Unemployment Benefits Can Count as Zero under Professional Judgement

 The Department of Education (ED) recently issued two Dear Colleague Letters to provide guidance on the use of professional judgment (PJ) by financial aid administrators. This article addresses the implementation of the guidance contained in GEN-09-05, published on May 8, 2009.

As noted in the letter, the U.S. Department of Labor has been working with the states to ensure that recipients of unemployment benefits are sent a letter encouraging them to pursue postsecondary education and to apply for financial aid. In awareness of the Department of Labor's efforts to communicate with unemployed individuals about the option of pursuing higher education and the availability of financial aid, ED published GEN-09-05 to provide guidance to the community on exercising PJ authority in situations where an independent student has lost his or her job and is receiving unemployment benefits.

During this current period of economic hardship, the institution 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 the student is zero when adjusting the value of data elements used to calculate a student's eligibility for federal student aid. In consultation with the Department of Labor and the Office of Budget and Management, ED has determined that the maximum value of unemployment benefits would not have a material impact on the expected family contribution (EFC) of the independent student. Therefore, for the purpose of implementing GEN-09-05 only, the school may treat the value of unemployment benefits as zero when completing a PJ for these students.

The guidance to "zero out" the income earned from work and unemployment benefits applies only to the independent student, and does not extend to other members of the student's family. The letter notes that if an institution has proof that a member of the independent student's family is receiving unemployment benefits, the financial aid administrator should "examine the totality of the family's economic situation and make any appropriate adjustments." This guidance also does not apply to the parent of a dependent student. For dependent students who request a professional judgment due to a parent's change in income, schools should continue to review PJs on a case-by-case basis, requesting adequate documentation to support any adjustments to the information used to calculate the student's eligibility for federal financial aid. Financial aid administrators should use their professional judgment authority to make adjustments that accurately reflect each student's special circumstances.

The use of PJ is at the discretion of the financial aid administrator. An institution is not required to take the approach suggested by GEN-09-05. If a school is comfortable with its policies for considering PJ requests for independent students who have experienced a job loss, it should continue to follow its own policies.


Publication Date: 8/5/2009

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