medical bills. You look at the previous year and note that you did a PJ to exclude a similar “one-time” withdrawal last year. Last year you also had a Schedule A that showed about $9,000 in medical expenses. This year, medical expenses were not high enough to qualify for a deduction.

• Would you exercise a PJ? If so, for what? Would you ask for any additional documentation?

Areas to Perform PJ: COA

Cost of Attendance

Must be made within

categories defined in HEA

Section 472

Cannot create a new cost category

COA

• Josh is a graduate student who moved from Southern California to Northern Minnesota. He is asking for an increase in COA to take into consideration U-haul rental, gas for U-haul, change of climate clothing allowance, as well as the deposit he had to pay for an apartment. He feels these cost fall under educational expenses.

• Would you exercise PJ to allow for any or all of these expenses?

Areas to Perform PJ: D/O

Dependency Override

Allowed

FAA may accept D/O from another institution

if it is for the same academic year

Nature of relationship with parents make it

unsafe, unreasonable, or inappropriate to

require parental information and/or

support

Not Allowed

Parent’s refusal to contribute or provide

information, parent not claiming student as dependent, student demonstrates self-

sufficiencyMay NOT change from

Independent to Dependent

Would you consider a Dependency Override for:

• Documented physical or sexual abuse at home• Documented emotional or verbal abuse at home• Cultural differences related to higher education• Disowned due to sexual orientation• Disowned due to student’s lifestyle choices

Dependency Status• Justin is 22, lives on his own and pays $750 per

month in rent, pays for his own cell phone, utilities and is considered by his peers to be self-sufficient. His parents do not claim him on their tax return and have said they are unwilling to provide income information, thus refusing to fill out the FAFSA. Would you grant an override?

Dependency Status• Matthew is 22 and has lived with his grandparents

since his mother died 2 years ago. His mother had a one night stand, he has never met his father and he has no idea where he is at. Last year Matthew included his grandparents information on the FAFSA and it wasn’t caught. What would you do?

Dependency Status• Crystal transfers to your fine institution from Avila

University, where last award year she was granted a dependency override. She comes into your office, starts throwing things and says she is independent. What should you do?

• Crystal doesn’t get a D/O at your school and decides to go back to Avila, because they “care about students.” Now applies and is admitted to your institution for the spring semester. What happens?

Determination of Unaccompanied Youth Status

• Dependent student was living in a shelter for 6 months and now lives in an apartment with her boyfriend. She was in the shelter at the time she applied for financial aid and provided you with documentation from the shelter.

• Parent student lived with is incarcerated. Student has recently reconnected with dad and step-mom who are willing to help, but only have the means to offer the student a cot in a room in the basement that is primarily used for storage. As such, student’s permanent address is her campus address. On breaks, she either stays on campus or goes home with a friend.

Unaccompanied Homeless Youth• Several years ago Mike’s family fell on hard times. Dad was

injured and could no longer work. Mom left and they have no idea where she is. With no income, Mike and his dad became homeless. Fortunately, families from their church have taken them in for periods of time over the past 2 years, although there have been occasions when Mike has lived with a family while his dad lived in his car or with another family. You have a letter from their pastor verifying their situation.

• When Mike, now 18, submitted his FAFSA he answered YES to the question, “On or after July 1, 2014 were you homeless or were you self-supporting and at risk of being homeless?

• Mike did not have a homeless determination so answered NO to the 3 subsequent questions.

• Based on this information, would you approve the homeless status or would you require Mike to add his father’s information to his FAFSA?

Areas to Perform PJ

Refusal or Adjustment of Loan

Certification

May not discriminate based on borrower’s race, national origin, religion, sex, marital status, age, disability

status, or income

Reason for determination &

actions taken must be documented in student’s file and provided to

borrower in writing

Possible reasons: High debt burden, Unwillingness to

repay loan

PJ - Loans• CortneyJo is a graduate student at your institution

and has accumulated $250,000 in debt. She is also a full time employee at your institution and receives a 75% tuition reduction. She has applied for a Graduate PLUS loan maximum of $32,332 this year. What would you do?

Direct Unsubsidized Loan for Dependent Student Without Parental FAFSA

• Does the situation warrant special consideration?

• Would you ask other questions about the family situation? If so, what would you ask?

• What documentation would you request?

• What adjustments would you make?

Unsubsidized Loan Eligibility

• Lily is a 18-year-old student who lives with her parents. Her parents do not trust the Federal government and vehemently object to them requiring people to pay tax on their income. As such, have not filed a tax return since Lily was a child.

• Unlike her parents, Lily has filed a tax return since she started working as a waitress at the age of 16.

• Although they approve of her going to college, Lily’s parents refuse to fill out any federal forms, including the FAFSA.

• What would you do?

Areas to Perform PJ

Satisfactory Academic Progress

May exercise PJ to waive SAP

standards due to undue hardships

Personal illness or

injuryOther

special circumsta

nce

Death of relative

Verification and PJ

• If student is selected for verification, school must complete verification before exercising PJ

• Regardless of whether or not student was selected for verification, ALL PJ adjustments must be reprocessed by CPS

Salutations