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Ask for a Professional Judgment Review for Job Loss or Other Changes in Income

Mark Kantrowitz

January 17, 2011

I lost my teaching job last June and got a half year's salary instead of a full year. I did not get a job in the fall, so our household income was operating on half of my income. My husband's work status is the same, so we are at three-quarters. This year I do not have a job. Is there any way (on the FAFSA application) that we can indicate our current financial situation?

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The FAFSA does not have any questions concerning unusual situations, not even questions about the most common unusual circumstances, such as job loss. The form is processed by machines, not people.

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However, Congress recognized that a boilerplate form would not adequately address the needs of all families, so it delegated to college financial aid administrators the authority to make adjustments to the data elements on the form (and/or to the cost of attendance) on a case-by-case basis when justified by special circumstances. The adjustments must be supported by adequate documentation of the special

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circumstances. Section 479A(a) of the Higher Education Act of 1965 includes several examples of special circumstances, such as the following:

  • tuition expenses at an elementary or secondary school
  • medical, dental, or nursing home expenses not covered by insurance
  • unusually high child care or dependent care costs
  • recent unemployment of a family member or an independent student
  • a student or family member who is a dislocated worker
  • the number of parents enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at a college that is eligible for federal student aid
  • a change in housing status that results in an individual being homeless

But the authority is not limited to just these circumstances. It can include any changes in a family's income or assets or in the student's status. Anything that changed from last year to this year or anything that differentiates the family from typical families can be considered a special circumstance. College financial aid administrators have very broad authority to make adjustments when there is a special circumstance that they feel merits an adjustment. As you have experienced, job loss can happen at any point in the year. Because of your mid-year job loss, your family income last year was three-quarters of your family income in previous years. Because you haven't been able to find a new job yet, your family income this year will be half of your family income in previous years. This is clearly a situation that merits an adjustment. Special circumstances can include job loss in the middle of the previous year in addition to job loss at or after the end of the previous year. Most colleges will conduct a holistic review of the family's total financial circumstances, not just the special circumstance by itself. So if you lose your job and win a multi-million-dollar lottery at the same time, you probably won't get an adjustment. More realistically, the intent is to identify additional special circumstances that the family may have overlooked, such as expenses for a special needs child or high unreimbursed medical expenses.

The review process is usually called a professional judgment review or PJ. Some colleges call it a special circumstances review or a financial aid appeal. You should contact the college and ask about their process for conducting a professional judgment review. Some colleges have a form that asks for detailed information about the special circumstance. Others ask the family to write a letter summarizing the special circumstance. You will also need to supply independent third party documentation of the special circumstance. For example, a copy of the layoff notice or proof of the recent receipt of unemployment benefits should be sufficient in cases involving job loss. If the college financial aid administrator decides that the situation merits an adjustment, the amount of the adjustment will be based on the financial impact of the special circumstance. Everything is formulaic. The college doesn't decide to give you a few extra thousand dollars because they feel sorry for you. Rather, they will calculate the change in income from the job loss, taking into account any severance pay and unemployment benefits, and reduce the income figures on the FAFSA by this amount. In effect they will be switching from prior year income to estimated award year income. The adjustment to the income figure on the FAFSA will then result in a new expected family contribution (EFC), which will then result in changes in the financial aid package. The college financial aid administrator cannot directly manipulate the EFC; instead, adjustments are made to the data elements that are used to calculate the EFC. If we have bonus sometimes, do I need to include this in my gross income on the FAFSA? There are years that we don't have it. — H. A. Bonuses must be included in gross income on the FAFSA. However, after you've filed the FAFSA, you can ask the college for a professional judgment review. The basis for the review is that the bonus is a one-time event that is not reflective of ability to pay during the award year. Professional judgment can address changes in income even when they don't result from job loss. Not every college will make an adjustment for bonuses. There are two approaches taken by colleges that consider making an adjustment for bonuses. If the bonus is an unusual event that hasn't happened in the past several years, some colleges will remove it from income. On the other hand, if a bonus is a routine but occasional part of compensation, some colleges will replace the prior tax year income with an average of income during the last 3 or 5 years. This is the same technique used for families where the income varies considerably from one year to the next, such as for self-employed individuals. Note that you can't make these adjustments yourself. You must file the FAFSA reflecting your actual income and appeal to the college for an adjustment.

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