FinAid | Professional Judgment | Special Circumstances

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Professional Judgment

Special Circumstances

At a very basic level, special circumstances are anything that makes the information provided on the FAFSA form not reflective of the family's ability to pay. This can include anticipated differences between the prior tax year and the upcoming award year, such as an impending job loss or unusual capital gains. It can also include anything that differentiates the family's situation from other families, such as medical expenses not covered by insurance.

The Higher Education Act identifies eight specific examples of special circumstances. These examples are intended to illustrate the types of circumstances that merit professional judgment adjustments and were added during the 1998 reauthorization of the act. Financial aid administrators are not limited to these circumstances, nor are they required to use professional judgment in these circumstances, and should review each family's situation on a case by case basis.

The specific examples listed in the Higher Education Act include:

tuition expenses at an elementary or secondary school

medical or dental expenses not covered by insurance

unusually high child care costs

recent unemployment of a family member

the number of parents enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at a Title IV institution of higher education

proceeds of a sale of farm or business assets if the sale resulted from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or an involuntary liquidation

additional costs incurred as a result of a student’s disability.

or other changes in a family’s income, a family’s assets, or a student’s status

Other common special circumstances include:

Death, disability or serious illness of a wage-earner, or the wage-earner becomes mentally or physically incapacitated.
Unusual capital gains.
Roth IRA rollovers.
Custodial parent remarries after application date.
Death of custodial parent and student has not had any contact with non-custodial parent for many years.
The whereabouts of the parent are unknown.
Recent divorce of the student's parents (i.e., to separate the income of the custodial parent from the non-custodial parent).
Termination of a child support agreement (i.e., the custodial parent will no longer receive child support payments during the award year).
Casualty losses due to weather (hurricane, tornado, mud slides, ground subsidence and other natural disasters), fire, theft, acts of God, or terrorism.
A parent being called to active duty in the armed forces.
Special needs children.
Alimony payments that are not deductible on the family's income tax return.
Temporary layoff or furlough of a wage-earner.
Drop in income due to fewer hours (i.e., no overtime) or reduced salary or elimination of bonuses.
Wages included moving expenses.
Bankruptcy or foreclosure.
Elder care expenses (e.g., nursing home fees).
Change in income due to recent retirement.

The Counselor's Handbook gives examples of situations that do not count as special circumstances, identifying them as contrary to the law's intent. These include:

Vacation expenses.
Tithing expenses.
Standard living expenses (e.g., utilities, credit card expenses, children's allowances, etc.).

Other examples of situations that should not count as special circumstances include mortgage payments, car payments, lawn care, and credit card debt payments.

Often one can identify some special circumstances by considering whether the circumstances were beyond the family's control. The Federal need analysis methodology assesses a portion of the family's discretionary income (money that is not required for basic living expenses). Expenses and income reductions that are caused by circumstances beyond the family's control do not represent discretionary spending and so can be used to justify professional judgment.

Special circumstances are not required to be circumstances beyond the family's control. An anticipated reduction in family income during the award year is sufficient reason for a professional judgment adjustment, regardless of the reason for the reduction. A financial aid administrator can make an adjustment even if the family's income drops because of a voluntary income reduction, such as a wage-earner quitting his or her job to take care of the family full-time or a wage-earner voluntarily forgoing a bonus. Private elementary and secondary school tuition for the student's siblings also represent a special circumstance, even if the decision to send the children to private school is entirely voluntary.

Special circumstances can include an anticipated drop in the student's income (i.e., the student quits his job to attend school full time), not just a change in the parent's income.