Professional Judgment: Case Studies

1. Professional Judgment: Case Studies Lisa Hoskins - UMKC Daniel Holt – William Jewell College

2. Cases for discussion • What the law says vs. What you should know

3. What the law says • Higher Education Act of 1965, As Amended

4. 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.

5. 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.

6. 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.

7. Special Circumstances • Special circumstances differentiate an individual student from a class of students rather than conditions that exist across a class of students.

8. 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.

9. 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.

10. What you should know Best Practices • Create an office Policy and/or Procedure • Each individual should maintain Consistency • Document as much as possible

11. 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

12. Student # 1 SITUATION: • 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

13. Student #1 SOLUTION: • 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

14. Student #2 SITUATION: • 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)

15. Student # 2 SOLUTION: • 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

16. Student #3 SITUATION: • Dependent Student • EFC of 19,121 • COA of 26,156 • Troubled relationship with mother- multiple suicide attempts, identity theft, and gambling problem

17. Student #3 SOLUTION: • Dependency Override Requested official documentation: • Student couldn’t access private medical documents • Could not document gambling issue • Could not document identity theft • Student submitted his 2007 1040, a personal letter, and a letter from his aunt • ISIR correction • Outcome = Approved after deliberation

18. Student #4 SITUATION: • 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

19. Student #4 SOLUTION: • 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

20. Student #5 SITUATION: • Dependent Student • Completed FAFSA using guardian’s income info • EFC: 5430 • COA of 26,156 • Student is estranged from birth parents, but had seen them once every few years

21. Student #5 SOLUTION: • Dependency Override • Collected student’s income information, personal letter, letter from case worker, documentation of guardianship • ISIR Correction • Outcome = Approved

22. Student #6 • Dependent Student • Completed FAFSA, but selected for verification • Student is estranged from parents over a religious disagreement • Disagreement is less than 1 year old

23. Student #6 SOLUTION: • Dependency Override • Student turned in letter requesting override • Outcome = Denied • Disagreement was less than 1 year old and there was no proof of other abuse • Student chose to borrow a private loan

24. Student #7 • Dependent student • EFC 14,500 • Parents AGI $70,000 • $6,000 Unreimbursed medical expenses

25. Student #7 SOLUTION: • Income protection allowance (11% of income is protected) • Approved: • However, only lowered EFC to 13,173 • Did become AMG eligible.

26. Student #8 • Dependent Student • EFC 99,999 • Claiming one-time capital gain exceeding $ 500,000 • No assets reported • No earned income from work in ‘07 • Estimating low income for ’08 (less than $30,000)

27. Student #8 SOLUTION (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.

28. Questions or Scenarios?

29. Resources & References • NASFAA Monographs • Finaid.org online resources • Federal Student Aid Handbook- Application & Verification Guide • Dept of Ed’s Counselor Handbook