There are unique situations where you will need to exercise your discretion as a financial aid administrator: when modifying data used to calculate the expected family contribution (EFC), performing dependency overrides, resolving conflicting information, reporting cases of fraud, and determining a student to be an unaccompanied homeless youth.
The following special cases are discussed in further detail in this chapter:
You may choose to exercise professional judgment (PJ) to adjust a student’s cost of attendance or the data that determine a student’s EFC to account for a student’s special circumstance.
You might decide that unusual circumstances warrant making a dependent student an independent student.
You may need to determine if a student should be classified as an unaccompanied homeless youth. You may need to resolve a discrepancy after receiving conflicting information for a student.In some cases, you may discover that a student or employee has been guilty of fraud and should be reported to the Department.
The FAFSA Simplification Act (the Act) distinguishes between different categories of professional judgment by amending section 479A of the HEA.
Special Circumstances refer to the financial situations (loss of a job, etc.) that justify an aid administrator adjusting data elements in the COA or in the EFC calculation.
Unusual Circumstances refer to the conditions that justify an aid administrator making an adjustment to a student’s dependency status based on a unique situation (e.g., human trafficking, refugee or asylee status, parental abuse or abandonment, incarceration), more commonly referred to as a dependency override.
A student may have both a special circumstance and an unusual circumstance. Financial aid administrators (FAAs) may make adjustments that are appropriate to each student’s situation with appropriate documentation. See GEN-22-15 for additional guidance and discussion of the changes made by the FAFSA Simplification Act and implemented for the 2023-24 Award Year.
An aid administrator may use PJ on a case-by-case basis to adjust the student’s cost of attendance or the data used to calculate his or her EFC. This adjustment is valid only at the school making the change.
The law gives some examples of special circumstances that MAY be considered (HEA Sec. 479A):
Change in employment status, income, or assets Change in housing status (e.g., homelessness) Tuition expenses at an elementary or secondary school Medical, dental, or nursing home expenses not covered by insurance Child or dependent care expenses Severe disability of the student or other member of the student’s household Other changes or adjustments that impact the student’s costs or ability to pay for college.This is not an exhaustive list. You may use your discretion to make appropriate, reasonable adjustments to reflect a student’s situation more accurately. As explained in Chapter 2, this may include accounting for resources, such as in-kind support, that do not appear on the FAFSA or in the EFC calculation. You may also use your discretion to deny a student’s request for adjustment. However, you may not maintain a policy to deny all requests for special circumstance adjustments. This means that schools can no longer indicate that they do not perform PJs. Your institution must develop policies and a process for reviewing requests for professional judgment. Additionally, your institution must publicly disclose that students may request an adjustment based on special circumstances. This could include (but is not limited to) posting what may be considered a special or unusual circumstance on your website, include such information in mailings to students, or add language on award notifications.
The reason for your decision to approve or deny a request for professional judgment and any subsequent adjustments must be documented. The documentation must relate to the special circumstances that differentiate the student—not to conditions that exist for a whole class of students. You must resolve any inconsistent or conflicting information before making any adjustments. An FAA’s decision regarding adjustments is final and cannot be appealed to the Department.
The law doesn’t allow you to modify either the formula or the tables used in the EFC calculation; you can only change the cost of attendance, or the values of specific data elements used in the EFC calculation. In addition, you cannot adjust data elements or the cost of attendance solely because you believe the tables and formula are not adequate or appropriate. The data elements that are adjusted must relate to the student’s special circumstances. For example, if a family member is ill, you might modify the AGI to allow for lower earnings in the coming year or might adjust assets to indicate that family savings will be spent on medical expenses.
You also cannot use PJ to waive general student eligibility requirements or to circumvent the intent of the law or regulations. For instance, you cannot use PJ to change FSEOG selection criteria.
Occasionally aid administrators have made decisions contrary to the professional judgment provision’s intent. These “unreasonable” judgments have included, for example, the reduction of EFCs based on recurring costs such as vacation expenses, tithing expenses, and standard living expenses (e.g. utilities, credit card expenses, children’s allowances, etc.). Aid administrators must make “reasonable” decisions that support the intent of the provision. Your school is held accountable for all professional judgment decisions and for fully documenting each decision.
When considering using PJ, an FAA should keep in mind that an income protection allowance (IPA) is included in the EFC calculation to account for modest living expenses. Before adjusting for an unusual expense, consider whether it is already covered by the IPA. It is reasonable to assume that approximately 30% of the IPA is for food, 22% for housing, 9% for transportation expenses, 16% for clothing and personal care, 11% for medical care, and 12% for other family consumption. The income protection allowance is one of the intermediate values in the FAA Information section of the output document (labeled as “IPA”). See Chapter 3 for the IPA values and how they impact the student’s EFC calculation.
If you use professional judgment to adjust a data element, you must use the resulting EFC consistently for all FSA funds awarded to that student. For example, if for awarding the student’s Pell Grant you adjust a data element that affects the EFC, that new EFC must also be used to determine the student’s eligibility for aid from the Campus-Based and Direct Loan programs.
If you make a PJ adjustment, you must set the FAA Adjustment flag. You submit a PJ change electronically, via FAA Access to CPS Online or third-party software, and may do so without a signature from the student or parent. In FAA Access or Electronic Data Exchange (EDE), you must select “EFC adjustment requested” for the professional judgment field. The next ISIR will indicate “Professional judgment processed.”
If you exercise PJ for a student who was selected for verification (by you or the Department), you must complete verification first. This is to ensure that you have correct information before considering a PJ adjustment. You may, however, complete verification and then make the PJ adjustment on the same transaction.
You do not have to verify information that you will entirely remove due to PJ. For example, if a dependent student’s parents have separated after completion of the FAFSA form and one parent is no longer in the household size, you may decide to use PJ to remove that parent’s income from the FAFSA form. You do not have to verify that parent’s income prior to removing it. Also, using PJ does not require you to verify a student’s application if he or she was not already selected for verification by the Department or your school.
Finally, a school is not permitted to make a professional judgement for a student after that student has ceased to be eligible, including when a student is no longer enrolled.
The verification page on the FSA Assessments site has guidance to help you review your PJ and dependency override procedures; see Activity 2.
PJ examples
Example 1: Kitty’s mother had income earned from work of $25,000 in 2021 but is no longer employed. After receiving documentation confirming this, the FAA at Krieger College decides to adjust the AGI reported for Kitty’s parents to account for their reduced income. The FAA also reduces the income earned from work for Kitty’s mother to zero.
Example 2: In 2021 Alan had $4,500 in medical expenses that were out-of-pocket costs. He is married, has two children, and is the only member of his household in college, so his IPA is $46,040. Because his expenses were less than the amount for medical expenses already provided for in the IPA (11% of $46,040 is $5,067), the aid administrator at Sarven Technical Institute does not adjust Alan’s FAFSA form.
The FAFSA Simplification Act, enacted into law as part of the Consolidated Appropriations Act, 2021, and amended by the Consolidated Appropriations Act, 2022, codifies previous guidance from the Department (as issued in earlier Dear Colleague Letters) to use statutory authority to exercise professional judgment during a disaster, emergency, or economic downturn.
Financial aid administrators may, during a qualifying emergency:
determine that the income earned from work for an applicant is zero, if the applicant can provide paper or electronic documentation of receipt of unemployment benefits or confirmation that an application for unemployment benefits was submitted; and
make additional appropriate adjustments to the income earned from work for a student, parent, or spouse, as applicable, based on the totality of the family's situation, including consideration of unemployment benefits.
Acceptable documentation of unemployment should be submitted not more than 90 days from the date it was issued. However, institutions may use discretion to accept documentation older than 90 days under their general professional judgment authority if they do not have reason to believe there is conflicting information.
Further, the Department will adjust the program review selection model to account for an increase in the use of professional judgment by schools during the award years applicable to the qualifying emergency.
FAAs may also use their discretion to refuse or reduce Direct Loan funds if they document the reason, make the determination on a case-by-case basis, notify the student in writing, and ensure the decision is not due to discrimination on the basis of race, national origin, religion, sex, income, age, or disability.