© NASFAA 2000 Professional Judgement & Need Analysis in Graduate Aid MASFAA Conference November 20, 2003 Scott D. Lewis, Debt Management Consultant USA Funds Services

© NASFAA 2000 Topics Covered u Statutory Authority & Evolution u Underlying Concepts u Principles of Need Analysis u Professional Judgement Principles u Areas of Professional Judgement u Recent Changes u Documentation u Case Studies

© NASFAA 2000 Statutory Authority u Section 479A of the Higher Education Act provides the authority for the financial aid administrator to exercise discretion known as “professional judgement.” HEA Section 479A

© NASFAA 2000 Pop Quiz! The term “professional judgement” was first used for the academic year. What term was used prior to this change?

© NASFAA 2000 Evolution u Higher Education Amendments of 1986 broadened professional judgement authority

© NASFAA 2000 Underlying Concepts u Need Analysis used to allocate limited financial aid resources

© NASFAA 2000 Principles of Need Analysis u Family responsible for college cost u Aid distributed based on ability to pay - not willingness u Ability to pay determined independent of college cost u Horizontal vs. vertical equity u Snapshot approach u Need Analysis results are a benchmark

© NASFAA 2000 Correction, Update or Adjustment? Correction = FAFSA information initially reported incorrectly can be corrected Update = Initial FAFSA information which was correct when the FAFSA was filed, but has since changed, can be updated Adjustment = A financial aid administrator wishing to make a change while exercising professional judgement can make an adjustment

© NASFAA 2000 Professional Judgement Principles u Can use discretion in certain areas when a student’s family has unique or extraordinary circumstances u Circumstances must differentiate an individual student from a class of students

© NASFAA 2000 Professional Judgement Principles What are unique or extraordinary circumstances? u Tuition expenses at an elementary or secondary school u Medical or dental expenses not covered by insurance u Unusually high child care costs u Recent unemployment of a family member u The number of parents enrolled at least half-time in a degree, certificate or other program leading to a recognized educational credential at a federal aid granting institution u Other changes in a family’s income, a family’s assets, or a student’s assets

© NASFAA 2000 Professional Judgement Principles (cont’d) u Must be made on an individual case-by- case basis u Across the board changes are not permitted u Policies and procedures to objectively identify students u Subjective - No wrong or right answer u You must make your own decision

© NASFAA 2000 Areas of Professional Judgement u Dependency Status u Data Elements u Cost of Attendance u FFEL & Direct Loan Eligibility u Satisfactory Academic Progress

© NASFAA 2000 Cannot Use Professional Judgement to: u Change a student’s status from independent to dependent u Adjust the EFC directly u Alter the need analysis formula or change table values

© NASFAA 2000 Cannot Use Professional Judgement to: (cont’d) u Create a new category of costs u Include expenses for post-enrollment activities, such as bar examinations or professional licensing fees, in the student’s cost of attendance u Circumvent statutory FSEOG selection criteria

© NASFAA 2000 Recent Changes u Beginning with award year, schools no longer could treat legal guardians as parents when determining dependency and calculating student eligibility. u Beginning with award year, parents of a dependent student no longer may be included as household members in college. An Additional Consideration… u Roth IRA conversions.

© NASFAA 2000 Documentation Requirements u You have the authority to request and use supplemental information u Special circumstances and action taken must be documented in the student’s file

© NASFAA 2000 Purpose of Documentation u Provides additional information and a history for future reference

© NASFAA 2000 Two Types of Documentation A written request from the student and –Letters –Bills –Receipts –Pay Stubs –Other third party documentation A clear record of: –Decision made and how it was reached –Decision date –Description and date of actions taken –School policy and procedure citation –Name and title of decision maker

© NASFAA 2000 Maintaining Documentation u Documentation may be maintained in paper or electronic files

© NASFAA 2000 Impact of Packaging Policies and Available Funds u Is there additional aid available to meet the increased need?

© NASFAA 2000 Case Studies What would you do as a financial aid administrator in these situations?

© NASFAA 2000 Professional Judgement & Need Analysis in Graduate Aid Questions?