Federal Financial Aid in Hard Times

If you’re facing the prospect of having to drop out of school this fall because your financial aid isn’t enough, you’ll want to hear how the federal government is handling the recession’s impact on students and financial aid availability.

Federal Financial Aid Appeal Process

I spoke with Anthony, a charming and knowledgeable representative at the Federal Student Aid Information Center. I asked him if it was possible for students to get additional federal aid after their FAFSA had already been processed if their financial circumstances had changed since then. I also asked for a quick explanation of how the federal financial aid appeal process works.

Anthony explained that yes, schools ARE allowed to appeal for more federal aid on a student’s behalf when there’s a change in the student’s circumstances. Here’s the inside scoop:

  • Your school has to be willing to consider your financial aid appeal. (Apparently, not all schools are.)
  • If neither the state nor your school has any more financial aid available, then your school can file an appeal with the U.S. Department of Education to increase your federal aid (this is a federal process between the school and the Education Department).
  • The most common appeal scenario is a change in your (or your family’s) financial situation severe enough to justify reassessing your financial aid need based on your current circumstances rather than the information from your FAFSA. Examples of such changes include job loss, divorce, overwhelming and unexpected medical expenses, and other financial losses or obligations that significantly decrease your EFC (Expected Family Contribution).
  • Your school will most likely be willing to file a federal appeal on your behalf if you can document your change in circumstances very clearly, with proof and paperwork.
  • The detailed proof and documentation is essential because schools get audited by the federal government, and have to prove to the U.S. Department of Education that they did not falsely claim a need for more federal funding than they actually needed.

For more information on increasing your federal financial aid eligibility or other FAFSA issues, call the Federal Student Aid Information Center at 1-800-433-3243.

Department of Education Instructions to Financial Aid Administrators

The U.S. Department of Education knew this was going to be a tough year for financial aid offices. Back in April and May, the Department sent letters to financial aid administrators across the country, granting them permission to be flexible with financial aid appeals and eligibility rules.

One letter encouraged financial aid administrators to use their best judgment and “…do more than provide good service to the students who request that you make an adjustment. …[R]each out to your students (and prospective students), particularly those who seem to have hit a rough patch, to make sure that they know there may be ways that you can help.”

The other letter alerted financial aid administrators that students who recently lost their jobs should have their FAFSAs changed to reflect zero income, even if they received unemployment benefits.

The second letter also stated: “Many recently unemployed individuals do not know that they may now be eligible for Federal Pell Grants and other need-based student aid. Most do not know of your ability to adjust financial aid eligibility based on their special circumstances. Because of the severity of the economic recession, the U.S. Department of Labor has been working with the states so that each state will send a letter to all recipients of unemployment insurance benefits to encourage them to consider enrolling in postsecondary education and applying for financial aid.”

The Department of Education appears to understand the need for federal financial aid availability in these hard times. If your state has not had time to divert some of its stimulus bill education funds to replace lost state grants, ask your financial aid office to reconsider your eligibility for increased federal aid.

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