FAFSA Applications After an Income Change (Article)
FAFSA Applications After an Income Change
If you are the parent of a current or soon to be college age kid, you probably know the Free Application for Federal Student Aid (FAFSA) for the 2021-2022 school year opened on October 1, 2020. The FAFSA is the portal to apply for financial aid from a variety of sources such as the federal government, state government and the university the student will attend.
For most students under age 24, this FAFSA requires the disclosure of the student’s and the parent’s financial situation including assets and income. The income portion of the application is determined by the previous years tax return information. This means, the 2021-2022 school year application is based off income information from the 2019 tax returns.
In normal years, using tax returns from previous years has very little impact on the FAFSA results for most people. After all, their income is likely to be similar from year to year. In 2020, Covid-19 made things very different. Since March, more than 57 million Americans filled an unemployment claim. Lots of those people were college students or parents of college students. This means a large number of people will submit a FAFSA that shows a significantly higher income then they will actually receive in 2020. This will result in missing out on potential aid opportunities.
If you are one of the people affected by this, you have the ability to appeal your FAFSA determination to the Financial Aid Office at the university. Typically, this is done by drafting a letter to the Financial Aid Office that summarizes how your income was materially different then that reflected by the FAFSA form.
This isn’t meant to be a negotiation, nor are you trying to trick the office into giving you something you don’t deserve. You are simply trying to get access to any funds you are entitled to based on your current, actual income instead of the income you earned in 2019.
So, don’t let an income change derail your child’s financial aid eligibility. Make sure to contact your student’s financial aid office to let them know your 2019 income is not reflective of your current situation.
Francis Investment Counsel does not provide legal or tax advice.
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