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.

Legislative Authority

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.

However, section 480(d)(7) is not included within the scope of these prohibitions, so the Department has given guidance on the appropriate use of dependency overrides. Specifically, this guidance has been provided in Dear Colleague Letter GEN-03-07 and repeated in the Verification Guide section of the Federal Student Aid Handbook.

The Department also provided some guidance in Dear Colleague Letter GEN-98-2 (cannot modify EFC formula and the role of the Income Protection Allowance), Dear Colleague Letter GEN-99-10 (dislocated workers, Roth IRA), Dear Colleague Letter GEN-06-10 (529 plans and prepaid tuition plans held by a grandparent or non-custodial parent are generally disregarded) and the Counselor's Handbook (overview, examples of reasonable and unreasonable adjustments, and the role of the Income Protection Allowance). The Department has also published worksheets that schools can use to review their PJ practices and conflicting information policies. But generally the Department treads lightly in matters relating to professional judgment, for fear of substituting their judgment for that of the financial aid administrator.

Nevertheless, PJ 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.

Best Practices

The purpose of this section of FinAid is to address the lack of guidance by providing a collection of best practices relating to professional judgment. It provides information about guiding principles of professional judgment and the most common adjustments used by financial aid administrators, as well as motivated arguments for those decisions based on the underlying philosophy of need analysis, Department guidance in similar situations, and evidence of Congress's intent.

This represents Mark Kantrowitz's analysis of reasonable adjustments for the most common types of special circumstances. It is not and cannot be binding on financial aid administrators. But it can nevertheless act as a useful guide to financial aid administrators who are conducting professional judgment reviews.

• Philosophical Basis of Need Analysis
• Special Circumstances
• Dependency Overrides
• Principles of Professional Judgment
• Cost of Attendance Adjustments and Student Budgets
• Case Studies (How to Handle Various Situations)
• Methods of Implementing Adjustments
• Legislative Authority
• Authority to Request Documentation
• Counterintuitive Results