Recently Unemployed? How it Will Affect Your Student Aid
The amount of income you (or your family, if you are still a dependent) earn has an effect on your EFC, or Expected Family Contribution, as defined for federal aid. The EFC is the money you and your family are expected to pay out of pocket for college tuition and fees.
The federal government determines this amount based on your family’s income and assets, and helps you make up the rest with federal loans and grants. The less your family makes, the smaller your EFC will be—and the more grant and subsidized loan money you will be eligible for.
But what if you’ve submitted your FAFSA—maybe even received your financial aid judgment based on your income—right before you or a parent lost employment? Here are a few factors to consider when you’re recently unemployed.
Timing is everything
While it’s true that online education could reduce tuition, it’s also possible that it could have little or no impact on a school’s bottom line.
You can ask for a professional judgment review
However, there’s hope for students or families who have significantly less income than they did when they filled out the FAFSA the first time. You can go to your school’s financial aid office and ask for a review of your situation. The federal government allows student aid officials to change the Expected Family Contribution based on your projected income during the year, rather than what you earned in the past.
Your unemployment benefits will be counted
If you or your family member is receiving unemployment benefits, those will have to be counted as income on your review. This will doubtless boost your Expected Family Contribution than it would be if you were receiving no income whatsoever. However, it’s likely you’ll still be paying less than you would have if you (or a parent) had a full-time job.
You may be eligible for expanded financial aid
President Obama expanded Pell Grant availability to unemployed workers as part of his stimulus package. Under the law, unemployed individuals may be eligible for up to $5,350 in Pell Grant funding for online degree tuition and fees at universities, community colleges, and trade and technical schools. This applies not only to unemployed workers, but to their spouses and children as well, as long as the spouse or child is supported financially by the person who lost his or her job. And it applies to those who received layoffs, currently receive unemployment benefits, or people who were self-employed but are currently no longer receiving income from their self-employment activities.
You may have to prove unemployment status
You may be asked to bring proof of unemployment to your financial aid office to trigger a review. Proof may include a layoff notice, a Schedule C worksheet for the self-employed, or a letter from your state unemployment agency that outlines your employment status and eligibility for increased financial aid. Bear in mind that there may be a time limit—such as 90 days from your proof of unemployment letter—to qualify for extra aid.
If you’ve recently lost your job and are struggling with how to meet your tuition obligations under a financial aid package that included your previous income, you’re not alone. A professional judgment review is possible—and you may qualify for additional student aid. Don’t wait to talk to a financial aid professional—as a review could significantly improve your financial situation.
FinAid.org: Professional Judgment Reviews
USA Today: Pell Grants, Other Forms of Aid Can Help Older Adult Students
More About Financial Aid
- Can You Hurt Your Chances for Federal Financial Aid By Saving Too Much for College?
- In a Same-Sex Marriage? How Your FAFSA Will Change in 2014
- How Your Federal Student Aid Will Change in 2013
- Do Younger Children Get a Better Deal on Student Aid?
- Senior Citizens and the FAFSA: Getting Federal Aid When You're Over 60
- Can Your Credit Score Affect Your Federal Aid?
- Tuition Aid for International Students: The Funding Landscape
- Major Changes to Your Federal Student Aid in 2012-2013: What's Ahead