Does the GEN-09-05 Guidance On Unemployment Benefits and Professional Judgment Still Apply?

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Generally, yes. See Dear Colleague Letter GEN-21-02.

GEN-09-04 and GEN-09-05 no longer apply, and the June 20, 2020 FSA Handbook changes to the 2020-21 Application and Verification Guide (AVG) appear to be the U.S. Department of Education's (ED's) way of notifying the community. This is a change in ED guidance. Earlier this spring, verbal guidance from ED indicated that GEN-09-04 and GEN-09-05 were still in effect because they had not been officially rescinded. The guidance was even referenced when the initial version of the 2020-21 AVG. ED's guidance later changed based on the fact that these two Dear Colleague Letters are marked as "Maintained for Historical Purposes Only" on the the IFAP website with a notice that stated, "Documents that have a red “Note” at the top of the document that says “Historical Record” are posted for historical purposes and are no longer applicable." IFAP has since been retired and has become the FSA Knowledge Center.

All that aside, as ED reminds schools in GEN-21-02, you don't need ED's permission to exercise professional judgment (PJ) to reduce or zero out income earned from work, to reduce or eliminate the amount of unemployment compensation, to adjust the adjusted gross income (AGI) or to adjust any other data element used in the calculation of the expected family contribution (EFC) because the individual is receiving unemployment income. For years, financial aid administrators (FAAs) have had this PJ capability under Section 479A of the Higher Education Act of 1965 (HEA), as amended [1087tt(a)]. The FAA has the lawful authority to adjust any data element that is used in EFC calculation as long as the FAA believes there are special circumstances that warrant the adjustment. As with any PJ decision, the FAA must document the reasons for making the adjustment, and all PJ decisions must be made on a case-by-case basis. This means, you have to make an individualized determination looking at the entirety of the family's circumstances before you decide to include, adjust, or eliminate any form of income using PJ.

For example, you can accept a letter from a state unemployment agency, or other evidence that a student is receiving unemployment benefits, to support your PJ decision to adjust the amount of unemployment benefits or income earned from work if that's what you decide is appropriate. Also, you are not limited to zeroing out income earned from work. You could also choose to eliminate the unemployment benefits from consideration, especially if you are using estimated income for a 12-month period that might not include the unemployment benefits. You also could eliminate or reduce the unemployment compensation on the basis that it is likely one-time income. You have flexibility as an aid administrator as long as you can justify and document your treatment of the income based on the family's individual circumstances.

Remember, unemployment income is not income earned from work; it is other income that is included in the calculation of AGI. If you are adjusting the amount of unemployment income during PJ, it might be more appropriate to adjust AGI instead of income earned from work.

Also remember the following:

Additional $600 in Unemployment Insurance: The above considerations also apply when you decide whether to exclude the additional $600 in unemployment benefits from the EFC calculation.

Notes:

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