Special Circumstances

1. Special Circumstances 2013 High School Counselor Workshop NYS HESC & NYSFAAA

2. Basis • Assessed on a case by case basis • Mostly considered rare, extraordinary or extreme • Otherwise known as Professional Judgment • Adjustments are made to the FAFSA based on special circumstances • US Department of Education is prohibited from regulating (HEA Sec.479A), but offers clarification • Determination requires documentation • Conflicting information needs resolution

3. Basis (continued) • Not used to help students circumvent the law or regulations • Decisions must be reasonable in nature • Do not carry over from year to year

4. Applicable Areas • Dependency Override • Expected Family Contribution • Cost of Attendance • Unsubsidized Stafford Loan Eligibility

5. Unreasonable Adjustments • Recurring • Vacation expenses • Tithing • Standard living expenses • Credit card • Utilities

6. Cost of Attendance • One-time increase based on additional costs due to school purposes • Examples: • Computer purchase • Books and supplies that exceed the allotment within a student budget that exceed the total cost of attendance

7. Independence • 24 or older • Married • Attending a Graduate Program • Veteran or Active Duty Military • Dependent or Children getting more than 50% of support • Foster Care (ages 13 or older) • Orphan/Ward of the Court • Emancipated Minor, as determined by state • Legal Guardianship • Homeless Unaccompanied Youth • Youths at Risk of Homelessness

8. Homeless Youth • Homeless: A student is considered such if they lacks fixed, regular and adequate housing • Unaccompanied: The student Is not living in the physical custody of his/her guardian • Youth: 21 years of age or younger • In cases of 22 and 23, a dependency override is needed

9. Homeless Youth Requirements • Documentation consists of: • As determined by the high school or school district homeless liaison • Director of an emergency shelter or transitional housing program funded by the US Department of Housing and Urban Development • Director of a runaway or homeless youth basic center or transitional program • If student does not have documentation, Financial Aid Administrator (FAA) can determine of youth is unaccompanied • Unaccompanied homeless youth, like incarcerated students, may use the address of the school as their own on the FAFSA

10. Who is the parent? • Custodial • Student lives with you more than 50% of the time and receives more than 50% of financial support • Adoptive • Legal adoption via the family court • Step-parent • You married the student’s parent **No foster parents, legal guardians or other relatives**

11. Change to Parent Definition 2014-15 • Based on recent Defense of Marriage Act (DOMA) Act changes • If the parents of a dependent student are unmarried and living together, will need to report both income/asset information • Regardless of gender • Parent is defined as Biological or Adoptive • Households ineligible to use the IRS DRT • No longer use terms Mother and Father

12. EFC Documentation • IRS Forms • Canceled checks demonstrating support paid • Documentation from a care provider • Details on who is included in household size • Include age, enrollment status, occupation

13. Dependency Overrides • Should originate from a third party with knowledge of the unusual circumstances of the student • Third party: teacher, counselor medical authority, clergy, prison administrator, government agency, court • Evidence: signed letter or official document such as court order • Can include situations such as: • Abandonment by parents • Abusive family environment that threatens health or safety • Student unable to locate parents

14. Dependency Overrides • The following are not reasons for an override: • Parents refusing to contribute to student’s education • Parents unwilling to provide information on the FAFSA or for verification • Parents don’t claim the student as a dependent for income tax purposes • Student demonstrates total self-sufficiency

15. Expected Family Contribution • Unusually large medical bills or nursing home expenses that are not covered by insurance • Unusually high elementary or secondary school tuition or dependent care expenses • Parent or student recently lost their job • Conversion of a regular IRA to Roth IRA • Parent enrolled at least ½ time in a degree/certificate program • Additional family members • example: Siblings

16. Distribution of Retirement Funds/Rollovers • Transfer of funds to savings if counted as an asset • Unusually high income due to distribution of retirement funds • Income based on a an annual pension pay out • IRA to Roth Conversion • Reduce the income and taxes paid to the amount that would have been reported if there was no Roth conversion, if warranted • Even if the family does not actually have the additional income or assets available

17. IRA Distribution/Rollover Documentation • IRS Forms • May require more than one year • Document from family detailing distribution, itemization of family income and expenses

18. Medical Costs • Medical, dental and nursing home expenses not covered by insurance • Or used as a deduction on tax return • Expenses are included in the Income Protection Allowance and represents 11% of the value. • Expenses must exceed 11% of the IPA for the applicant • Data elements on FAFSA are changed to relate to an adjustment of income/assets to modify the AGI to allow for lower earnings in the coming year • Might adjust assets to indicate that family savings that will be spent on medical expenses

19. Medical Documentation • Family Statement • Copies of payment plans or agreements • Copies of charges and insurance coverage statements • IRS Forms and Schedules

20. Unsubsidized Loan Eligibility • Students without parental support who don’t qualify for independence, are eligible for an unsubsidized Stafford loan • Document parents’ refusal to complete the FAFSA and lack of financial support, including the date of when support ended • If parent refuses to sign & date such a statement, documentation from a third party is needed

21. Questions?