Can We Use Professional Judgment To Adjust Adjusted Gross Income In Joint Custody Situations?

Award Year: 2024-25 KA-36784 Helpfulness Rating 313 page views

This guidance is specific to the 2024-25 award year and later. For 2023-24* award year guidance see AskRegs Q&A, Can We Use Professional Judgment To Adjust Adjusted Gross Income In Joint Custody Situations?

Scenario: Our office currently has four families with shared custody, and part of the year they pay child support and part of the year they receive child support.

Answer: First, the parents need to determine which parent will be the parent of record for purposes of completing the FAFSA. Effective with the 2024-25 award year, the parent of record on the FAFSA is noted below. You will notice that the parent with whom the student lived the most in the past 12 months prior to filing the FAFSA is no longer a criterion for divorced or separated parents. For divorced or separated parents, income and assets are reported for the parent who provides the most financial support over the 12 months prior to filing the FAFSA even if the student does not live with that parent or lives with the other parent. The parent is self-reported on the FAFSA by the parent, and unless there is conflicting information, there is currently no requirement to verify or otherwise confirm which parent provides the greater portion of support. 

Note that effective with the 2024-25 award year, child support paid is not reported on the FAFSA; it is no longer an income exclusion (formerly Additional Financial Information). Also any child support received is now included in assets on the FAFSA According to Dear Colleague Letter GEN-23-11, "Assets now include the annual amount of child support received (previously included as income in the EFC formula). The recipient of the child support will be asked to report the amount received in the last complete calendar year."

Also starting with the 2024-25 award year, under Section 480(k) of the Higher Education Act of 1965 (HEA), as amended [20 USC 1087vv(k)(1) Amendment of Section], household size becomes family size. Family size is based on federal tax information (FTI) transferred directly from the IRS to the FAFSA via the FUTURE Act Direct Data Exchange (FA-DDX). This means the number of dependents in the family size is now based on the number of individuals who are claimed as dependents on either the applicant’s (if independent) or parent’s (if dependent) U.S. federal tax return. For more information about who can be claimed as a dependent on a federal tax return, see the IRS document Overview of the Rules for Claiming a Dependent.

If FTI is pulled in, the FAFSA contributor (student and/or parent) is given the opportunity to manually update the family size if it has changed since filing the applicable tax return. However, the contributor cannot see what family size was reported from the FA-DDX, as the transferred FTI is masked.

When the FAFSA contributor manually enters the family size, for a dependent applicant, they should include the parent (and spouse or partner), the student, the parent’s dependent children (even if they live apart because of college enrollment), and other people living with the parent now. Include these dependent children and other people only if the parent will provide more than half of their support between July 1 and June 30 of the award year covered by the FAFSA.

Financial aid administrators do have the authority to exercise professional judgment (PJ) to address special circumstances. See Dear Colleague Letter GEN-22-15, the U.S. Department of Education (ED) which clarifies that special circumstances refer to the financial situations (loss of a job, etc.) that justify an aid administrator adjusting data elements in the COA or in the student aid index (SAI) calculation. Any PJ decisions must be done on a case-by-case basis and supported by documentation provided by the student.

Student Aid Reference Desk: For additional information, try the Student Aid Reference Desk. It is a central hub of all the important financial aid resources you need with direct links to legislation, regulation, Dear Colleague Letters, and other ED and NASFAA references. It is updated on a rolling basis with the latest news and changes. Search Professional Judgment.

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