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Professional Judgement & Professional Judgement & Need Analysis in Need Analysis in

Graduate AidGraduate Aid

MASFAA ConferenceMASFAA ConferenceNovember 20, 2003November 20, 2003

Scott D. Lewis, Debt Management ConsultantScott D. Lewis, Debt Management Consultant

USA Funds ServicesUSA Funds Services

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Topics CoveredTopics Covered Statutory Authority & EvolutionStatutory Authority & Evolution

Underlying ConceptsUnderlying Concepts

Principles of Need AnalysisPrinciples of Need Analysis

Professional Judgement PrinciplesProfessional Judgement Principles

Areas of Professional JudgementAreas of Professional Judgement

Recent ChangesRecent Changes

DocumentationDocumentation

Case StudiesCase Studies

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Statutory AuthorityStatutory Authority

Section 479A of the Section 479A of the Higher Education Act Higher Education Act provides the authority provides the authority for the financial aid for the financial aid administrator to exercise administrator to exercise discretion known as discretion known as “professional “professional judgement.”judgement.”

HEA Section 479A

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Pop Quiz!Pop Quiz!

The term “professional judgement” was first The term “professional judgement” was first used for the 1993-1994 academic year.used for the 1993-1994 academic year.

What term was used prior to this change?What term was used prior to this change?

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EvolutionEvolution

Higher Education Amendments of Higher Education Amendments of 1986 broadened professional 1986 broadened professional judgement authorityjudgement authority

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Underlying ConceptsUnderlying Concepts

Need Analysis used to Need Analysis used to allocate limited financial aid allocate limited financial aid resourcesresources

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Principles of Need AnalysisPrinciples of Need Analysis

Family responsible for college costFamily responsible for college cost Aid distributed based on ability to pay - Aid distributed based on ability to pay -

not willingnessnot willingness Ability to pay determined independent of Ability to pay determined independent of

college costcollege cost Horizontal vs. vertical equityHorizontal vs. vertical equity Snapshot approachSnapshot approach Need Analysis results are a benchmarkNeed Analysis results are a benchmark

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Correction, Update or Correction, Update or Adjustment?Adjustment?

CorrectionCorrection = FAFSA information initially = FAFSA information initially reported incorrectly can be correctedreported incorrectly can be corrected

UpdateUpdate = Initial FAFSA information which was = Initial FAFSA information which was correct when the FAFSA was filed, but has correct when the FAFSA was filed, but has since changed, can be updatedsince changed, can be updated

AdjustmentAdjustment = A financial aid administrator = A financial aid administrator wishing to make a change while exercising wishing to make a change while exercising professional judgement can make an professional judgement can make an adjustmentadjustment

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Professional JudgementProfessional JudgementPrinciplesPrinciples

Can use discretion in certain areas when a Can use discretion in certain areas when a student’s family has unique or student’s family has unique or extraordinary circumstancesextraordinary circumstances

Circumstances must differentiate an Circumstances must differentiate an individual student from a class of individual student from a class of studentsstudents

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Professional JudgementProfessional JudgementPrinciplesPrinciples

What are unique or extraordinary circumstances?What are unique or extraordinary circumstances?

Tuition expenses at an elementary or secondary schoolTuition expenses at an elementary or secondary school Medical or dental expenses not covered by insuranceMedical or dental expenses not covered by insurance Unusually high child care costsUnusually high child care costs Recent unemployment of a family memberRecent unemployment of a family member The number of parents enrolled at least half-time in a The number of parents enrolled at least half-time in a

degree, certificate or other program leading to a degree, certificate or other program leading to a recognized educational credential at a federal aid recognized educational credential at a federal aid granting institutiongranting institution

Other changes in a family’s income, a family’s assets, Other changes in a family’s income, a family’s assets, or a student’s assetsor a student’s assets

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Professional Judgement Professional Judgement Principles Principles (cont’d)(cont’d)

Must be made on an individual case-by-Must be made on an individual case-by-case basiscase basis

Across the board changes are not permittedAcross the board changes are not permitted Policies and procedures to objectively Policies and procedures to objectively

identify studentsidentify students Subjective - No wrong or right answerSubjective - No wrong or right answer You must make your own decisionYou must make your own decision

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Areas of Professional Areas of Professional JudgementJudgement

Dependency StatusDependency Status Data ElementsData Elements Cost of AttendanceCost of Attendance FFEL & Direct Loan FFEL & Direct Loan

EligibilityEligibility Satisfactory Academic Satisfactory Academic

ProgressProgress

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Cannot Use Professional Cannot Use Professional Judgement to:Judgement to:

Change a student’s status from Change a student’s status from independent to dependentindependent to dependent

Adjust the EFC directlyAdjust the EFC directly Alter the need analysis formula Alter the need analysis formula

or change table valuesor change table values

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Cannot Use Professional Cannot Use Professional Judgement to: Judgement to: (cont’d)(cont’d)

Create a new category of costsCreate a new category of costs Include expenses for post-enrollment Include expenses for post-enrollment

activities, such as bar examinations or activities, such as bar examinations or professional licensing fees, in the student’s professional licensing fees, in the student’s cost of attendancecost of attendance

Circumvent statutory FSEOG selection Circumvent statutory FSEOG selection criteriacriteria

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Recent ChangesRecent Changes Beginning with 1999-2000 award year, schools Beginning with 1999-2000 award year, schools

no longer could treat legal guardians as parents no longer could treat legal guardians as parents when determining dependency and calculating when determining dependency and calculating student eligibility.student eligibility.

Beginning with 2000-2001 award year, parents Beginning with 2000-2001 award year, parents of a dependent student no longer may be of a dependent student no longer may be included as household members in college.included as household members in college.

An Additional Consideration…An Additional Consideration… Roth IRA conversions.Roth IRA conversions.

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Documentation RequirementsDocumentation Requirements

You have the authority to You have the authority to request and use supplemental request and use supplemental informationinformation

Special circumstances and Special circumstances and action taken must be action taken must be documented in the student’s documented in the student’s filefile

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Purpose Purpose of of

DocumentationDocumentation

Provides additional Provides additional information and a history for information and a history for future referencefuture reference

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Two Types of DocumentationTwo Types of Documentation

A written request from A written request from the student andthe student and– LettersLetters

– BillsBills

– ReceiptsReceipts

– Pay StubsPay Stubs

– Other third party Other third party documentationdocumentation

A clear record of:A clear record of:– Decision made and how it Decision made and how it

was reachedwas reached

– Decision dateDecision date

– Description and date of Description and date of actions takenactions taken

– School policy and School policy and procedure citationprocedure citation

– Name and title of decision Name and title of decision makermaker

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Maintaining DocumentationMaintaining Documentation

Documentation may be maintained in paperDocumentation may be maintained in paper

or electronic filesor electronic files

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Impact of Packaging PoliciesImpact of Packaging Policiesand Available Fundsand Available Funds

Is there additional aid available to Is there additional aid available to meet the increased need?meet the increased need?

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Case StudiesCase Studies

What would you do as a What would you do as a financial aid administrator in financial aid administrator in

these situations?these situations?

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Professional Judgement & Professional Judgement & Need Analysis in Need Analysis in

Graduate AidGraduate Aid

Questions?Questions?