ED Rescinds 2009 Professional Judgement Guidance: What Does That Mean for You and Your Students?

Melissa Maichle .

On June 19, NPR reported that the Department of Education (ED) has made the 2009 guidance on Professional Judgement(PJ), issued as a result of the serious recession at that time, inactive.  At first glance, this news is troubling.  The world is in the middle of a pandemic and our country continues to have surges of COVID-19. At this writing, about 45 million Americans are unemployed as businesses were forced to shut down to stop the spread of the virus or downsize as a result of lost revenue. 

What the Regulations Say

First, let’s take a look at the section on PJ in HEA Sec. 479A(a) which opens:

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.  However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances.

This is still the law – you can and should use your professional judgement when considering students experiencing extenuating circumstances as long as these circumstances are properly documented.  Since the change to using prior-prior year income data to determine a student’s or family’s ability to absorb college costs, it is more important than ever to consider the student’s current situation in contrast.

If the status quo still holds true, what’s the big deal with rescinding the 2009 guidance?  Not much – it was really just an opportunity for ED to encourage administrators to use their extraordinary powers to help students, while also letting them know there was an expectation that a larger number of PJ adjustments would be performed given the economy. There is no penalty for helping students under these quidelines.  The summary from the April 2, 2009 Dear Colleague Letter (DCL) reads:

This letter reminds financial aid administrators of their ability to exercise adequately documented professional judgment when determining the eligibility of students for federal student aid. It encourages aid administrators to consider special circumstances of students and families during these challenging economic times.  

The one technical change addressed in the May 8, 2009 DCL was in regard to individuals entering higher education as a result of job loss in order to improve future employment prospects.

 During this period of economic hardship, you may use the letter from the state unemployment agency, or other evidence that a student is receiving unemployment benefits, to document that the income earned from work of that student is zero for the purposes of adjusting data items for the student on the student’s federal financial aid application. For purposes of implementing this letter only, unemployment benefits can also be considered zero as the Department of Education, in consultation with the Department of Labor and the Office of Management and Budget, has determined that the maximum unemployment benefits available would not have a material impact on the Expected Family Contribution of an independent student.

What you need to know

Professional Judgement

The emphasis and bold text is from HEAG – the bold text is important as it makes clear that whether automatic $0 income was used for qualifying students collecting unemployment benefits or the value of those benefits, the student’s aid eligibility was materially the same.  So, eliminating the ability to use the automatic $0 income should have a marginal impact on a relatively small population; independent undergraduates.  At the time, graduate students were also impacted, but today there is no federal need-based assistance for them.

So, in summary, not a lot has changed.  The most important factors in performing PJ adjustments remain adequate documentation and individual treatment of each student.  If you do this and use the reasonable person rule (i.e., could a reasonable person reach the same conclusion based on the documentation collected), your institution will survive any additional scrutiny by its auditors or ED due to the increased number of PJ calculations.  You can still help your students and their families weather this difficult time – just like you always have.