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Professional Judgment
 
US Department of Education
Dear Colleague Letter GEN-99-10

GEN-99-10

February 1999

GEN-99-10

Dear President:

At a recent nationwide summit, Vice-President Al Gore called for business, labor, government, and education leaders to work together to ensure that today's students are receiving the preparation they need to compete and succeed in the twenty-first century workplace. In light of our country's severe shortage of workers in some technology-based occupations, participants at the summit emphasized the need for colleges to form close partnerships with businesses to identify the specific areas of occupational need and to develop training programs to address these needs. The Vice-President expressed his desire that the education community do everything it can to ease the transition of workers into technology-oriented jobs. On behalf of Secretary Riley, I am writing to encourage you to take full advantage of programs that can be helpful in assisting families with breadwinners who are in the process of retraining. Over the years, the student financial assistance programs have proven to be helpful to students of all ages and circumstances, and we believe they can be particularly useful in assisting families of displaced workers.

Your financial aid administrator can be very helpful in ensuring that the dislocated workers on your campus receive adequate assistance under these programs. As you are aware, the statutory calculations used to determine a student's eligibility for student financial assistance generally take into account the family's income from the previous tax year. For the dislocated worker's family, the income from a previous year is often much higher than the income expected in the current year. The good news is that financial aid administrators have authority under the law to exercise "professional judgment" to adjust these data items to account for families with special circumstances. This authority must be used carefully, and any adjustment of a data item requires a documented case-by-case review of the family's entire financial situation. However, we believe the recent loss of a job, in most cases, can reasonably be considered a special circumstance that warrants the use of professional judgment to increase a student's eligibility for financial assistance. In addition, because students do not always know to ask for "professional judgment" consideration, it is important that your financial aid staff be aware of this tool and make an effort to identify students who may benefit from it.

Professional judgment authority may be used in other ways to assist students with special circumstances such as for elementary school or secondary school tuition expenses, unusual medical or dental expenses, or unusual changes in income or assets. One recent phenomenon that artificially increases income with potentially adverse impact on the financial aid applicant is the Roth IRA. Students from families who transfer funds from regular IRA accounts to Roth IRA accounts will typically see their taxable incomes increase, and this increase will reduce their eligibility for federal student assistance. Yet, these increases are on paper only - these families do not have additional income available for meeting educational expenses. Again, financial aid personnel are encouraged to review these cases individually and, where warranted, use their professional judgment authority to reduce applicable family income and taxes to the levels that would have applied without the Roth transfers.

These are some ideas we have had that will ease the financial burden of students' families and I am sure there are others that you may want to consider for your campus. I am confident that you will join the Vice-President, the Secretary and me in our efforts to prepare today's students for the exciting and rewarding careers that are already awaiting them. We appreciate your continued contributions to our country through the education of its most important resource - its people.

Sincerely,

Greg Woods
Chief Operating Officer
Office of Student Financial Assistance Programs

 

 
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