Transcript 2009-10 Changes to Federal Methodology What you Need to Know

2009-10 Changes to Federal
Methodology
What you Need to Know
Lisa Koretoff
Guilford Technical Community College
Agenda
Smaller Impact Changes
 Untaxed Income
 Special Combat Pay
 Qualified Education Benefits
 Professional Judgment
Larger Impact Changes
 Definition of an Independent Student
 Simplified Needs Test and Auto Zero EFC
 Income Protection Allowance
Discussion: How will this affect your school? What
can we do to get the word out to students about
the changes?
2009-10 Changes to FM
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CCRAA – the College Cost Reduction and
Access Act. Signed into law on September
27, 2007.
HEOA – The Higher Education Opportunity
Act of 2008 reauthorized financial aid
programs for the first time since 1998.
Signed into law on August 14, 2008.
While HEOA also made changes to FM, this
session will mainly concentrate on the
changes to the upcoming year’s FAFSA.
2009-10 Changes to FM
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CCRAA Excludes Some Sources of
Untaxed Income
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Welfare benefits, including TANF
Earned Income Credits
Additional Child Tax Credits
Untaxed Social Security Benefits
◦ Special Fuel Tax Credits
◦ Foreign Income Exclusions
2009-10 Changes to FM
What are the effects?
 Worksheet A disappears
 Worksheets B and C incorporated into
the FAFSA
 Unless EFC is already zero, these changes
may decrease the EFC significantly.
2009-10 Changes to FM
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CCRAA Excludes Special Combat Pay
◦ Reported in Box 12 of the W-2, Code Q
◦ Any combat pay that is reported in the AGI
will be identified in the “Additional Financial
Information” section, which include the
former Worksheet C questions. The amounts
listed here will be subtracted from the AGI.
2009-10 Changes to FM
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CCRAA affects Qualified Education
Benefits
◦ Qualified Education Benefits include 529 plans,
both college saving plans and prepaid tuition
plans, other state prepaid tuition plans which
are not 529 plans, and Coverdell education
accounts
◦ Now, when these benefits are owned by a
dependent student, they will be considered an
asset of the parent.
2009-10 Changes to FM
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CCRAA Effects on Professional Judgment
◦ Added 3 specific examples:
 Unemployment of independent student
 Family member who is a dislocated worker
 Homeless
2009-10 Changes to FM
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HEOA Effects on Professional Judgment
◦ Added 3 specific examples:
 Nursing home expenses not covered by insurance
 Unusually high dependent care expenses
 Student who is a dislocated worker
Both changes went into effect with HEOA’s
enactment on August 14, 2008
2009-10 Changes to FM
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Your school’s policy on professional
judgment
◦ Will these changes affect how your school
handles professional judgment?
2009-10 Changes to FM
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Two other professional judgment changes
◦ HEOA allows the FAO to grant unsubsidized
Stafford loan eligibility to students whose
parents refuse to support the student and will
not complete the FAFSA.
 The details on how this process will work are still
to be determined.
 Potential pitfalls?
2009-10 Changes to FM
◦ CCRAA allows school to accept a
dependency override performed by another
school within the same award year. If a school
choose to do this, it does not need to
document the student’s special circumstances.
 This is left to the FAO’s discretion on whether they
will accept it or not.
 Potential Pitfalls?
2009-10 Changes to FM
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New Additions to the Definition of an
Independent Student
◦ Students who were in foster care or were wards
of the court at any time when they were 13 or
older
◦ Emancipated minors, as determined by a court in
the student’s state at the time FAFSA is filed
◦ Students who have a legal guardian, as
determined by a court in the student’s state at
the time FAFSA is filed
◦ Homeless, unaccompanied youths and youths at
risk for homelessness
2009-10 Changes to FM
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Question 55 reads “When you were age
13 or older, were both your parents
deceased, were you in foster care or were
you a dependent/ward of the court? “
◦ Student would say “yes” even if they were
later adopted or returned to their parents.
2009-10 Changes to FM
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Question 56 reads “As of today, are you
an emancipated minor as determined by a
court in your state of legal residence?”
◦ Emancipation is not available in 20 states,
including South Carolina, Georgia and
Tennessee. However, North Carolina does
permit the emancipation of a minor.
More info: www.jlc.org/factsheets/4/
2009-10 Changes to FM
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Question 57 reads “As of today, are you in
legal guardianship as determined by a
court in your state of legal residence?”
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What is the problem with Questions 56
and 57 in terms of future year eligibility?
2009-10 Changes to FM
HEOA fixes the problem of students
reverting back to dependent after turning
18 years of age.
 For 2010-11, the questions will be
reworded to ask if they were
emancipated minors or had legal
guardians UNTIL the age of 18.
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2009-10 Changes in FM
Homelessness – defined in section 725 of
the McKinney-Vento Homeless Assistance
Act.
 Questions #58 – 60 on the FAFSA will
ascertain if the student should be
considered independent due to
homelessness.
 “Homeless”, “Unaccompanied”, and
“Youth” all have separate definitions
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2009-10 Changes to FM
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“Homeless”: Individuals who lack a fixed,
regular, and adequate nighttime residence
including youth who:
◦ Are sharing the housing of other persons due
to loss of housing, economic hardship, or a
similar reason; are living in motels, hotels,
trailer parks or camping grounds due to the
lack of alternative adequate accommodations;
◦ Are living in emergency or transitional
shelters; are abandoned in hospitals; or are
awaiting foster care placement;
2009-10 Changes to FM
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Homeless definition continued:
◦ Have a primary nighttime residence that is a
public or private place not designated for or
ordinarily used as a regular sleeping
accommodation for human beings; and
◦ Are living in cars, parks, public spaces,
abandoned buildings, substandard housing, bus
or train stations, or similar settings
2009-10 Changes to FM
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“Unaccompanied”: Not in the physical
custody of a parent or guardian
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“Youth”: 21 years of age or younger or
still enrolled in high school
2009-10 Changes to FM
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The following parties can determine this
status:
◦ A high school or school district homeless liaison
◦ A director or designee of an emergency shelter
program funded by HUD
◦ A director or designee of a runaway or homeless
youth basic center or transitional living program
◦ Financial Aid Officer – however, there has been
no guidance given to FAOs on how this process
might work.
2009-10 Changes to FM
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Question
Answers to dependency status questions
are NOT required verification items.
However, you can if you want to do so.
Students are told this in the FAFSA
directions. Are you planning to verify any
or all of the responses to these
questions?
2009-10 Changes to FM
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Simplified Needs Test (SNT) and Auto Zero
EFC
Quick Review:
Simplified Needs Test – Assets will be excluded
from the calculation of EFC if student meets the
criteria.
Auto Zero EFC – Student’s EFC will be set to zero
automatically if student meets the criteria.
CCRAA adds dislocated worker status as an
alternative eligibility criterion to the tax filing
status and means-tested federal benefits criteria.
2009-10 Changes to FM
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Dislocated Worker
◦ Has lost a job;
◦ Has been laid off or has received a lay-off notice from a job;
◦ Is receiving unemployment benefits due to being laid off or losing a
job and is unlikely to return to a previous occupation;
◦ Is self-employed but is unemployed due to economic conditions or
natural disaster; or
◦ Is a displaced homemaker, which is a person who previously
provided unpaid services to the family, is no longer supported by
the husband or wife, is unemployed or underemployed, and is having
trouble finding or upgrading employment.
If a person quits a job, then they are generally not considered a
dislocated worker even if they are receiving unemployment
benefits.
Questions #85 (parent) and #103 (student/spouse) have been
added.
2009-10 Changes in FM
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To qualify for SNT or Auto Zero EFC:
◦ Income requirement met (below $50,000 for SNT
and at or below $30,000 for Auto Zero EFC (an
increase from $20,000 due to CCRAA)
AND
◦ Filed or were eligible to file a 1040A/1040EZ;
◦ Receiving means-tested federal benefits within the
last 24 months (was just in the base year); or
◦ Dislocated worker
* Note: Independent students without dependents other
than a spouse are not eligible for Auto Zero EFC.
2009-10 Changes in FM
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Income Protective Allowance (IPA)
Changes
A certain amount of income is needed for basic
living expenses and thereby “protected” from
the calculation of the EFC.
An increase in the IPA will protect more
income. Less income will be available for
educational expenses and the student’s EFC
will decrease.
2009-10 Changes to FM
CCRAA dictates the amount of IPA, with
an increase each year, between 2009 and
2013.
 After the 2012-13 year, ED will revert to
determining the IPA by increasing
amounts by a percentage equal to the
estimated percentage increase in the CPI
and rounding the result to the nearest
$10.
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2009-10 Changes in FM
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Where do we go from here?
◦ Prepare our systems for the requirements
◦ Revise our materials as necessary (P and P
manuals, literature)
◦ Inform students of the changes
2009-10 Changes in FM
“APPLY TO SUCCEED: ENSURING
COMMUNITY COLLEGE
STUDENTS BENEFIT FROM
NEED-BASED FINANCIAL AID”
This report from the Advisory Committee
of Student Financial Assistance was
published in September 2008.
http://www.ed.gov/about/bdscomm/list/acsf
a/edlite-index.html
2009-10 Changes to FM
The report asks how we can encourage
students to apply for financial aid,
especially since CCRAA expands grant
eligibility.
 What can you do at your campuses to
encourage students to apply, even if they
didn’t qualify before?
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Thank you!