Professional Judgment 101

1. Professional Judgment 101 2008 CASFAA CONFERENCE, ANAHEIM Craig Yamamoto, Director of Financial Aid California State University, Sacramento

2. Agenda • Professional Judgment Overview • Special Circumstances • Professional Judgment Prohibitions • Professional Judgment Case Studies • Best Practices

3. Definition of Professional Judgment • The process of evaluating a student’s exceptional circumstances according to the technical and ethical principals of federal student aid.

4. Authorization: HEA Sec. 479A(a) 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. However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances. Special circumstances may include tuition expenses at an elementary or secondary school, medical or dental expenses not covered by insurance, unusually high child care costs, recent unemployment of a family member, the number of parents enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation agreement under section 487, or other changes in a family’s income, a family’s assets, or a student’s status. Special circumstances shall be conditions that differentiate an individual student from a class of students rather than conditions that exist across a class of students. Adequate documentation for such adjustments shall substantiate such special circumstances of individual students. In addition, nothing in this title shall be interpreted as limiting the authority of the student financial aid administrator in such cases to request and use supplementary information about the financial status or personal circumstances of eligible applicants in selecting recipients and determining the amount of awards under this title. No student or parent shall be charged a fee for collecting, processing, or delivering such supplementary information.

5. Principles of Professional Judgment • Allows FAA limited flexibility on a case by case basis • Subjective • Philosophical approaches

6. Special Circumstances • Elementary or secondary school tuition expenses • Medical or dental expenses not covered by insurance • Unusually high child care costs • Recent unemployment of a family member • Divorce • Death

7. Special Circumstances (continued) • Dependency status • HEA, Section 480(d) • Need Analysis • HEA, Section 479A • Denial/reduction of Stafford Loan eligibility • 34 CFR 682.603(e) • 34 CFR 685-301(a)(7) • Satisfactory Academic Progress • 34 CFR 668.16(e)

8. Special Circumstances (continued) • No limit to FAA to request and use supplementary information about financial status or personal circumstances in selecting recipients and determining amount of awards • No student or parent shall be charged a fee for collecting, processing, or delivery such supplementary information

9. Professional Judgment Prohibitions Professional Judgment cannot be used to: • make an independent student dependent • create a new cost category in the Cost Of Attendance (COA) • directly adjust the EFC • change the EFC formula • make across the board changes • make an otherwise ineligible student eligible for Title IV aid

10. PJ Prohibitions (continued) Professional Judgment cannot be used to: • circumvent the intent of law or regulations • circumvent the FSEOG selection criteria • include expenses related to post-enrollment activities in COA • Exception: Allowance for one time direct costs of obtaining first professional license or certificate • Cost must be incurred during period of enrollment • May only be provided one time per student per eligible program

11. Documentation • Adequate documentation • Supports student’s request for special circumstances • Clearly supports FAA’s decision making process • Provides history of special circumstances for future reference

12. PJ Case Study – Dependency Status WALL-E will be a junior in 2008-09. He is 21 years old, and for the 2006-07 and 2007-08 award years he was independent because he was married. In October 2007, WALL-E and his wife divorced and WALL-E moved back home with his parents. He and his wife filed a joint federal tax return for 2007. They had a combined income of $25,000 in 2007, $3,000 of which was his income from a Federal Work-Study job. He expects to earn about the same in 2008. WALL-E’s parents are providing a place for him to live, but they claim that they cannot contribute toward his educational costs since they are also supporting WALL-E’s younger sisters who are both in high school. WALL-E’s parents earned $40,000 in 2007.

13. PJ Case Study – EFC Adjustment EVE is 18 years old and will be a freshman in college in 2008-09. In 2007, her father received a $10,000 bonus for being his company’s top salesperson. In addition, EVE’s mother appeared as a contestant on a TV quiz show and won $5,000, which the family reported on their 2007 tax return. EVE’s father does not expect to receive a bonus in 2008. In fact, his company is downsizing and he could be laid off. Also, the family used EVE’s mother’s winnings to pay off the balance of a car loan. Her parents’ income in 2007 was $60,000. They estimate that their 2008 income will be around $48,000.

14. PJ Case Study – Federal Loan Denial Bolt, an independent student, is enrolled in his forth year of an educational program leading to employment in a field with relatively low earnings potential. Bolt has already accumulated over $45,000 in Stafford Loan debt. Would you deny or reduce any subsequent loans? • FAAs may on a case-by case basis refuse to certify/originate the loan or certify/originate a loan for an amount lesser amount. • Decisions must not constitute a pattern or practice that denies access to borrowers because of race, sex, color, income, religion, national origin, age, handicapped status or selection of a particular lender or guarantor. • Cannot limit loans only in the amount needed to cover school charges or limit unsubsidized Stafford borrowing by independent students.

15. Applying PJ to SAP ED guidance allows schools to exercise PJ to determine that an individual student who does not meet the qualitative and/or quantitative progress standards is maintaining SAP if there are mitigating circumstances in that student’s case. • If SAP appeal is approved, eligibility applies to all Title IV programs • Can add conditions for individual or group of students

16. PJ Case Study - SAP Belle has completed her junior year at Ballroom College, and she performed poorly. She failed three of her courses, took an incomplete in two, and earned “D” grades in the others. At the end of her freshman year she had a cumulative 1.9 grade point average (GPA). At the end of Belle’s sophomore year, her GPA was just over a 2.0. Her current GPA no longer meets Ballroom College’s satisfactory academic progress requirements, and she is also deficient by seven credit hours. Early in the school year Belle became pregnant and encountered physical complications which resulted in her missing quite a bit of school. Belle has filed an appeal of her SAP determination.

17. Best Practices • Understand how the use of PJ will impact the student • Documentation • COA adjustment • Projected year income • EFC vs. Financial need • Update Policies and Procedures • Train staff • Inform students and parents

18. Questions? Thanks for coming and enjoy the Conference!