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The Power Defined
• Professional judgment (PJ) is the action used,
at the discretion of the financial aid
administrator (FAA), to address special
circumstances that affect a student’s ability to
pay for educational expenses.
• Professional judgment can only be used on a
case-by-case basis.
The Power of Professional
Judgment
WFAA Conference, 2014
Wendy Olson, Whitworth University
Wendy Olson, WFAA 2014
The Power Defined
The Power Given
• Professional judgment decisions must be well
documented or they are not considered
professional judgment.
• Financial aid administrators’ decisions are final
and cannot be appealed to the U.S.
Department of Education.
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• “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 an individual 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.”
• Section 479A of the Higher Education Act of 1965
Wendy Olson, WFAA 2014
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10/27/2014
Why?
When to Use It
• Because families have special circumstances
and sometimes the round peg doesn’t fit into
a square hole
• Because Congress recognized FAAs were
professionals who would use it wisely
• Basically… because Congress says so
Wendy Olson, WFAA 2014
• There are four major categories of special
circumstances:
– Cost of Attendance
– Expected Family Contribution
– Dependency Status
– Loan Origination and Eligibility
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When to Use It
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How are students made aware of PJ?
• The FAFSA states, “If you or your family has
unusual circumstances that might affect your
financial situation (such as loss of employment),
complete this form to the extent you can, then
submit it as instructed and consult with the
financial aid office at the college you plan to
attend.”
• Other ways students/families are informed?
• Added under the HEROES Act of 2003
– The HEROES Act allows the US Dept. of Education,
and thus FAAs through professional judgment, to
• waive certain statutory and regulatory provisions on a
case-by-case basis
• choose the method of determining financial need that
is most beneficial to the affected students
– Expires September 30, 2017
Wendy Olson, WFAA 2014
Wendy Olson, WFAA 2014
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Wendy Olson, WFAA 2014
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What to Do When You Use It
What to Do When You Use It
• Confirm verification has been completed if required by
Dept. of Ed or your school
• Modify FAFSA data
• Send revised FAFSA information to CPS
• Modify budget when appropriate
• Modify award
• Document your decision thoroughly so it makes sense to an
auditor or program reviewer
• Notify student with decision whether positive or negative
• Collect documentation
• proof of expense or estimate of expense
• from student or other reliable source
• Review information – some schools have
committees for this purpose
• Decide whether request merits PJ
Wendy Olson, WFAA 2014
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What to Do When You Use It
• For expected family contribution:
– Modify budget
– Possible reasons (not a complete list)
– Modify data elements: income, US income taxes paid,
assets, household size, number in college
– Use Income Protection Allowance table to see what
modest living expenses for family are already recognized
– Income Protection Allowance Percentages are:
Additional tuition or fee costs beyond norm
Dependent care expenses
Study abroad expenses
Computer purchase
Student disability-related expenses
First professional credential expenses (only once per academic
year for exam fees or license or certification costs)
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What to Do When You Use It
• For cost of attendance:
•
•
•
•
•
•
Wendy Olson, WFAA 2014
• Food=30%, Housing=22%, Clothing/Personal Care=16%, Other
family consumption=12%, Medical care=11%, Transportation=9%
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What to Do When You Use It
What to Do When You Use It
• For expected family contribution:
• For expected family contribution:
– Possible reasons (not a complete list)
•
•
•
•
– Possible reasons continued:
Medical or dental expenses not covered by insurance
Tuition expenses at an elementary or secondary school
Support of extended family members
Changes in a family’s income or assets from:
• Changes in family members’ situations from:
– Separation, divorce, death, marriage, birth
– Parents enrolled in school
– Illness, unemployment, loss of child support or untaxed income,
unusual capital gains, natural disaster, unusual debt, IRA rollover
Wendy Olson, WFAA 2014
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What to Do When You Use It
Wendy Olson, WFAA 2014
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What to Do When You Use It
• For expected family contribution:
• For Dependency Status:
– Income adjustments may be based on base year
(2013), estimated year (2014), expected year
(2015-16), or next twelve months (GEN-09-04)
– Adjustments may be made to:
– See DCL GEN-03-07
– Unusual circumstances = condition that deems
inappropriate to expect a parental contribution,
i.e.
• AGI, taxes paid, value of assets, income earned from
work, number in household, number in college
• Other?
Wendy Olson, WFAA 2014
• Remember – when verifying - household size and number in
college are always updated unless the update is due to a
change in the student’s marital status (AVG, p. 89)
• Abusive family environment
• Abandonment
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What to Do When You Use It
What to Do When You Use It
• For Dependency Status:
• For Loan Origination & Eligibility:
– Unusual circumstances would not be…
•
•
•
•
– Refuse to originate loan
– Reduce the borrower’s loan eligibility
– Offer dependent student unsubsidized Stafford
funds when parents refuse to complete the FAFSA
and have ended financial support
Parents refusal to contribute
Parents refusal to file FASFA or verification documents
Parents leaving student off their tax return
Student demonstrating self-sufficiency
– Dependency overrides must be reaffirmed every year
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When Not to Use It
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Policies
• Cannot make an otherwise ineligible student eligible
for Title IV aid. For example,
– Ineligible non-citizen
– Student owes a Title IV overpayment
– Student is in default
• Cannot circumvent the law or regulations. For example,
– Changing an independent student to dependent
– Awarding a direct Stafford loan to a less-than-half time
student
Wendy Olson, WFAA 2014
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• Indicate the conditions that will be reviewed
• Indicate who may utilize professional judgment in the
office
• Indicate documentation that is required – always need
to include reason, the name of the FAA and the date of
the adjustment
• Indicate how and when the family will be notified of
the outcome of the PJ request
• Indicate the timeframe for review of PJ requests
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Ways Offices Handle the
Administration Side or
Resources
• FSA Handbook, AVG, Chapter 5, 121-125
• Dear Colleague Letters:
• Who handles it in your office? All? A select few?
• How do you train your staff?
• How do you write, review and update policies and
procedures on PJ?
• What concerns does your office have about using
PJ?
Wendy Olson, WFAA 2014
– GEN-11-14 – Dependency Overrides
– GEN-11-04 – PJ & Combat Pay Exclusion
– GEN-09-05 – Use of Professional Judgment by FAA
– GEN-09-04 – Use of Professional Judgment by FAA
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Summary
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The End
• Professional judgment is a powerful tool to be
used for good in the world.
• There are appropriate times to use it.
• There are forbidden times to use it.
• Having the required policies in place is critical.
• Documenting decisions keep auditors and
program reviewers happy and allows you to
continue to do good in the world.
Wendy Olson, WFAA 2014
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Wendy Olson, Whitworth University, [email protected] WFAA 2014
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