Financial Aid Answers - presented by eLearners.com : PJ

It's a New Year for Special Circumstances

ter — Tue, 08 Jan 2008 15:06:00 GMT

Did you submit some type of appeal for your financial aid office for your 2007-08 financial aid? If so, you most likely will be required to submit a new appeal for 2008-09 if your special consideration still applies.

What are appeals? In a blog several months ago I wrote about special circumstances such as daycare costs, loss of employment or income, medical expenses, etc. These are all special circumstances that are not reported on the FAFSA. Schools cannot automatically carry appeals forward since information may have changed from academic year to academic year and calendar year to calendar year.

Let's take a look at a few special circumstances and why you would have to appeal again, even if nothing's changed:

Loss of employment. If you lost your job in 2006 and requested an appeal of special circumstance for 2007-08, the school could have looked at your estimated 2007 income. You may have reported unemployment compensation as estimated income in 2007, but at some point in the same year you ran out of eligibility. On the 2008-09 FAFSA you have to report the 2007 unemployment compensation as income, but since you're still out of work and no longer getting unemployment income in 2008, you can request another appeal based on your loss of unemployment benefits.
Medical costs: Your school looked at your 2006 federal tax return Schedule A, which itemized medical expenses in 2006. The school cannot assume you had these same expenses in 2007, and will not automatically consider medical expenses as a special circumstance for 2008-09. If you did still have medical expenses that you paid in 2007, you will need to contact your school's financial aid office to request a special review.
Daycare expenses: Your school has the option to use actual daycare expenses that you paid, or use a standard rate determined by reviewing child care expenses in your area. While you probably will still pay for daycare expenses in 2008-09, your costs could increase. Or, on the other hand, your child may be of age where daycare is no longer needed.

These are only a few examples of special considerations. If you submitted an appeal for 2007-08 and your situation still applies, do not assume the school will change your financial aid eligibility automatically for 2008-09. You will need to contact your school for assistance. Remember, the school has the right to approve or deny all special circumstance requests.

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Into to Professional Judgment Part 2

ter — Sat, 10 Nov 2007 00:36:00 GMT

I've done a lot of pondering since my last post, mainly because distance education student budgets (also called "cost of attendance") can vary between colleges. This doesn't mean that Professional Judgment can't be used, but not all situations may apply for students enrolled in distance learning courses. That said, I still encourage you to contact your financial aid office if you have any special circumstances.

I could go into great detail about each of these special circumstances I'm listing tonight, but that would make this blog extremely long. Instead, I will list the most common circumstances and provide a brief explanation.

The 1998 Higher Education Reauthorization Act acknowledges the following special circumstance for Professional Judgment:

Elementary or secondary school tuition paid: this would be tuition paid for other dependents in the household and not you--the student. Some schools may set a minimum amount that had to be paid before PJ can be done.
Medical or dental expenses not covered by insurance: since financial aid administrators are not trained in reading hospital or insurance records, your school may require the federal 1040 Schedule A that shows itemized medical expenses paid the prior year. Again, schools may set a minimum of what was paid.
Unusually high child care costs: any costs could possibly be included if child care is not factored in to the student's cost of attendance. Schools may require documentation from the day care provider, or use a standard amount if a study has been completed to find the average day care expense for your area.
Recent unemployment of a family member: I suggest students also contact the financial aid office if the student experiences recent unemployment, or a parent has had a dramatic change in employment but is still working.
Other changes in family income or assets: remember, this has to be a special circumstance. Using assets to pay for college or other expenses does not constitute a special circumstance. These other changes are more difficult to accept as a special circumstance.

Here are some other special circumstances I have seen approved:

Bank foreclosure for farm or business: example is a family using all or part of disposable income to pay off business or farm debts due to foreclosure.
Family member has high living costs: example is a family member who is disabled and requires special care expense that is ongoing.
Mileage for students commuting extensive distances: this would not apply to distance learning classes unless you are taking a combination of on-campus and distance learning courses. It may also depend on whether the school is a residential or commuter school and if mileage is already factored in to the student's budget.
Purchase of a computer: purchase or commitment to purchase must already be made before PJ can be done.

What doesn't qualify as a special circumstance?

Credit card debt
Spending your assets, such as savings, after the FAFSA is filed
Cashing in bonds, CDs, or other assets that is reported as income on the federal tax return and reported as income on the FAFSA. Even though this may be a one-time income, it is still considered income. Exceptions are very limited and determined by the financial aid office.

This list is not all-encompassing. For example, our school made a PJ decision to adjust a student's family income based on income that was received as inheritance and reported on the FAFSA, but was used (and documented) to pay the father's funeral expenses. Remember, financial aid administrators are not required to perform PJ, as it is a discretionary action, and not all schools make decisions the same way.

I want to reiterate that the use of Professional Judgment for special circumstances depends on the school and your student budget. The best advice I can provide is to contact your financial aid office if you do have a special circumstance.

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Introduction to Professional Judgment

ter — Wed, 07 Nov 2007 01:04:00 GMT

Financial aid adminstrators have the authority to use something called Professional Judgment (PJ) to adjust a student's information on the FAFSA to revise a student's Expected Family Contribution or adjust a student's cost of attendance. What can be considered may depend on your school's cost of attendance. In most cases, using Professional Judgment helps the student to receive additional financial aid. I'll discuss the various types of PJ that administrators perform in my next blog, but know that any PJ change must be done on a case-by-case basis.

What is Professional Judgment (PJ)?

PJ is an action taken by a financial aid adminstrator to help a student who has a special circumstance
PJ cannot be used to classify a special circumstance for a whole class of students--it must be done on a case-by-case basis only
If PJ is used, it must be applied to all federal student aid. Example: a financial aid administrator cannot use PJ for Pell Grant and not other federal programs such as SEOG
Any PJ done at one school does not automatically carry over to another school if you transfer

What doesn't constitute PJ?

Adminstrators cannot change the Federal Methodology formula used to calculate the Expected Family Contribution as prescribed by law
Adminstrators cannot change a student' cost of attendance based on the belief that the formula is inappropriate or inaccurate
General student eligibility requirements, as defined by law, cannot be circumvented. An example of this would be awarding federal student financial aid to a non-degree student

How do I know if I have a special circumstance? Special circumstances are just that--special. Although the Higher Education Reauthorization Act (1998) recognizes certain types of special circumstances (which will be described in my next blog), this doesn't mean there is a definitive list. If you have a situation that you feel warrants special consideration for financial aid, contact your school's financial aid office for assistance. The financial aid professional can ask you questions to determine if PJ is an option.

What all is involved to do PJ? Documentation is required to do a PJ. If the financial aid office determines you have a special circumstance, personnel will provide you with information on what documentation is needed, depending on your situation. Because PJ is school-specific, some schools may be more stringent with the required documentation than others. However, all schools must have enough documentation to make a notation to your student record for federal auditing purposes. I mention this because I have had students who received a PJ adjustment to their aid at one school, but I did not feel the the same documentation supported a PJ at my school.

Who makes the PJ determination? Usually, the financial aid advisor/counselor will review the documentation first. If the financial aid personnel feels the documentation is sufficient, action (whether approved or denied) can be taken. There are some times when a committee convenes to discuss the situation and documentation before a decision is reached.

My next report will cover some common types of special circumstancs.

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