Session C-33

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Session C-33

• Professional Judgment
• Carney McCullough
• U.S. Department of Education

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Professional Judgment

• Areas to which professional judgment applies
• Dependency override
• Expected family contribution
• Cost of attendance
• Unsubsidized loan eligibilitynew
• FFEL/DL denial
• Satisfactory academic progress

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Dependency Override

• Independent student is defined in section 480(d)
  of the HEA
• Meets one of eight criteria specified in the HEA
  and reflected on the FAFSA, or
• Is a student for whom a financial aid
  administrator makes a documented determination of
  independence by reason of other unusual
  circumstances.

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Dependency Override

• Case-by-case
• Unusual circumstances
• Per Webster rare, extraordinary, uncommon,
  unexpected, distinctive
• Documented!
• Determination and supporting documentation

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Dependency Override

• Conditions that do NOT qualify as unusual
  circumstances individually or in combination
• Parents refuse to contribute to the students
  education
• Parents are unwilling to provide information on
  the FAFSA or for verification
• Parents do not claim the student as a dependent
  for income tax purposes
• Student demonstrates that he or she is totally
  self-sufficient

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Dependency Override

• Examples that may constitute unusual
  circumstances
• Students voluntary or involuntary removal from
  parents home due to an abusive situation that
  threatened the students safety and/or health
• Incapacity of parents such as incarceration or a
  disability or mental or physical illness
• Inability of the student to locate the parent(s)
  after making reasonable efforts
• Other extenuating circumstances sufficiently
  documented by a signed letter from a third party

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Dependency Override

• Documentation
• Must document the reason for the determination
  and maintain documentation supporting the
  decision

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Dependency Override

• Documentationcontd.
• Should obtain supporting documentation from a
  third party with knowledge of the unusual
  circumstances. Includes
• Counselors or teachers
• Clergy
• Community groups
• Government agencies
• Medical personnel
• Courts
• Prison administrators

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Dependency Override

• Documentationcontd.
• In cases where third-party documentation cannot
  be obtained, may accept signed statement from
  relatives, friends, or the student

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Dependency Override

• You may make an otherwise dependent student,
  independent
• You may not make an independent student,
  dependent
• Annual determinationmust affirm each year that
  the unusual circumstances still exist
• Valid only at the school that performed the
  override (2008-09)

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Dependency Override

• Effective for the 2009-10 award year, a financial
  aid administrator may rely on a dependency
  override performed by another institution for the
  same award year

--Section 480(d)(2), College Cost Reduction and
Access Act of 2007
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Dependency Override

• What would you do?
• Margaret has lived with her father and
  grandmother her entire life. Her father died
  when she was 16 and she continues to live with
  her grandmother. There is currently a
  restraining order against her mother which
  forbids any contact. The order was issued after
  the mother tried to kidnap her when she was 15.
  She doesnt know how to fill out her FAFSA.

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Dependency Override

• What would you do?
• Annie is 21 years old. Shes been in trouble and
  was arrested, tried, and convicted for passing
  bad checks. Shes now on probation under very
  strict criteria. One of those criteria is that
  she is forbidden from having any contact with her
  mother who works for the probation department.
  She comes to you because she doesnt know how she
  can get parental information to complete her
  FAFSA. Her father is deceased and she has a
  married sister who lives close by.

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Expected Family Contribution/Cost of Attendance

• Section 479A of the Higher Education Act of 1965,
• as amended
• (a) IN GENERALNothing 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.

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Expected Family Contribution/Cost of Attendance

• Examples of special circumstances listed in
  section 479A of the HEA
• Elementary or secondary school tuition expenses
• Medical, dental, or nursing home expenses not
  covered by insurance
• Unusually high child or dependent care costs
• Recent unemployment of family member or
  independent student

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Expected Family Contribution/Cost of Attendance

• Examples of special circumstances listed in
  section 479A of the HEAcontd.
• Family member or student is a dislocated worker
• Parents enrolled in college
• Change in housing status resulting in
  homelessness
• Other changes in familys income, familys
  assets, or students status

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Expected Family Contribution/Cost of Attendance

• Use of professional judgment is
• Not limited to these circumstances
• Not required in these circumstances
• Examples are just that
• Ideas about the types of conditions you might
  consider

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Expected Family Contribution/Cost of Attendance

• Examples of unreasonable adjustments
• Vacation expenses
• Tithing expenses
• Standard living expenses such as utilities, cable
  bills, credit card payments, cell phone,
  childrens allowances
• Standard maintenance items such as lawn care,
  home repair, and gasoline

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Expected Family Contribution/Cost of Attendance

• Remember!
• Must be special circumstances
• Must be individual, not a class of students
• Must have adequate documentation
• Cannot use professional judgment to waive
  eligibility requirements (e.g. regular student)
  or circumvent the intent of the statute

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Expected Family Contribution

• To adjust the EFC
• Must adjust a data element in the formula (e.g.
  AGI)
• May not
• Change the formula itself (e.g. asset conversion
  rate) or the tables
• Make an adjustment to the PC, SC, or EFC
• Make the adjustment on the initial FAFSA

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Expected Family Contribution

• Remember
• Must first resolve any conflicting information
  before making an adjustment
• Must verify base year data if selected for
  verification
• Adjustment is only valid at the school making it
• Must use resulting EFC consistently for all FSA
  funds

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Expected Family Contribution

• Things to Remember
• Income Protection Allowance
• For parents and independent students with
  dependents
• Increases as family size increases
• Decreases as number in college increases
• For dependent students
• 2008-09 3,000
• 2009-10 3,750

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Expected Family Contribution

• Things to Remembercontd.
• For independent students without dependents other
  than a spouse
• Single and married with both in college
• 2008-09 6,050
• 2009-10 7,000
• Married with one in college
• 2008-09 9,700
• 2009-10 11,220

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Expected Family Contribution

• The IPA is
• 30 food
• 22 housing
• 9 transportation
• 16 clothing and personal
• 11 medical
• 12 other family consumption

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Expected Family Contribution

• What would you?
• Sam is married and has two children
• Sam had 2,300 in unreimbursed medical expenses
• Sam is the only family member in college
• IPA is 24,220
• 24,220 x 11 2,664
• Would you make an adjustment for Sam?

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Expected Family Contribution

• What would you?
• Susie is a dependent student who lives with her
  mother and sister
• Susie is the only family member in college
• Susies mother has incurred credit card debt of
  8,000
• IPA is 19,150
• 19,150 x 12 2,298
• Would you make an adjustment for Susie?

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Expected Family Contribution

• Things to Remember
• Education Savings and Asset Protection Allowance
• Increases with the age of the parent/independent
  student
• Deducted from net worth

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Expected Family Contribution

• Things to Remembercontd.
• Asset Conversion Rate
• Parents rate 12
• Dependent students rate 20
• Independent student
• Without dependents other than a spouse 20
• With dependents other than a spouse 7

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Expected Family Contribution

• How the Asset Contribution is calculated
• 100,000 net value rental home
• 5,000 savings
• 105,000 net worth
• - 42,300 APA
• 62,700 discretionary net worth
• x .12 asset conversion rate
• 7,524 included in parental contribution

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Expected Family Contribution

• What would you do?
• Marys parent s own a rental home with a net
  worth of 100,000
• The rental home burns down
• Family loses potential rental income
• Upcoming insurance settlement

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Cost of Attendance

• Tuition and fees
• Room and board
• Books and supplies computer allowance
• Transportation
• Miscellaneous personal expenses
• Dependent care allowance

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Cost of Attendance contd.

• Disability related expenses
• Study abroad expenses
• Cooperative education expenses
• Loan fees
• Cost of obtaining first professional credential
  or license

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Cost of Attendance contd.

• Less than half-time students
• Tuition and fees
• Books and supplies
• Transportation
• Dependent care
• Room and Board (limited to not more than 3
  semesters/2 consecutive)

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Cost of Attendance contd.

• Students enrolled in correspondence program
• Tuition and fees
• Books and supplies, if required
• Transportation
• Room and Board (only for required residential
  training)

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Cost of Attendance contd.

• Incarcerated students
• Tuition and fees
• Books and supplies, if required

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Expected Family Contribution/Cost of Attendance

• Documentation
• Must document the reason for the determination
  and maintain documentation supporting the
  decision

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Expected Family Contribution/Cost of Attendance

• Documentationcontd.
• Examples
• Medical bills not reimbursed by insurance
• Elementary/Secondary school tuition bills
• Child care or dependent care bills
• Pay stubs
• Documentation of unemployment
• Tax returns

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Expected Family Contribution/Cost of Attendance

• Documentationcontd.
• Can I collect too much documentation
• Not a chance!
• No way!
• NO!
• NEVER!
• Not!

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Unsubsidized Loan Eligibility

• The Higher Education Opportunity Act of 2008
  (HEOA) amended section 479A of the HEA to allow
  FAAs to offer a dependent student an unsubsidized
  FFEL/DL without parental data being provided on
  the FAFSA if the FAA verifies that
• The parent or parents of such student have ended
  financial support of the student, and
• The parents refuse to file such form

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Unsubsidized Loan Eligibility

• New provision was effective upon enactment of the
  HEOAAugust 14, 2008
• Operational details will be forthcoming
• What we do know is that the FAA must verify the
  situation by collecting appropriate documentation

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Unsubsidized Loan Eligibility

• What would you do?
• Julie is a 21-year-old student who lives with her
  parents. Her parents do not believe that the
  Federal government has the legal right to levy
  income tax, so they have not paid taxes or filed
  a tax return for the last ten years. Julie has
  been working since she turned 18 and does file a
  tax return each year. Her parents refuse to
  provide any information or sign the FAFSA.

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FFEL/DL Certification

• An institution may refuse to certify or may
  reduce the borrowers determination of need.
• Must be done on a case-by-case basis
• Reason must be documented and provided to the
  student in writing
• Documentation must be retained in students file
• No discrimination

Section 479A(c) of the HEA, 34 C.F.R. sections
682.603(e) and 685.301(a)(7)
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Satisfactory Academic Progress

• An institution may determine that a student is
  making SAP although the student does not have the
  appropriate GPA at the end of the second year if
  the institution determines that students failure
  to meet the requirements is due to
• Death of a relative
• Injury or illness of the student
• Other special circumstances
• Must be documented!

Section 484(c) of the HEA, 34 C.F.R. section
668.34(c)
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Contact Information

• We appreciate your feedback and comments. I can
  be reached at
• Phone [phone]
• Email Carney.McCullough_at_ed.gov
• Fax [phone]

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Additional Scenarios

• What would you do? For each scenario
• Would you exercise professional judgment?
• What type of documentation would you request?
• What type of adjustment(s) would you make?

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Additional Scenarios contd.

• Evan is a 20-year-old student. Evan had lived
  with his mother and two younger siblings until
  his mother recently remarried. His mother and
  stepfather have a prenuptial agreement that the
  stepfather will cover household expenses, but no
  extra costs for Evan and his siblings like
  tuition, music lessons, etc. Evan asks that his
  stepfathers income not be included because his
  mother and stepfather have only been married for
  six months and Evan has not lived with him.

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Additional Scenarios contd.

• Patrick is concerned because his father has been
  unemployed since February. This has caused the
  family to drastically cut their expenses and use
  their savings to meet living expenses. Using
  Patricks parents base year income, he has a
  nine-month EFC of 1450.

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Additional Scenarios contd.

• Dory has requested an income reduction due to the
  fact that her husbands business is not making
  the same money this year as last year. He makes
  and installs cabinets and has had to drop his
  hourly rate from 26 to 14 to get business.