Education Dept. announces it won’t punish colleges for reconsidering student aid

• By Cory Turner/NPR

The U.S. Department of Education moved Thursday to make it easier for colleges to reconsider and potentially increase financial aid for students who have lost jobs or family income in the current economic crisis. The move comes after NPR reported in June that the department had shelved guidance meant to encourage college aid administrators to exercise what’s known as “professional judgment” and reconsider aid for students whose finances have changed.

Most students planning to attend college in the fall submitted financial information from 2018 — information that may now be woefully outdated for many families given the current, pandemic-driven recession. But, reconsidering financial aid packages for too many students can trigger an investigation from the Department of Education, to make sure schools aren’t misusing funds. These reviews can be labor-intensive and lead to costly fines.

In 2009, in response to the Great Recession, the Obama administration assured schools they would not be punished for helping students. In recent months, with job losses mounting, college financial aid administrators began asking if that 2009 guidance was still active, says Justin Draeger, president of the National Association of Student Financial Aid Administrators.

The Department of Education quietly addressed that question in late May, during a call with stakeholders. According to multiple sources familiar with the call, a top department official indicated that, in spite of the downturn, the guidance was no longer active. The official described the unemployment challenges many students now face as “temporary,” unlike the Great Recession, and disagreed with the previous policy of allowing schools to fast-track help for students receiving unemployment benefits.

The department had said little publicly about the apparent shift in policy, which alarmed financial aid administrators. The guidance had been labeled “Maintained for Historical Purposes Only,” though it is not clear when that label was added. The department also amended its Federal Student Aid Handbook on June 12, calling the guidance “outdated.”

“I think financial aid offices are out there doing their best,” Rachelle Feldman told NPR in June. She is associate provost of scholarships and student aid at the University of North Carolina at Chapel Hill. “The fear of audit, the change in guidance — it’s all very real and paralyzing.”

Thursday, the Department clarified its position, saying it “understands that high unemployment nationwide resulting from the COVID-19 pandemic will increase the number of professional judgment decisions performed” and that it “will not negatively view increased use of professional judgment or use it as a selection criterion for a program compliance review.”

In short: Colleges will not be punished for reconsidering many students’ aid packages.

“We’re pleased to see the department taking steps … to provide schools reassurance that they can help students in need without later being unduly penalized,” says Draeger.

The news comes as many schools say they’re already seeing spikes in requests to revisit students’ aid packages. According to Draeger, when NASFAA surveyed its member institutions in June, 90% of financial aid offices at the nearly 300 schools that responded said they anticipate an increase in these professional judgment requests this year.

The department’s announcement came the same day the four top Republicans and Democrats on the House and Senate education committees sent a letter to Education Secretary Betsy DeVos urging her to clarify the department’s position and make clear to schools that they can reopen students’ financial aid files without fear of triggering a federal compliance review.

The bipartisan letter also urged DeVos to affirm that aid offices can zero out income for any student who is receiving unemployment benefits — a powerful step to fast-track financial aid for students who need it most. This provision was also part of the original 2009 guidance but was not included in the department’s Thursday announcement.