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Understanding Your Options: Special Circumstances and Professional Judgments
By: Diana Crump, FAS Consultant
Navigating special circumstances and Professional Judgments in financial aid can often feel overwhelming for professionals, given the unique nature of each case. However, it doesn’t have to be that way. When faced with a student who has special circumstances, having a clear understanding of your options empowers you to provide the utmost assistance to the student. By exploring the available avenues, you can ensure that you’re doing everything possible to support your students in their financial aid journey.
A student asks if they can get more financial aid because they are having financial difficulties. What can you do?
Talk to the student about their situation. Getting a thorough understanding of the student’s circumstances and checking their Free Application for Federal Student Aid (FAFSA) for the current Expected Family Contribution (EFC) is the first step.
If the student does not already have a zero EFC, and the request is the result of a job loss or reduction in income for the student or the parents of a dependent student, an EFC adjustment may be in order. In addition, one-time items that show as income on taxes, such as a Roth IRA conversion, can be considered for EFC adjustment.
If the request is due to unusual expenses, for categories such as medical or childcare, a cost of attendance (COA) adjustment may be helpful. This should be considered only after reviewing the Income Protection Allowance (IPA) for the appropriate expense category for that student to determine whether their expenses exceed the percentage already included in the IPA.
Dependent students have additional layers of complexity in the financial aid process due to the expectation of parent involvement. Some parents are absent or refuse to participate in the financial aid process, but when is a dependency override appropriate?
For 2022-23, if a student has unusual circumstances such as abuse, abandonment, or inability to locate the parents, a dependency override is appropriate. However, the FAFSA Simplification Act has broadened unusual circumstances warranting dependency override for the 2023-24 aid year. Unusual circumstances now include human trafficking; legally granted refugee or asylum status; parental abuse, abandonment, or estrangement; inability to locate parents; and student or parental incarceration; and other guidance has changed for 2023-24 as well. As always, the guidance is found in the Federal Student Aid Handbook, Application and Verification Guide, Chapter 5, Special Cases.
For dependent students whose situations do not include the unusual circumstances listed above, but who are self-supporting and have parents who refuse to participate in the financial aid process, the student can receive aid, but only dependent-level unsubsidized loans.
When speaking to a dependent student in a difficult situation, don’t forget to ask about housing. If the student has temporary or inadequate housing, you may be able to make the determination that they qualify as unaccompanied homeless youth, even if they did not answer yes to this question when they completed the FAFSA.
While professional judgments are made on a case-by-case basis, the key to all of them is documentation. Be sure to thoroughly document a student’s unique circumstances in compliance with the guidance provided in the FSA Handbook.
Understanding a student’s individual circumstances, and your own options for assisting them, can have a profound impact on whether a student is able to afford college. Don’t be afraid to use your professional judgment as a valuable tool to help your students.
Your institution could use an additional layer of support to give your students the individual attention they deserve. What can you do?
FAS supports your institution in navigating special circumstances and professional judgments with ease. Our experienced team of experts are ready to provide customized solutions tailored to your institution’s unique needs. Take the next step with FAS and enhance your financial aid processes and improve student outcome. Contact us today for a consultation. Together, we can make a meaningful difference in the lives of your students.
Creating and Maintaining an Effective Financial Aid Appeals Process
By: Sean Hudson, Sr Consultant
In an ideal world, higher education would be accessible to all without financial barriers. However, until we reach that point, it is crucial for educational institutions to make education affordable for students. This is achieved through strategic packaging of financial aid at various discount rates and the utilization of Professional Judgements when the Free Application for Federal Student Aid (FAFSA) does not accurately reflect a student’s or family’s financial situation. By establishing a solid appeal process, we can further extend opportunities for students and parents to pursue their educational aspirations.
Increasing Demand for Appeals:
With the transition to Prior-Prior FAFSA years and the recent Higher Education Emergency Relief Fund (HEERF) funding, the number of Professional Judgements and appeal requests has surged. Educational institutions must adapt to meet this growing demand for financial assistance.
Strategic Approach to Appeals:
When dealing with appeal requests, it is vital to approach the process strategically. Begin by understanding the available budget and determining if a separate budget item for appeals exists. By collaborating with the Finance Office and potentially the Admissions Office, you can present a comprehensive statement and showcase the potential return on investment (ROI). Demonstrating how providing additional funding can lead to increased enrollment and revenue generation over multiple years is an effective strategy.
Developing an Effective Process:
To ensure transparency and streamline the appeal process, it is imperative to establish a clear and accessible written process. This process should be prominently displayed on the college website and include information on application requirements, necessary supporting documentation, the review timeframe, and communication methods for notifying students of the decision. Specify the review committee composition, without divulging individual names, to provide reassurance and credibility. Additionally, define the amount or range of funding available for appeals, balancing the students’ needs while considering the institution’s budgetary limitations. Clearly communicate whether the appeal grants are one-time disbursements or can be expected annually.
Leveraging Partnerships:
Collaborating with the Alumni Relations Office responsible for awarding Endowed Scholarships can optimize the appeal process. Utilize the appeal process to identify suitable recipients for specific donor scholarships, thereby saving appeal budget funds by redirecting them towards endowed scholarships.
Monitoring and Fiscal Responsibility:
To ensure efficient utilization of appeal funds, implement regular monitoring of the awarding process. Stay vigilant in identifying students who have secured full funding through other means. It is essential to allocate sufficient funds for the spring semester, unless the policy explicitly states that appeals are exclusively granted in the fall. Consider the previous year’s awarded funds and track them accordingly, while also monitoring new students who do not enroll to reallocate those funds for future appeals.
Maintaining Transparency and Managing Expectations:
Once you begin awarding funds through the appeal process, anticipate an increase in applications, as students often share information with their peers. Transparent communication and a well-defined process become even more critical in managing expectations and maintaining a fair and equitable system. Additionally, recognize that students who previously received Professional Judgements may become appeal applicants, particularly if the initial adjustment resulted in only a minimal increase in aid.
Unlocking Potential: Benefits of a Well-Designed Appeal Process:
A well-crafted appeal process can yield numerous benefits for educational institutions. It can effectively boost new student enrollment, contribute to student retention, increase revenue through enrollment growth, and enhance the institution’s reputation for prioritizing student well-being. Investing time and effort into developing a robust process, even if it requires revamping an existing one, will undoubtedly yield long-term rewards.
As the pursuit of accessible higher education continues, educational institutions must proactively adapt their financial aid processes to meet the needs of students and families. By implementing a transparent and effective appeal process, colleges and universities can create an environment that fosters educational opportunities, supports student success, and upholds their commitment to providing a quality education for all.
Are you looking for expert guidance and support in optimizing your institution’s financial aid processes? Contact FAS today!
The Whole Institution Approach: Mitigating Risks and Achieving Compliance in Student Aid Administration
By: Bob Covey-Robbins, FAS Sr. Consultant
An institution’s eligibility for administering federal student aid is critically important, and everyone must understand that compliance with federal regulations is an institutional responsibility and not just a financial aid responsibility. When we review the top audit and program review findings published by the US Department of Education we find that lack of compliance often falls outside the financial aid office’s responsibility. Let’s look at a few examples.
Audit Finding #2 and Program Review Finding #1: Student Status – Inaccurate/Late Reporting
Accurate enrollment reporting is important. The student status effective date drives when student loan repayment begins, or when a deferment should become effective. If a student has been repaying their loans and returns to school at least half-time, then their loan repayments can be deferred, so the student may cease making payments while they are furthering their education. If the school, however, fails to report that the student is now enrolled, then the lender or servicer of the loan continues to expect payments, and if the enrollment fails to be reported too long, the student can suffer undue consequences like negative impact to their credit rating, and is determined to be delinquent or in default on their loans.
Enrollment reporting is generally the responsibility of the Registrar or Student Records department, but problems are found as part of the Title IV Audit or Program Review.
Audit Finding #3 and Program Review Finding #2: Return to Title IV (R2T4) Calculation Errors
The Financial Aid Office is usually responsible for calculating R2T4, revising awards, and informing students of their responsibilities. However, the R2T4 calculation relies heavily on the student’s withdrawal date. For an unofficial withdrawal where a student stops attending classes, the R2T4 calculation may rely on accurate reporting of the student’s last date of attendance. Responsibility for accuracy of the calculation then, is a shared responsibility between Financial Aid, Faculty, and the Registrar.
Audit Finding #6 and Program Review Finding #3: Student Credit Balance Deficiencies
Federal regulations require the separation of responsibility for awarding/authorizing federal student aid awards and disbursing the funds, so again, we have shared responsibility between departments. The Financial Aid office has its set of rules and regulations to follow when determining a student’s eligibility, and the Bursar or Business Office has a separate set of rules and regulations to follow when applying funds to institutional charges and delivering excess funds to the student.
Program Review Finding #9: Consumer Information Requirements Not Met
This is a finding that can involve many different departments of an institution of higher education. Specific information and how the information is made available is complex and perhaps the best example of how Title IV compliance is an institutional responsibility. Besides the financial aid information that must be distributed or made available to students, Title IV regulations also require much information from other departments such as an Annual Fire Safety Report, Annual Security Report, Completion or Graduation Rates, Constitution Day and Citizenship Day program, Drug and Alcohol Abuse Prevention Program, Athletic Program Participation Rates and Financial Support Data, and the list goes on.
Managing Compliance
Maintaining Title IV compliance in the Financial Aid Office is complex and requires continual attention, and the responsibilities of Title IV compliance outside the Financial Aid Office make it even more daunting. Compliance can be considered much like a person’s general health, which requires day-to-day attention with regular check-ups. Many schools consider it valuable to have a regular, impartial, external review of their overall compliance. It’s better to find and close compliance gaps with a regular compliance check-up than to have them exposed in an audit or program review.
How Much Training is Enough?
By: Robert “Bob” Covey-Robbins, Sr. Consultant
How much training is enough for a financial aid office? How often do we need to provide updated training to staff? One of the top concerns that we often hear from financial aid staff is that they don’t get enough training.
Consistent and Comprehensive Training.
Financial aid training is not a “one-and-done” endeavor. It requires a consistent effort to stay up to date on financial aid policy. In 2022, just looking at federal sources, there were 86 Federal Registers, 24 U.S. Department of Education Dear Colleague Letters, and 196 Department of Education Electronic Announcements, all related to the administration of Title IV Student Financial Aid programs. If a school doesn’t have a training program to share all these updates with appropriate staff, then there are likely compliance gaps in existence that could result in significant risk.
Implementing Cross-Training.
Depending on a school’s size and level of automation, some functions within a financial aid office may be somewhat specialized with staff having specific programmatic or functional oversight. It’s important, however, that program expertise is not siloed to the point that when an individual becomes unavailable their program cannot continue. Cross-training and sharing of responsibilities is a good insurance policy against silo risk.
Training can also be a key element in succession planning. If recruiting efforts don’t always produce the experienced financial aid professional that was sought, a school may have to change its strategy to recruit someone who has the right basic skills and train them on the financial aid programs.
Combating Staffing Shortages.
Many schools are dealing with staff shortages and difficulty in filling vacant positions. This has been particularly true since the “Great Resignation” brought on by the COVID-19 pandemic began. However, it’s not a brand-new situation. Recruiting and retaining qualified staff for financial aid, business offices, and other student service departments is continually a concern for schools.
Coming up with a salary and benefits package that will attract the ideal candidate who is positive, fast-thinking, detail-oriented, problem-solving, knowledgeable of an amazingly complex set of federal, state, and institutional laws, regulations, policies, procedures, and practices, and consistently delivers world-class student service, while continually collaborating with and building successful working relationships with other administrators, faculty, staff, and the public in general, is challenging, to say the least.
If a school doesn’t have a person who is tasked with coordinating, preparing, and delivering training, then it may need to look externally for the training that is needed. FAS understands the importance of consistent and updated training for financial aid staff, especially in the face of constantly changing policies and regulations. We help institutions stay up-to-date with financial aid best practices.
Is your Financial aid office feeling the effects of staff shortages? Our services are designed to create systems and processes to assist with routine training and updates, ensuring that your financial aid office operations run smoothly. Learn more about how we can help your financial aid office stay compliant and up-to-date with the latest regulations and compliance requirements. Contact Us.
Reap the Benefits of Outsourcing
By: Jennifer Vaden, Student Business Services (SBS) Consultant
Many institutions have been feeling the pinch since the pandemic hit, with resource scarcity becoming commonplace. The question of how to accomplish more with less is getting tougher to answer. Meanwhile, students and parents expect a high level of service and support. This has created an environment in which colleges and universities must be creative with the financial and human resources we have to meet student and parent demands. Now is the time to reap the benefits of outsourcing.
Outsourcing a service to a third-party vendor can position an institution to improve operational efficiency, reduce overall costs, and enhance flexibility for its employees. Even though the word “outsourcing” may elicit a negative reaction as some inevitably link it to the act of laying off workers, outsourcing does not have to be all or nothing. Outsourcing can be approached as a partnership utilizing both institutional and third-party resources to significantly improve a service that is vital to students and parents. Many shared student services teams have embraced these partnerships to better meet customer service demands.
The first step is to assess which operational tasks, such as customer service, credit balance refunds, or financial aid verification, may be good candidates for outsourcing. Before exploring a partnership, however, it is imperative to start with what you know, namely, what is your data telling you. Achieving a high level of service and operational efficiency often requires a deep understanding of trends in volume, needs, and student and parent behavior as well as the productivity and capacity of your employees to meet those service demands. Today’s students live in an on-demand world in which waiting more than five seconds to receive a response can feel like a lifetime. Students and parents expect shorter wait times as they believe that the service level should be commensurate with the high costs associated with attending an institution of higher learning.
At one private four-year research institution, the business peaks align with the start of the Fall and Spring semesters, registration periods, and our yield season in April. Outside of these peak times, student and parent service demands tend to level out considerably. This presents a staffing conundrum. During peak times, far more staff are needed than are currently employed on the team to meet the higher demand for our services; however, in non-peak times, current internal staffing levels can meet the lower demand. Based on a thorough data analysis, it was clear that supplement staffing was needed for phone coverage. This would lower wait times and reduce complaints that sometimes were escalated to senior staff or even the presidential level.
Consequently, the institution engaged a third-party vendor to manage incoming calls rather than hiring additional benefited (W2) employees. The specific department was designed or resourced to staff seasonally whereas third-party vendors and servicers specialize in staffing for shifts in volume and activity. A third-party vendor can help you reach an optimal level of staffing to meet operational needs during the high, and shoulder, seasons.
Given the financial constraints facing many institutions, outsourcing a service is a decision worth considering especially if the demand for that service fluctuates throughout the academic year. The internal costs to hire, train, and retain benefited employees can be substantial. Budgetarily, direct costs to cover salary and fringe benefits for additional staff positions can add up rather quickly, making it more difficult to obtain the funding required to meet demands.
Outsourcing can be a viable alternative. The cost of a contract with a third-party vendor should typically be less than what an institution would need to budget to hire internally to meet the demand during peak times. In the instance mentioned above, the annual cost equates to approximately four internal frontline staff positions. However, the third-party vendor easily scales the staffing coverage beyond four positions to easily meet peak season demands. Bringing the service back in-house would cost nearly twice as much and result in overstaffing outside of peak times.
When factoring in the time and allocation of managerial staff to onboard and train new employees, the indirect costs quickly mount up. Moreover, complex learning curves often create situations where new employees are not able to significantly contribute for some time, requiring current employees to pick up the slack. This can increase burnout among current employees.
In this case, the third-party vendor is responsible for hiring, onboarding, and training their staff to support the client’s institutional needs. The institution supports the vendor as needed to ensure the content and quality are up to standards. This arrangement generally frees up managers to focus on more pressing service issues and reduces the burden that would otherwise fall on current employees. Considering the direct and indirect costs, outsourcing is a pragmatic solution.
Establishing a partnership with a third-party vendor can also provide you with the flexibility to focus on more than just day-to-day operational needs. There are important nonoperational needs that require managers to take their teams offline. Meetings, staff training and development, and campus events are a few of the reasons that operations may need to close temporarily. With a third-party vendor, operations can continue uninterrupted while you can dedicate time to grow and support your staff members. This flexibility benefits the leadership level as well. You now have the bandwidth to focus on the greater vision for the student experience because operational needs are being met efficiently and effectively.
Consider outsourcing operational needs to a third-party vendor when the data suggests it’s a smart option and your leadership asks you to be more creative with resources. Achieving cost savings, enhancing efficiency, maintaining compliance, and boosting flexibility are only a few of the benefits that await you when you embrace outsourcing as a viable solution.
If you’re just beginning to consider outsourcing, pinpoint the most time-consuming tasks. What takes your staff’s attention away from direct service to students? Most often, it’s back-office processes ranging from the Return of Title IV Funds (R2T4) to reconciliation and verification. All these functions are required by federal regulations. Outsourcing them to a trusted partner gives you peace of mind that you’re in compliance and the added efficiencies give you a real operational advantage. Contact FAS to learn how outsourcing is key to strengthening financial operations, optimizing enrollment, and enhancing the student experience.
The Financial Aid Operating Calendar – It’s a Date and More
By: Staff
Financial aid offices keep track of dozens, even hundreds, of important dates. These range from application processing cycles, regulatory reporting deadlines, and software updates to campus visitation events, staff meetings, and even personnel vacation requests. So, a financial aid operations calendar gives institutions a real advantage. It empowers the financial aid office to plan for important dates, complete tasks on time, and manage workloads effectively.
Getting started is easier than you think. Often a “low-tech” approach is helpful. This could be a paper calendar or a whiteboard positioned in a high-visibility spot. Start with the academic calendar on your school’s website or in the catalog. Overlay that with information on your financial aid processing cycle, and other key information. When you’re ready to move it online, most email systems provide a shared calendar option. Also, web applications such as Calendly and Monday.com have free and low-cost subscription services.
Once you create a calendar, make it a living document, and revisit it frequently. Ask for feedback from everyone in the office, and perhaps from stakeholders in other departments. Share your operating calendar with other departments and request a copy of theirs. Include a calendar review in staff meetings at least once a month. An update-to-date calendar can reveal things that otherwise might be overlooked. Some tasks may not require much lead time. Others could need more. Are there large projects which hinge on many small tasks being completed? Will too many people be out of the office at a busy time of year?
Near the end of the year, do a calendar self-assessment. Did you miss any deadlines? Did a project need more time than was planned? Was too much time allotted for another? What you learn about this year makes next year’s calendar even more effective.
An operating calendar is a powerful tool for planning and achieving the financial aid office’s goals. It keeps projects on track and even helps to ensure the staff maintains a healthy work-life balance. Need help creating an operating calendar? FAS can help! Reach out today for a no-obligation consultation.
Guidance on 1098-T and Pandemic Relief (HEERF) Funds
By: Christy Blakney, Student Business Services (SBS) Consultant
First, The Good News
Collecting and reporting correct information on IRS Form 1098-T seems to continually cause challenges. The good news is that there are no substantive changes to reporting for the 2022 tax year and past year challenges for properly reporting pandemic relief (HEERF) funds have been firmly answered. The Internal Revenue Service previously clarified that the emergency relief funds paid directly to students, or for which the student directed to be applied to their account balance, should be treated the same as any personal payment.
Treatment of Various Fund Types
Note that the IRS guidance only applies to funds under Section 3504 (additional Federal Supplemental Educational Opportunity Grant funds), Section 18004 (HEERF), Section 18008 (Howard University, Gallaudet University), Section 314 of the COVID Relief Act, and Section 2003 of the American Rescue Plan (ARP). It may not apply to funds that came through the states under the Governor’s Emergency Education Relief (GEER) Fund under Section 18002(c)(2) of the CARES Act. Institutions that received those funds from their states could use them to fund institutional grants to students. Absent guidance to the contrary, those grants to students should likely be reported on the 1098-T in the same manner as other institutional aid, especially for state tax reporting purposes. Additionally, funds received by the institution and used to “write off” delinquent student account balances may need to be reported to the student on a 1099-C as a cancellation of debt. Be sure to consult your tax office for applicability.
Inform Your Students
While school officials want to be very clear that we will never provide tax advice, you should provide information that lets them know how each amount reported on the 1098-T was calculated. The IRS allows institutions a wide range of flexibility in reporting to allow for differences in policy and timing but that is exactly what makes a 1098-T confusing to some taxpayers. Many taxpayers expect the form to report “plug and play” amounts similar to a W-2 or 1099 but unfortunately, that is simply not true. Providing a detailed supplement of the calculations is not always feasible so it is important to clearly state your school’s policies with regard to items such as treatment of deposits, exemptions, waivers, contracts, and also the school’s choice of reporting spring charges (Box 7 option). These helpful tips can be reported on your own 1098-T FAQ site or as a communication that accompanies your 1098-T form.
At a minimum, sharing the link to the IRS FAQs may help reduce questions directed to your office and will support your calculation method for reporting amounts on the 1098-T.
Remember to Solicit Students’ TINs
And, finally, make sure you continue to follow IRS guidance to send a written solicitation (e-mail and other electronic communications are considered “written”) to any student who has not provided their taxpayer identification number (TIN), e.g., Social Security number. Best practices suggest sending this solicitation at least twice before sending your file to the IRS. Rules require schools to file 1098-Ts even if the student fails to provide his/her TIN. Proof of an annual request protects the institution from being assessed penalties for filing a 1098-T without a TIN. Also, consider working with your Registrar’s Office to coordinate this information-gathering function. Also, be sure you “check the box” on the IRS copy of your 1098-T file indicating you have complied with this solicitation requirement during 2022.
If a student fails to provide you with their TIN prior to the institution submitting their 1098-T file to the IRS, the IRS indicates that you should not issue a corrected form simply to add or correct personal information. Corrected forms are only necessary if reported amounts were calculated incorrectly and are being changed.
Still Have Questions
Student Business Services can help your institution review its existing business practices related to 1098-T and other reporting requirements. Together, we can develop a comprehensive managerial reporting plan that is easy to execute and ensures you will meet regulatory deadlines. Contact us today for a no-obligation consultation.
A FAS-Track to New Academic Year Setup
By: Lisa Seals, Senior Consultant
Ready for the New Academic Year?
Getting ready for a new academic year can be a time of reflection or pulling your hair out. It’s a time to determine what has worked well, what could be improved, and what must totally be re-evaluated or reinvented.
Where to Start?
All Student Services, or Enrollment Management, departments are crucial to the new academic year setup. Using the right information from each area in the setup process not only streamlines operations but also maintains compliance measures and ultimately gives students a better experience. Each department has specific requests and requirements of the Financial Aid Office. Mapping out everything that is needed, why it is needed, and the timelines to be met is a great starting point.
What’s Needed and From Whom?
Gathering data, from certain departments, helps to set reasonable timelines to get these steps set up in your ERP systems and to produce actual or estimated offers to all students, but specifically the first-time, first-year incoming students.
Admissions
- Admissions Requirements
- Admissions application acceptance
- Admissions approval timelines/codes
- Merit scholarship model and award amounts
- Need based grant (scholarship) model for incoming students
- When are students given school email and portal access?
Registrar
- Academic calendar (Start/End dates)
- Official break of 5 or more days
- Term and Module census dates
- Is the calendar approved and are all dates in the registrar module?
Business Office
- Tuition and Fee rates
- Billing statement dates
- Will estimated aid be listed on the bill?
Housing
- Will actual housing costs be available or will estimates be used?
Information Technology
- When will the new academic year release of the software be installed?
- Will there be an opportunity for testing the new release in a development (i.e., sandbox) environment?
What would you ask for?
Reasonable Timelines?
What is a reasonable timeline? Meeting with the various student services departments will be helpful during this process. Generally, the Admissions Office and Senior Leadership have a target date for first-year, incoming students to receive offers from the institution. With that in mind, make sure that you have the new academic calendar as well as updated tuition and fee rates, and housing costs. Also, confirm the IT Department’s timeframe for importing the new award year’s data into your ERP system.
We know that we can use estimated data for this information. Most institutions want to now use actual tuition and fee rates while establishing a cost of attendance. The goal is to have finalized information to complete the setup processes, and not have to redo anything. What do you use?
What’s Next?
Let’s set up the system! We’ll get into that soon!