Download ppt - Professional Judgment Carney McCullough

OFFICE OF POSTSECONDARY EDUCATION

Professional Judgment

Carney McCullough


Professional JudgmentAreas to which professional judgment

appliesDependency overrideExpected family contributionCost of attendanceUnsubsidized loan eligibility—newFFEL/DL denialSatisfactory academic progress

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Dependency Override

Independent student is defined in section 480(d) of the HEAMeets one of eight criteria specified in the HEA

and reflected on the FAFSA, orIs 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-caseUnusual circumstances

Per Webster: rare, extraordinary, uncommon, unexpected, distinctive

Documented!Determination and supporting documentation

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Dependency OverrideConditions that do NOT qualify as “unusual

circumstances” individually or in combinationParents refuse to contribute to the student’s

educationParents are unwilling to provide information on the

FAFSA or for verificationParents do not claim the student as a dependent for

income tax purposesStudent demonstrates that he or she is totally self-

sufficient

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Dependency OverrideExamples that may constitute “unusual

circumstances”Student’s voluntary or involuntary removal from parents’

home due to an abusive situation that threatened the student’s 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 OverrideDocumentation—cont’d.

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

Documentation—cont’d.

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 determination—must 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 doesn’t know how to fill out her FAFSA.

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Dependency OverrideWhat would you do?

Annie is 21 years old. She’s been in trouble and was arrested, tried, and convicted for passing bad checks. She’s now on probation under very strict criteria. One of those criteria is that she is forbidden from having any contact with her father who works for the probation department. She comes to you because she doesn’t know how she can get parental information to complete her FAFSA. Her mother is deceased and she has a married sister who lives close by.

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Expected Family ContributionCost of Attendance

Section 479A of the Higher Education Act of 1965, as amended—

“(a) IN 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.”

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Examples of special circumstances listed in section 479A of the HEA—Elementary or secondary school tuition expensesMedical, dental, or nursing home expenses not

covered by insuranceUnusually high child or dependent care costsRecent unemployment of family member or

independent student

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Examples of special circumstances listed in section 479A of the HEA—cont’d.Family member or student is a dislocated workerParents enrolled in collegeChange in housing status resulting in homelessnessOther changes in family’s income, family’s assets, or

student’s status

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Expected Family Contribution Cost of Attendance

Use of professional judgment is—Not limited to these circumstancesNot required in these circumstancesExamples are just that:

Ideas about the types of conditions you might consider

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Examples of “unreasonable” adjustments—Vacation expensesTithing expensesStandard living expenses such as utilities, cable

bills, credit card payments, children’s allowancesStandard maintenance items such as lawn care

and home repair

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Expected Family Contribution Cost of Attendance

Remember!Must be “special circumstances”Must be individual, not a class of studentsMust have adequate documentationCannot 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

Dear Colleague Letter GEN-09-04 April 2, 2009Encourages FAAs to consider special

circumstances during these challenging economic times

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Dear Colleague Letter GEN-09-05 May 8, 2009Letters to all recipients of

unemployment insurance benefits that can be used as documentation

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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 ContributionRemember—

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 itMust use resulting EFC consistently for all FSA

funds

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Expected Family ContributionThings to Remember—

Income Protection AllowanceFor 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 ContributionThings to Remember—cont’d.

For independent students without dependents other than a spouseSingle 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 ContributionThe IPA is—

30% food22% housing 9% transportation16% clothing and personal11% medical12% other family consumption

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Expected Family ContributionWhat would you?

Sam is married and has two childrenSam had $2,300 in unreimbursed medical

expensesSam is the only family member in collegeIPA is $24,220

$24,220 x 11% = $2,664Would you make an adjustment for Sam?

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Expected Family ContributionWhat would you?

Susie is a dependent student who lives with her mother and sister

Susie is the only family member in collegeSusie’s mother has incurred credit card debt

of $8,000IPA is $19,150

$19,150 x 12% = $2,298Would you make an adjustment for Susie?

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Things to Remember—Education Savings and Asset Protection

Allowance Increases with the age of the parent/independent

studentDeducted from net worth

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Expected Family ContributionThings to Remember—cont’d.

Asset Conversion RateParent’s rate = 12%Dependent student’s rate = 20% Independent student

Without dependents other than a spouse = 20%With dependents other than a spouse = 7%

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Expected Family ContributionHow 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 worthx .12 asset conversion rate$ 7,524 included in parental contribution

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What would you do?Mary’s parent s own a rental home with a

net worth of $100,000The rental home burns downFamily loses potential rental incomeUpcoming insurance settlement

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Cost of AttendanceTuition and feesRoom and boardBooks and supplies; computer allowanceTransportationMiscellaneous personal expensesDependent care allowance

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Cost of Attendance – cont’d.

Disability related expensesStudy abroad expensesCooperative education expensesLoan feesCost of obtaining first professional credential or

license

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Less than half-time students—Tuition and feesBooks and suppliesTransportationDependent careRoom and Board (limited to not more than 3

semesters/2 consecutive)

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Students enrolled in correspondence program—Tuition and feesBooks and supplies, if requiredTransportationRoom and Board (only for required residential

training)

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Incarcerated students—

Tuition and feesBooks and supplies, if required

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Documentation—Must document the reason for the

determination and maintain documentation supporting the decision

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Documentation—cont’d.Examples—

Medical bills not reimbursed by insuranceElementary/Secondary school tuition billsChild care or dependent care billsPay stubsDocumentation of unemploymentTax returns

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Documentation—cont’d.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, andThe parents refuse to file such form

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New provision was effective upon enactment of the HEOA—August 14, 2008

Eligible for base amount for grade level & additional $2,000

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Unsubsidized Loan EligibilityMust collect and maintain appropriate

documentationSigned and dated statement from parents

Has stopped providing financial support and dateWill not provide financial support in the futureRefuses to complete parental section of FAFSA

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What would you do?

Julie is a 21-year-old student. 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 CertificationAn institution may refuse to certify or may

reduce the borrower’s determination of need.

Must be done on a case-by-case basisReason must be documented and provided to the

student in writingDocumentation must be retained in student’s fileNo 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 ProgressAn 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 student’s failure to meet the requirements is due to—Death of a relative Injury or illness of the studentOther special circumstances

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

Must be documented!

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Contact Information

We appreciate your feedback and comments. I can be reached at:

• Phone: 202-502-7639• Email: [email protected]• Fax: 202-502-7874

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