The Free Application for Federal Student Aid (FAFSA) does not provide families with a place to explain special circumstances affecting their ability to pay for the student’s education. The Federal Need Analysis Methodology (FM) is likewise a rigid formula, with no provisions for exceptions. To remedy this, Congress has delegated to the school’s financial aid administrator the authority to compensate for special circumstances on case-by-case basis with adequate documentation. As the man or woman in the field, the financial aid administrator is best able to evaluate the family’s situation and to make appropriate adjustments.
Professional Judgment refers to the authority of a school’s financial aid administrator to make adjustments to the data elements on the FAFSA and to override a student’s dependency status. The school does not have the authority to change the need analysis formula itself or to make direct adjustments to the Expected Family Contribution (EFC). Instead, the school may make adjustments to the inputs to the formula. The changes to the inputs are dictated by the impact of the special circumstances on the family’s income and assets. The standard formula is then applied to the new data elements, yielding a new EFC figure.
The decision of the financial aid administrator is final. There is no appeal. By law, neither the school’s president nor the US Department of Education can override the financial aid administrator’s decision.
The authority to conduct professional judgment reviews is granted by sections 479A and 480(d)(7) of the Higher Education Act of 1965. Section 479A is concerned with the authority to adjust data elements of the FAFSA application and the authority to refuse to certify a student loan. Section 480(d)(7) is concerned with the authority to override a student’s dependency status.
It is worth noting that the term unusual circumstances is used only in connection with dependency overrides. In the section dealing with adjustments to data elements, the term special circumstances is used instead, with the word unusual only being used in connection with “unusually high child care costs”. The word unusual means uncommon or rare. Although the word special is sometimes used as a synonym for unusual, it also includes qualities that readily distinguish an item from among others of the same category. An item need not be rare in order to be special. (Note also the use of the word other in Section 480(d)(7) of the Higher Education Act, as in “other unusual circumstances”, is an indication that the six automatic methods of achieving independent student status are exemplars of unusual circumstances. This means that even with dependency overrides, the word unusual does not require extreme extenuating circumstances.) Congress’s choice of language appears to have been quite deliberate, to allow for conditions that distinguish a student from among a class of students but which are not necessarily rare.
Minimal Guidance from US Department of Education
Section 479A includes language that is interpreted as prohibiting the US Department of Education from providing guidance to financial aid administrators on the use of professional judgment. Doing so would limit the authority of the financial aid administrator to make adjustments, and that is specifically excluded by the Higher Education Act.
The Department of Education has provided guidance for 2021 in their January 2021 Update on the Use of “Professional Judgment” by Financial Aid Administrators. The Department has summarized their guidance as follows: This letter reminds financial aid administrators of their ability to exercise documented professional judgment when determining eligibility of students for federal student aid and encourages aid administrators to consider the special circumstances that may arise for students and families during the ongoing COVID-19 pandemic, especially as they relate to unemployment or reduction in work. See full letter here: 2021 Professional Judgement Guidance.
Professional Judgement decisions by financial aid administrators are examined during program reviews. Abuse of the discretion accorded to financial aid administrators can result in the institution being held liable to repay funds awarded because of an inappropriate adjustment.