Use Of Professional Judgment By Financial Aid Officers for Applicants with Special Circumstances

1. Use Of Professional Judgment By Financial Aid Officers for Applicants with Special Circumstances Presented by Kathy Parker Senior Financial Aid Advisor SUNY Canton Developed by Carolyn Corcoran, SUNY Potsdam School Counselor Workshops, Oct. 2013

2. Authority and Guidance • Spelled out in Sec. 479A of Higher Education Act • No regulations • USED is prohibited from regulating • USED offers clarification on specific issues to college aid officers through “Dear Colleague Letters” • Provides flexibility to college aid officers in the administration of federal student aid programs for applicants/families with special circumstances

3. Professional Judgment for FEDERAL Aid • Applicable areas -- • Dependency override • Expected family contribution • Cost of attendance • Unsubsidized loan eligibility

4. DependencyOverrides

5. Independent student is defined in Section 480(d) of the Higher Education Act If an individual meets one of eight criteria specified in the HEA and reflected on the FAFSA, HE/SHE DOES NOT NEED Dependency Override Being able to answer “yes” to at least one of the eight “automatic criteria “ defines the student as Independent for Federal Student Aid purposes Answering the Automatic Independence Questions Inaccurately will cause the FAFSA to be processed inaccurately under the Independent Student Needs Analysis Formula School Aid Office May Ask the Applicant to Document that he/she meets Automatic Independence Criteria

6. Federal Independence Criteria • Were you born before January 1, 1991? • As of today, are you married? (Also answer “Yes” if you are separated but not divorced.) • At the beginning of the 2014-2015 school year, will you be working on a master’s or doctorate program (such as an MA, MBA, MD, JD, PhD, EdD, graduate certificate, etc) • Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training? See Notes page 2. • Are you a veteran of the U.S. Armed Forces? See Notes page 2. • Do you now have or will you have children who will receive more than half of their support from you between July 1, 2014 and June 30, 2015? • Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2015?

7. Federal Independence Criteria Cont’d 8. At any time since you turned age 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court? See Notes page 9. • As determined by a court in your state of legal residence, are you or were you an emancipated minor? See Notes page 9. • As determined by a court in your state of legal residence, are you or were you in legal guardianship? See Notes page 9. • At any time on or after July 1, 2013, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless? See Notes page 9. • At any time on or after July 1, 2013 did the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless? See Notes page 9. • At any time on or after July 1, 2013, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? See Notes page 9.

8. Higher Ed Act Also Defines an Independent Student As: • Is a student for whom a financial aid administrator makes a documented determination of independence by • reason of documented unusual circumstances - exercises “PJ” and makes the student independent

9. Conditions that do NOT qualify as “unusual circumstances” either individually or in combination— cannot be used to make a student “independent” Parents refuse to contribute Parents are unwilling to provide information Parents do not claim the student as an income tax dependent Student demonstrates total self-sufficiency

10. Examples 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

11. Examples that may constitute “unusual circumstances” (more) • 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

12. Dependency Override (cont’d) Document, Document, Document!!! • College Aid Officer must document the reason for the determination and maintain documentation supporting the decision • Supporting documentation should be from a third party with knowledge of the unusual circumstances

13. Dependency Override (cont’d) Documentation (more) • Third party includes— • Counselors or teachers – That’s “you guys!” • Clergy • Community groups • Government agencies • Medical personnel • Courts • Prison administrators

14. Dependency Override (cont’d) Documentation (more) • In cases where third party documentation cannot be obtained, “may” accept signed statement from relatives, friends, or the student • Most aid officers will require third party documentation

15. Dependency Override (cont’d) Effective with 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

16. Adjustments to the Expected Family Contribution (EFC) and Cost of Attendance (COA)

17. Adjustments to the EFC and COA 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.”

18. Adjustments to the EFC and COA (cont’d) 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

19. Adjustments to the EFC and COA (cont’d) Examples of special circumstances listed in section 479A of the HEA (more)— • Family member or student is a dislocated worker • Parents enrolled in college • Change in housing status resulting in homelessness • Other changes in family’s income, family’s assets, or student’s status (i.e., due to temporary layoff, drop in income due to reduction in hours, reduced salary, or elimination of bonuses)

20. Adjustments to the EFC and COA (cont’d) Other Common Examples of Special Circumstances Include- • Death, disability, or serious illness of a wage-earner • Change in Marital Status due to recent separation or divorce of the student’s parents (i.e., to separate the income of the custodial parent from the non-custodial parent) or if parent is widowed • Termination of a child support agreement (i.e., the custodial parent will no longer receive child support payments during the award year) • Reduction or loss of untaxed income (i.e., disability payments, workers compensation, or child support pyments) • Change in income due to retirement • Unusual Capital Gains • One time payment (lump sum) was received (i.e., IRA distribution)

21. EFC and COA Adjustments (cont’d) 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 that an aid officer might consider

22. EFC and COA Adjustments (cont’d) Examples of “unreasonable” adjustments— • Vacation expenses • Tithing expenses • Standard living expenses such as utilities, cable bills, credit card payments, children’s allowances • Standard maintenance items such as lawn care and home repair

23. EFC and COA Adjustments (cont’d) • Must be “special circumstances” • Special circumstances may be circumstances beyond the family’s control but are not required to be circumstances beyond a family’s control • Must be individual, not a class of students • Must have adequate documentation • Cannot use professional judgment to waive eligibility requirements (e.g. regular student, citizenship status) or circumvent the intent of the statute

24. EFC/Expected Family Contribution An aid officer, with sufficient documentation from the applicant/family, may adjust the EFC— • Must adjust a data element (s) in the needs analysis formula (e.g. AGI, Tax Paid, Wages) • May not— • Change the formula itself (e.g. asset conversion rate) or the formula’s tables • Make a direct adjustment to the PC, SC, or EFC • Make the adjustment on the initial FAFSA

25. Adjustment to EFC by Professional Judgement of Aid Officer (cont’d) • Must first resolve any conflicting information on the FAFSA before making an adjustment • Must verify base year data if applicant was selected for verification by student aid processor • Adjustment is only valid at the school making it • Must use resulting EFC consistently for all Federal Student Aid funds

26. Adjustment to the COA – Cost of Attendance The STANDARD Components: • Tuition and fees • Room and board • Books and supplies • Transportation • Miscellaneous personal expenses

27. Examples of Other Costs That Can Be Added through Professional Judgment: • Disability related expenses • Child Care expenses • Study abroad expenses • Cooperative education expenses • Loan fees • Cost of obtaining first professional credential or license • Cost of required curriculum materials (i.e., tools, equipment, uniforms, lab fees)

28. Adjustments to the EFC and COA due to Aid Officer’s Professional Judgement Documentation— • Aid Officer must document the reason for the determination • Aid Officer must maintain documentation supporting the decision

29. EFC and COA Adjustments (cont’d) Examples of documentation • Medical bills not reimbursed by insurance • Elementary/Secondary school tuition bills • Child care or dependent care bills • Pay stubs • Documentation of unemployment • Tax returns

30. “Unsubsidized Loan Only” Eligibility (for students with parents unwilling to file FAFSA)

31. Unsubsidized Loan Only Eligibility for Students with Unwilling Parents FAAs may offer a dependent student an unsubsidized loan 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 the FAFSA • No other type of federal can be offered

32. Unsub Loan Only Eligibility (cont’d) • Student would be eligible for base amount for grade level & additional $2,000 per Year • Freshman: $3500 + $2000 = $5500 • Sophomore: $4500 + $2000 = $6500 • Junior/Senior: $5500 + $2000 = $7500 • Aid Officer must collect and maintain appropriate documentation to award the “unsub only” scenario

33. “Unsub Loan Eligibility Only” (cont’d) Requires Signed and dated statement from parents that includes: • Has stopped providing financial support and date that support ceased • Will not provide financial support in the future • Refuses to complete parental section of FAFSA

34. Questions??