Special Cases | 2023-2024 Federal Student Aid Handbook (2024)

There are unique situations where you will need to exercise your discretion as a financial aid administrator: when modifying data used to calculate the expected family contribution (EFC), performing dependency overrides, resolving conflicting information, reporting cases of fraud, and determining a student to be an unaccompanied homeless youth.

The following special cases are discussed in further detail in this chapter:

An aid administrator may use PJ on a case-by-case basis to adjust the student’s cost of attendance or the data used to calculate his or her EFC. This adjustment is valid only at the school making the change.

The law gives some examples of special circ*mstances that MAY be considered (HEA Sec. 479A):

This is not an exhaustive list. You may use your discretion to make appropriate, reasonable adjustments to reflect a student’s situation more accurately. As explained in Chapter 2, this may include accounting for resources, such as in-kind support, that do not appear on the FAFSA or in the EFC calculation. You may also use your discretion to deny a student’s request for adjustment. However, you may not maintain a policy to deny all requests for special circ*mstance adjustments. This means that schools can no longer indicate that they do not perform PJs. Your institution must develop policies and a process for reviewing requests for professional judgment. Additionally, your institution must publicly disclose that students may request an adjustment based on special circ*mstances. This could include (but is not limited to) posting what may be considered a special or unusual circ*mstance on your website, include such information in mailings to students, or add language on award notifications.

The reason for your decision to approve or deny a request for professional judgment and any subsequent adjustments must be documented. The documentation must relate to the special circ*mstances that differentiate the student—not to conditions that exist for a whole class of students. You must resolve any inconsistent or conflicting information before making any adjustments. An FAA’s decision regarding adjustments is final and cannot be appealed to the Department.

The law doesn’t allow you to modify either the formula or the tables used in the EFC calculation; you can only change the cost of attendance, or the values of specific data elements used in the EFC calculation. In addition, you cannot adjust data elements or the cost of attendance solely because you believe the tables and formula are not adequate or appropriate. The data elements that are adjusted must relate to the student’s special circ*mstances. For example, if a family member is ill, you might modify the AGI to allow for lower earnings in the coming year or might adjust assets to indicate that family savings will be spent on medical expenses.

You also cannot use PJ to waive general student eligibility requirements or to circumvent the intent of the law or regulations. For instance, you cannot use PJ to change FSEOG selection criteria.

Occasionally aid administrators have made decisions contrary to the professional judgment provision’s intent. These “unreasonable” judgments have included, for example, the reduction of EFCs based on recurring costs such as vacation expenses, tithing expenses, and standard living expenses (e.g. utilities, credit card expenses, children’s allowances, etc.). Aid administrators must make “reasonable” decisions that support the intent of the provision. Your school is held accountable for all professional judgment decisions and for fully documenting each decision.

When considering using PJ, an FAA should keep in mind that an income protection allowance (IPA) is included in the EFC calculation to account for modest living expenses. Before adjusting for an unusual expense, consider whether it is already covered by the IPA. It is reasonable to assume that approximately 30% of the IPA is for food, 22% for housing, 9% for transportation expenses, 16% for clothing and personal care, 11% for medical care, and 12% for other family consumption. The income protection allowance is one of the intermediate values in the FAA Information section of the output document (labeled as “IPA”). See Chapter 3 for the IPA values and how they impact the student’s EFC calculation.

If you use professional judgment to adjust a data element, you must use the resulting EFC consistently for all FSA funds awarded to that student. For example, if for awarding the student’s Pell Grant you adjust a data element that affects the EFC, that new EFC must also be used to determine the student’s eligibility for aid from the Campus-Based and Direct Loan programs.

If you make a PJ adjustment, you must set the FAA Adjustment flag. You submit a PJ change electronically, via FAA Access to CPS Online or third-party software, and may do so without a signature from the student or parent. In FAA Access or Electronic Data Exchange (EDE), you must select “EFC adjustment requested” for the professional judgment field. The next ISIR will indicate “Professional judgment processed.”

If you exercise PJ for a student who was selected for verification (by you or the Department), you must complete verification first. This is to ensure that you have correct information before considering a PJ adjustment. You may, however, complete verification and then make the PJ adjustment on the same transaction.

You do not have to verify information that you will entirely remove due to PJ. For example, if a dependent student’s parents have separated after completion of the FAFSA form and one parent is no longer in the household size, you may decide to use PJ to remove that parent’s income from the FAFSA form. You do not have to verify that parent’s income prior to removing it. Also, using PJ does not require you to verify a student’s application if he or she was not already selected for verification by the Department or your school.

Finally, a school is not permitted to make a professional judgement for a student after that student has ceased to be eligible, including when a student is no longer enrolled.

The verification page on the FSA Assessments site has guidance to help you review your PJ and dependency override procedures; see Activity 2.

The FAFSA Simplification Act, enacted into law as part of the Consolidated Appropriations Act, 2021, and amended by the Consolidated Appropriations Act, 2022, codifies previous guidance from the Department (as issued in earlier Dear Colleague Letters) to use statutory authority to exercise professional judgment during a disaster, emergency, or economic downturn.

Financial aid administrators may, during a qualifying emergency:

Acceptable documentation of unemployment should be submitted not more than 90 days from the date it was issued. However, institutions may use discretion to accept documentation older than 90 days under their general professional judgment authority if they do not have reason to believe there is conflicting information.

Further, the Department will adjust the program review selection model to account for an increase in the use of professional judgment by schools during the award years applicable to the qualifying emergency.

The FAFSA Simplification Act provides a clearer directive for FAAs to assist applicants with unusual circ*mstances to adjust dependency status on the FAFSA form to reflect students’ situations more accurately (dependency overrides). Like other types of professional judgments, institutions must make students aware of their ability to request an adjustment for unusual circ*mstances by publicly posting the option on their website.

An FAA may conduct dependency overrides on a case-by-case basis for students with unusual circ*mstances. If the FAA determines that an override is appropriate, he or she must maintain the determination with any supporting documentation.

Under HEA Sec. 480(d)(9), the FAFSA Simplification Act incorporated additional unusual circ*mstances to consider when a student is unable to contact a parent or where contact with parents poses a risk to such student.

Unusual circ*mstances do include:

In such cases an override might be warranted based upon the student’s individual circ*mstances. These conditions would also not disqualify a student from being a homeless unaccompanied youth or self-supporting and at risk of homelessness.

However, none of the conditions listed below, singly or in combination, qualify as unusual circ*mstances meriting a dependency override.

Unusual circ*mstances do not include:

An aid administrator may override only from dependent to independent (though as suggested earlier, if an independent student receives substantial support from others, a school may use PJ to adjust the COA or FAFSA data items, such as untaxed income).

Additionally, the Act introduces new requirements for processing and communicating with students who request an adjustment for unusual circ*mstances. For aid applications for the 2023-24 Award Year and thereafter, schools and financial aid administrators must:

Beginning with the 2023-2024 award year, FAAs may use a dependency override made in a prior award year at the same institution. In fact, the Department encourages you to use the flexibility in the law to presume a student with a dependency override is independent in subsequent years unless the student tells you their situation has changed, or you have conflicting information. Though institutions can ask students if their unusual circ*mstances or homeless situation has changed each year, they should not maintain a practice that delays or hinders financial aid for such a student, nor may they require the student to answer prior to packaging or disbursing aid or require the student to submit additional documentation unless there is conflicting information that the institution needs to resolve.

To override the student’s dependent status on an initial application through FAA Access to CPS Online, the FAA should use the Dependency Override code of “1” (see the EDE Technical Reference for more information).

To authorize a dependency override on a paper FAFSA form, the FAA marks the bubble for an override, labeled “D/O,” in the “College Use Only” area, fills in the school’s federal code, and signs. A separate letter attached to the application in lieu of making the override is not acceptable.

If the parents refuse to sign and date a statement to this effect, you must get documentation from a third party (the student is not sufficient), such as a teacher, counselor, cleric, or court.

This situation does not on its own justify a dependency override. However, resolving the situation is at your discretion. If you decide that a student falls into this category, you must document your decision and ensure that the student submits a FAFSA form and passes all the eligibility matches. The result will be a rejected application with no EFC. You can then award the student a Direct Unsubsidized Loan up to the maximum the student would normally be eligible for depending on his or her grade level (but not the amount a student can get when his or her parent is unable to get a Direct PLUS Loan).

For students you determine to be unaccompanied homeless youths or unaccompanied, self-supporting youths at risk of being homeless, select the homeless youth determination option (#4) in the dependency override field in FAA Access to CPS Online or EDE. On the paper FAFSA, fill in the relevant bubble in the “College Use Only” box (see the graphic under the “Dependency Overrides” section in this chapter), include your school code, and sign. To cancel a homeless youth determination, you use the same method as when canceling a dependency override: change the dependency override value to “2—FAA override canceled” in FAA Access or EDE.

Finally, if you do not have conflicting information at your institution, you must use documentation from an FAA at another institution that made a documented determination that a student was an unaccompanied homeless youth in the same or prior award year. You should also presume that a student for whom your institution has made a determination of homelessness continues to be independent in each subsequent year at your institution unless the student tells you their circ*mstances have changed, or you have conflicting information.

The FAFSA Simplification Act provides additional guidance on the timing of determinations of independence for certain student populations (HEA 479D(c)). These include unaccompanied homeless youth or at-risk homeless youth, foster care youth, orphans, wards of the court, and students with unusual circ*mstances.

Institutions must review all requests for a determination of independence as quickly as practicable, but no later than 60 days after the student enrolls.

Note that the timeframe in the law is intended to encourage FAAs to make determinations as quickly as practicable. It is not intended to inhibit FAAs from making such a determination when a student requests one later in an award year. We encourage you to act on a request for a determination of independence within 60 days of the student making such a request. Further, you may deny such requests if a student does not provide requested documentation within the 60-day timeframe.

Financial aid administrators do not need to be tax experts, yet there are some issues that even a layperson with basic tax law information can evaluate. Because conflicting data often involve such information, FAAs must have a fundamental understanding of relevant tax issues that can impact the need analysis. You are obligated to know (1) whether a person was required to file a tax return and (2) what the correct filing status for a person should be. The IRS’s online Interactive Tax Assistant can help with these and other issues by walking the user through a series of questions. IRS Publication 17 is also a useful resource.

For example, an FAA who notices that a dependent student’s parents, who are married and live together, have each filed as head of household (which offers a greater tax deduction than filing as single or married) must ask if that is the right status. Resolution of the conflict could be the parents refiling and submitting a copy of the amended return or a reasonable explanation of why there really is no conflict under IRS rules.

You may not disburse aid until you have resolved conflicting information, which you must do for any student as long as he or she is at your school. Even if the conflict concerns a previous award year, you must still investigate it. You have resolved the matter when you have determined which data are correct; this might simply be confirming that an earlier determination was the right one. You must document your findings and include an explanation that justifies your decision.

The verification page on the FSA Assessments site has guidance to help you review your conflicting information procedures; see Activity 1.

National Hotline

Inspector General’s Hotline Office of Inspector General U.S. Department of Education 400 Maryland Avenue, SW Washington, DC 20202-1500

Fax: (202) 245-7047

1-800-MIS-USED (1-800-647-8733) Hours: M, W 9–11 a.m. T, Th 1–3 p.m.

To submit a complaint online at any time, go to https://www2.ed.gov/about/offices/list/oig/hotline.html and click on the appropriate link.

Institutions should submit fraud ring complaints through the Department’s OIG encrypted complaint web portal at the URL address https://oighotlineportal.ed.gov. Because the portal is encrypted, institutions do not need to encrypt submitted documents.

In addition, institutions will submit a Fraud Ring Reporting Spreadsheet through the IG’s compliant process. For more information on how to report fraud rings or for a copy of the Fraud Ring Reporting Spreadsheet, please review the August 21, 2020 electronic announcement.