With a title such as is given to this article, one would think that this discussion may contain information on workplace relationships or performance. However, there is another appropriate area for discussion in regard to the admonition to keep it professional. In the world of Federal Student Aid, that area for exploration is the matter of professional judgment.
Professional judgment is an interesting topic. A number of schools hardly ever use this provision in the law, while some may seem to be quite zealous in the application of this component of the financial aid administrator’s tool kit. Yet others, though they may utilize the option for professional judgment with some frequency, they do so with trepidation as they are uncomfortable with the opportunities and requirements of taking such action.
In light of these differing approaches to the use of professional judgment in financial aid, we will review this topic in more depth. While there could be much more information provided on the topic of professional judgment than space will allow in this discourse, we will highlight information applicable to these differing views.
Basis for Professional Judgment
The authorization to exercise professional judgment (PJ) is granted in legislation, not merely in regulatory provisions or allowances by the U.S. Department of Education (ED). The law is found in Section 479(a) of the Higher Education Act, as amended. The basic foundation of this section of law is:
(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.
Noteworthy is the specific designation that it is the financial aid administrator who has the authority to exercise professional judgment in the financial aid process. It is a professional decision made by the aid administrator. It does not fall under the purview or authority of any other campus or institutional official.
The law goes on to give some basic parameters of when professional judgment may be applicable and the authority delegated to the financial aid administrator. The easiest method for aid administrators to access the applicable complete and current wording of this legislation is in the 2014-2015 Federal Student Aid Handbook’s Application and Verification Guide, page AVG-122. It is important to note that slight modifications to the wording of the legislation are occasionally made via amendments to the law. These generally will be for the purpose of simplifying or clarifying definitions, etc. For example, an amendment to the law was made on July 22, 2014, with a scheduled effective date of July 1, 2015. This amendment makes the definition of a dislocated worker the same as elsewhere in U.S. law (specifically, as defined in section 2801 of title 29 of the U.S. Code). Therefore, it is important for interested parties to review the legislation related to professional judgment at least annually for any such changes.
Basic Rules for Professional Judgment
One of the reasons that some aid administrators hesitate in the option to use professional judgment is due to uncertainty in what can be done. Others seem to have no hesitancy in grabbing the concept and using it quite freely, at times to their chagrin in an audit or program review. For example, one school was observed utilizing professional judgment to create increased costs, thus resulting in additional aid available to fund a student’s “need” for a vacation. (The student happened to be a relative of the aid administrator. Needless to say, there were other issues at that institution!) But, more commonly, it is observed that there is a lack of documentation as to the reason why professional judgment is exercised. For example, while federal guidance has indicated it is acceptable to exercise professional judgment in cases of a student’s (or parent’s, as applicable) loss of employment, there must be acceptable legitimate documentation to warrant use of professional judgment. In one case, an aid administrator elected to modify a student’s eligibility simply based upon a single statement from the student indicating that she chose not to work while in school. A one sentence statement such as described hardly satisfies the requirement for adequate documentation. Therefore, in light of such cases of misunderstanding or blatant abuse of this provision, it is important to review the parameters outlined in the law that give direction in this matter.
First, to consider the use of professional judgment, there must be what the law calls “special circumstances.” The very use of this term gives clear indication that the exercise of professional judgment is not to be something applied in all situations. Rather, there must be something that makes the case a special circumstance; that is, the situation must be one that is unusual, rare, uncommon, and distinctive. It is a situation not common to other students.
Also, the determination of whether to use professional judgment must be done on a case-by-case basis. This means that an aid administrator may not simply state that a certain class of students, or all students in a certain situation, will automatically be approved for a professional judgment adjustment. An analysis of each individual’s unique circumstances must be reviewed rather than making a blanket statement that the aid administrator will exercise professional judgment for all students. As an example, a student may find that due to a unique aspect of his or her program, it would be important to successful completion of their program to purchase a specific piece of equipment that is not normally considered a part of the standard books and supplies or equipment COA component. Thus, the aid administrator reviews documentation from the student (e.g., receipt for the cost of the equipment, correspondence from the course instructor/professor as to how this piece of equipment is needed, etc.) and makes a determination of the legitimacy—or not—of the request for consideration. Should another student subsequently submit a request, the aid administrator would not automatically conclude that because she approved the last student that this student would also be approved. Appropriate requests and documentation for this student would have to be submitted and reviewed to determine if, in fact, this request was necessary as a component of the student’s educational costs. (Note that if an aid administrator begins seeing significant requests for increases in cost allowances for books, supplies or equipment, etc., it may be an indication of the need to review the standard allowances in the school’s COA budget components for reasonableness of costs for the typical student.)
Further, when a decision is made to exercise professional judgment, the aid administrator must ensure that the situation is well documented. This includes maintaining supporting documentation in the file that was used to make a determination of whether to exercise professional judgment. Additionally, documentation of the outcome or determination made to use professional judgment or not must be maintained. In all cases where professional judgment may be exercised, the financial aid administrator must ensure that he or she has appropriate documentation that affirms the action taken. Typically, documentation should be from a third party as is applicable to the special circumstance, e.g., documentation of unemployment, elementary or secondary school tuition bills/receipts, child or dependent care bills or receipts, etc.
Finally, professional judgment may not be used to circumvent the law or the intent of the law. That is, you may not attempt to use PJ to try to get around the law. For example, an aid administrator may not use professional judgment to place a student in the first priority selection group for consideration for a Federal Supplemental Educational Opportunity Grant (FSEOG) award if the student was not a Federal Pell Grant recipient with a zero Expected Family Contribution (EFC). Likewise, professional judgment could not be used to waive other eligibility requirements such as the necessity that a student be classified as a “regular student” in order to be considered for Federal Student Aid funds.
When it has been decided to exercise professional judgment for a student, it must be remembered that this exception being granted is for the one award year only. It is not a given that a student will be the recipient of exceptions based upon professional judgment in subsequent award years. A determination has to be made each year as to whether the same special circumstances as in a prior award year continue to make the applicant’s an unusual and rare situation, or if there are new and different special circumstances that may warrant consideration for exercising professional judgment.
Broad Examples for Possible Professional Judgment Action
The law does not leave financial aid administrators clueless as to what may be considered a case that “may” warrant professional judgment. There are a number of circumstances in which the law specifies that such a scenario may warrant consideration. These include:
- 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 a family (household) member or the student
- A situation of a family member or the student being classified as a dislocated worker
- When the parents of a dependent student are also enrolled in college at least half-time in an eligible program
- A change in housing status that results in homelessness
- Other unique changes in the family’s income, assets, or the student’s status (e.g., disability)
- The authority to refuse to certify a loan or to certify it for an amount less than the calculated need (If this authority is exercised, the professional must document the reason in the file and notify the student in writing. Such loan action must not be done in a discriminatory manner.)
- The authority to offer a dependent student a Federal Direct Unsubsidized Stafford Loan when the student does not live with the parents, the parents have ceased supporting the student financially and they refuse to file the Free Application for Federal Student Aid (FAFSA) for the student (The aid administrator must get documentation of the date when the parents’ financial support ended and also their signed statement of refusal to complete the FAFSA.)
It should be noted that the use of professional judgment is not limited to the above situations, nor is it required in the event of one of the scenarios described here. Professional judgment is an option available to the professional financial aid administrator to assist students in special circumstances. It is not a requirement.
Banned Adjustments in Professional Judgment
As the law gives examples of possible situations in which to use professional judgment, it also gives areas where aid administrators are prohibited from making adjustments. These include:
- Modifying or changing the elements of the EFC formula or the tables related to the formula
- Making a direct modification to the EFC itself (e.g., a student with a 1000 EFC may not have it reduced to 0 by simply making a change in the EFC; all changes that may be made must be made to specific data elements used in calculating the EFC)
- Changing the FSEOG selection criteria (see illustration referenced earlier)
- Allowing the inclusion of post-enrollment activity expenses in the COA
Somewhat similar to the prohibited adjustments given in the law that are highlighted above, ED has specified further that there are some decisions that would be considered unreasonable as it relates to exercising professional judgment. While these are not detailed in the law, ED has determined that such adjustments to EFCs based upon recurring costs would be contrary to the intent of the law. Such unreasonable adjustments would include allowing:
- Vacation expenses
- Tithing or charitable giving expenses
- Standard living expenses such as utilities, cable bills, credit card payments, children’s allowances, and standard maintenance items such as lawn care or routine home maintenance [such standard expenses should already be considered in the institution’s cost of attendance (COA) budget and via the Income Protection Allowance (IPA) in the EFC formula]
A point that should be considered when addressing professional judgment is the topic of financial aid administrators performing “dependency overrides.” Technically, this topic is covered in a completely different section of the law than professional judgment. But, let it suffice for the purposes of this discussion that if an aid administrator considers performing a dependency override, much of the guidance provided earlier is applicable. Additionally, any determination made to conduct a dependency override must include appropriate third-party documentation. Third-party documentation may include information from counselors or teachers, clergy, community groups, government agencies, medical personnel, courts, or prison administrators. In the event third-party documentation may not be obtained (which should be extremely rare), an aid administrator may accept a signed statement from relatives, friends, or the student.
Thus, we have explored briefly the idea of professional judgment. The concept is simple. Financial aid administrators are professionals that are expected to discern when it is appropriate to make exceptions in special circumstances with sufficient supporting documentation. They are to fully comply with the law and ED’s guidance. In doing so, they will avoid questionable actions that could cause concern in an audit or program review while still offering appropriate assistance to students in need. As a result, they will be able to remain confident that they are truly keeping it professional.
This article is presented for informational and educational purposes only and should not be considered to be giving legal advice.
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