Transcript Document

IN CONCERT
ILLINOIS ASSOCIATION OF STUDENT FINANCIAL AID ADMINISTATOR
ANNUAL CONFERENCE
April 8 – 10, 2015
Embassy Suites, East Peoria, IL
Professional Judgment
Bruce Foote
University of St. Francis
Topics We Will Cover
• Introduction
• Underlying Concepts
• Dependency Status
• Cost of Attendance
• Satisfactory Progress
• Questions
Disclaimer
• The materials in this presentation are collected from NASFAA,
Department of Education, past research, and of course, opinion. I will
make every effort to use the later very sparingly--but bear in mind
that when you ask me for it, I will not hesitate to share it with you.
HEA of 1986, Sec. 479A
Professional Judgment
• “DISCRETION OF FINANCIAL AID ADMINISTRATORS” Sec. 479A. “Nothing in this part shall be
interpreted as limiting the ability of the financial aid administrator, on the basis of adequate documentation, to
make necessary adjustments to the cost of attendance and expected family contribution computations to allow for
treatment of the individual students with special circumstances. In addition, nothing in this part shall be
interpreted as limiting the ability of the student financial aid administrator to use supplementary information
about the financial status of eligible applicants in selecting recipients and determining the amount of awards
under subparts 1 and 2 of part A and parts B, C, and E, of this title.”
Correction?
• Correction: FAFSA information initially reported incorrectly can be
corrected.
• This does not constitute professional judgment.
• EXAMPLE: Divorced parent reports total income from jointly filed tax
return and was divorced at the time of filing. Not PJ.
Update?
• FAFSA information was correct
at the time of filing but has
changed since that time. The
three items that may be updated
are:
• Dependency Status
• Household Size
• Number in College
Adjustment?
• An adjustment is a change to the student’s application data by the
FAO under professional judgment authority in order to achieve a
specific result.
• You will need to insure that whatever action you take it is
appropriate, necessary and properly documented.
Professional Judgment
Principles
• You can use discretion in certain areas when a student’s family has
unique circumstances.
• Special circumstances must differentiate an individual student from a
class of students.
• Must be made on an individual case-by-case basis.
• Across the board changes are not permitted in professional judgment.
Professional Judgment
Principles (continued)...
• Policies and procedures to objectively identify students for whom
professional judgment decisions may be appropriate are acceptable
business practices.
• EXAMPLE: A policy that states that the dollar value of the adjustment
must exceed 5 percent of the family’s AGI.
Professional Judgment
Principles (continued)...
• Professional judgment is highly subjective.
• There is no right or wrong answer.
• You must make your own decision.
• It is important to understand that many FAOs will approach a similar
situation and arrive at equally valid solutions.
• While a professional judgment decision is “legal”, your institution may
have policies about what will and will not be taken into consideration
under professional judgment.
Professional Judgment
Principles (continued)...
• Must be documented.
• Must adjust data elements.
• Must use the resulting EFC for all federal aid programs.
• Must resolve any inconsistent and conflicting information prior to
adjustment.
Things You Can’t Do
With Professional Judgment
• Change a student’s status from
Independent to Dependent.
• Adjust the EFC directly.
• Alter the need analysis formula
itself.
• Include expenses for post-enrollment
activities (bar exams, CPA, etc.).
• Circumvent statutory FSEOG selection
criteria.
• Can’t make changes in the general
program requirements.
Things You Can’t (Continued)...
• Can’t give allowances that are already taken into consideration by
Income Protection Allowance:
• Food
30%
• Housing
22%
• Transportation
9%
• Clothing/Personal
16%
• Medical
11%
• Other
12%
IPA Example
Income Protection Allowance
• $28,890
The amounts already being taken into
consideration by need analysis
• Food
• Housing
• Transportation
• Clothing/Personal
• Medical
• Other
• Total
$8,667
$6,356
$2,600
$4,622
$3,177
$3,468
$28,890
Documentation Requirements
• You have the authority to request
and use supplemental material.
• Special circumstances and action
taken must be documented.
• You cannot document “after the fact”
or “during an audit.”
• You have the right to an attorney to
be present during questioning ☺
Two Types of Documentation
• A written request from the
student and:
• Letters
• Bills
• Receipts
• Pay Stubs
• Other Third Party
Documentation
• A clear record of:
• Decision made and how it was
reached.
• Decision date.
• Description and date of actions taken.
• Citations of policy and procedures.
• Name and title of decision maker.
Maintaining Documentation
• Documentation may be maintained in paper or electronic files.
Important Considerations
• Would a “reasonable” person reviewing the same set of
circumstances reach a similar decision to yours?
• Is the method you have chosen to adjust an “appropriate” method
based on the situation at hand?
• You don’t have to make a professional judgment decision at all!
Professional
Judgment
Dependency Status
Dependency Status
• The FAO may override
dependency status on a case-bycase basis for students with
“unusual circumstances”
• The FAO must write a statement
outlining the situation and how
the decision was reached
• Both the statement and all other
supporting documentation must
be maintained in the student’s
file
• The following are not singly or in
combination to be considered
“unusual”
• Parental refusal to contribute
• Parent unwilling to complete
FAFSA or provide verification
information
• Parent does not claim student for
IRS purposes
• Student demonstrates selfsufficiency
Dependency Status
• Unusual circumstances do/might include:
• Abandonment by parents
• An abusive family environment that threatens the student’s safety
• The student is unable to locate his or her parents
Dependency Status
• The presence of the conditions listed above would not preclude the
student being considered as being an unaccompanied youth who is
homeless or self-supporting and at risk of being homeless
• If the student was too old to be considered a youth (i.e. >21) then
professional judgment override could be considered
Dependency Status
• The FAO can’t use professional judgment to change an Independent
student to a Dependent student…
• The FAO can use professional judgment to adjust either budget components
or adding support-in-kind as untaxed income
Dependency Status
• All documentation must support and include the reasoning for the
dependency override
• Information used to support the professional judgment decision
should definitely be obtained fro third-party sources
• If third-party documentation is reasonably “not obtainable”, the FAO may (but
doesn’t have to) accept a signed and dated statement from the student or
family member detailing the unusual circumstances
Note…
• An institution can, without gathering additional documentation,
accept an override granted by another school (but you don’t have to)
in the same academic year
• Remember all overrides do not automatically carry over from one year to the
next—the override should be reviewed each year to determine if the
situation has remained the same as granted by the original override
Professional Judgment
Data Elements
Potential Reasons
For Adjustment
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1)—Extreme medical expenses that exceed IPA percentage
2)—Unexpected home repairs
3)—Expenses relative to the death of a family member
4)—Loss of income relative to the death of a family member
5)—Loss of income due to loss or change of job
6)—Loss of income or asset due to natural disaster
7)—Loss of income due to retirement
8)—Bankruptcy
9)—Relocation due to job requirements
10)—Divorce
11)—Loss of untaxed income
12)—Adjustments due to parent in college
Potential Reasons (Continued)...
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13)—Adjustments to compensate for income producing assets
14)—Dependency overrides
15)—Adding untaxed income to Independents (i.e., cash support, support-in-kind)
16)—Cost of education increases/budget adjustments
17)—Adjustments for Elementary/Secondary tuition
18)—Student loan payments
19)—Computer purchases
20)—Loan refusal or reduction
21)—Converting a regular IRA into a Roth IRA
22)—Adding back depreciation and other “paper” losses
23)—Reduction or loss of Dependent student income
24)—Inclusion or exclusion of people in the household
Base Year, Estimated Year or Calendar Year???
• You can (and should) decide which of the treatments of income will
be most appropriate for this student.
• The decision is completely up to you, and perhaps institutional policy
(but why handcuff yourself with this policy?).
Other Considerations
• You should try to ensure that your adjustments are appropriate and
follow through the professional judgment.
• EXAMPLE: If you are lowering AGI, you would logically follow through
and adjust income from work and federal tax paid to reflect the new
income figures.
Parent In College
• Parent in college can be taken into consideration with professional
judgment.
• Care should be taken to make the “appropriate” adjustment!
• For example: Is the parent taking one class or is the parent a full-time
student?
Professional Judgment
Cost of Attendance
COA Components
• Tuition and Fees
• Room and Board
• Books, Supplies, Transportation, Personal Expenses, and Computer
Costs
Additional Allowances
• Dependent Care Expenses
• Disability-related Expenses
• Cooperative Education Programs
• Study Abroad
• Loan Fees
Restrictions
• <Half-Time (T&F, B&S, Transportation and Child Care)
• Correspondence (T&F, Required B&S, and, if a required residential
component, Transportation and R&B)
• Incarcerated (T&F, B&S if required)
No transportation☺
Professional Judgment
Restrictions
• Can’t add post-enrollment costs such as bar exam, CPA exam, etc.
• Can’t “create” new cost components.
• Expenses must be incurred by the student for the student for the
period of enrollment.
Important Note
• If the cost is an academic requirement for the degree program, it may
be included in the cost of attendance. If a nursing program requires
an exam to graduate, and the exam has a $25 fee, then the fee can be
added to the cost of attendance.
PJ for Tuition & Fee Component
• School policy must state if school uses average or actual T&F charge.
• May us professional judgment to deviate from policy on a case-bycase basis.
PJ for Room & Board
• You may use professional judgment to increase or decrease R & B on
a case-by-case basis.
PJ for Computer Costs
• School decides if and under what circumstances it will add computer
costs.
• Any deviation from policy constitutes professional judgment.
• It is extremely important that you have policy in place and follow that
policy. Policy should address areas such as “one-time purchase”,
upgrades, software, etc.
PJ for Child Care Allowance
• Adding your standard child care allowance is NOT professional
judgment.
• Adjusting the standard child care allowance IS professional judgment.
Questions??????????????