The school year is approaching and thousands more college students are enrolled this fall than last year. In one more ripple effect of the recession, traditional and nontraditional students alike are coming up short on tuition money and wondering how to appeal for more financial aid.

Wall Street Journal: Families Appeal to Colleges for Extra Aid

A quick look at college financial aid pages around the web turned up some consistent recommendations, particularly if your financial circumstances have gotten worse since you filed your FAFSA. Financial aid administrators have the flexibility to adjust aid awards based on special circumstances such as a job loss in your family. If you can prove a loss of income or other specific hardships, you should file an appeal with your school for more financial aid. Even if school itself has no funds remaining, your circumstances may make you more eligible, or your parents more eligible, for low-cost federal loans.

What is a financial aid appeal?

A financial aid appeal is a formal request to have your financial aid package reviewed and increased due to changes beyond your family’s control that have occurred since your FAFSA was processed or that were not reflected in your FAFSA.

Hardships and changes in circumstances eligible for an appeal will vary from school to school, but most schools will include:

• Significant or catastrophic loss of family income or benefits for either you or your parents (if you’re still a dependent they can claim on their taxes) due to loss of job, disability, retirement, or homelessness. Most financial aid offices are restricting appeals to families in which unemployment or underemployment has lasted 8 weeks or longer.
• You or your parent becomes widowed, separated, or divorced after the FAFSA was filed
• You or your parent have necessary medical and/or dental expenses that were paid but not covered by insurance and not likely to be covered by insurance in the future
• Personal bankruptcy
• Significant and unexpected disability or medical cost
• Childcare expenses required in order for you to attend classes
• Additional costs for required research, internship, or field study
• Unexpected transportation costs
• Increase in on-campus boarding costs when increase is not the result of a choice on student’s part
• Other special circumstances outside of your control (for example, unusual expenses related to special education needs of a brother or sister)

There are also some common appeal circumstances that schools will not consider:

• Personal choice decisions: you’ve run out of money due to credit card expenses, property purchased for income, high mortgage payments, or a family vacation, wedding, or new car
• Your income or your parents’ income level is already too high to have any effect on the appeal outcome

How to file a financial aid appeal:

• Confirm that your FAFSA for the current year is filed and processed
• Call your financial aid office and tell them why you want to appeal for more financial aid. Ask for any special forms required for filing an appeal and any details you should know about the process (does your financial aid office have a web-page listing all the appeal instructions?)
• Write a letter explaining your circumstances. Be detailed, not vague.
• Submit the letter with the appeal form and financial documentation your financial aid administrator requires. This could include the state confirmation of unemployment and/or termination of benefits, copies of medical bills that weren’t covered by insurance, a federal tax return, or the change in income you’re anticipating for the year ahead based on the change in your financial circumstances
• Ask when you should expect to hear back from them so you don’t bug them with phone calls before the time you could expect an answer

Federal Aid First. . . and Last

It may be that your appeal for more financial aid will be accepted only if your school can get more federal funding for you. Unfortunately, if your FAFSA determined that your Expected Family Contribution (EFC) was zero (0), then you’re already eligible for the maximum amount for federal student aid you can get. If the school or state cannot fill the gap, your appeal for more financial aid may be denied.

By the way, if you haven’t yet filed a FAFSA (Free Application for Federal Student Aid) for the coming school year, you still have plenty of time. Apply online, it’s fastest and most efficient.

Show Me The Money. The income and expense information you report on the FAFSA must be accurate for the year before you start school, not for the coming year. This is because studies have shown that for predicting your family’s financial ability to pay for higher education, income tax information from the most recently completed tax year, verifiable from your income tax return, is more accurate than an estimate projected into the year ahead.

We’re So Sorry. Once your FAFSA has been processed, you can’t make changes to the income or asset figures you provided. If your financial situation changes after your FAFSA has been filed, perhaps due to job loss or divorce, you should talk to the financial aid administrator at your school as soon as possible.

We Are Family, Pt 1: If you live with an aunt, uncle, or grandparent, you don’t need to report their income on your FAFSA. In general, you only need to report your parents’ income (birth parents or adoptive parents). If the relative you are living with has adopted you, however, and is now your adoptive parent, then you will need to include that person’s information on your FAFSA.

We Are Family, Pt 2: If you live with a girlfriend or boyfriend, you do not have to include any financial information for that person unless the two of you are actually married or are considered to have a common-law marriage under state law. However, you do have to report any rent or bills your housemate pays that you would otherwise be obligated to pay yourself. In this case, rent and expenses paid on your behalf are considered “cash support,” a form of income.

Is This Your Final Answer? You can submit corrections to your 2008-2009 FAFSA up to September 21, 2009. Why might you need to make corrections to last year’s FAFSA, after the money has been disbursed? Most of the time, changes are at the request of your school’s financial aid office, which may ask you to correct information pertaining specifically to that institution. In other cases, students have misunderstood FAFSA rules about marital status, the definition of (in)dependent student status, or how to account for children, parents, or significant others in nontraditional families. Sometimes, even misspellings or incorrect numbers go undetected until the final crunch.

A Penny Saved Is A Penny Earned. Even if you think you won’t qualify for need-based federal grants, you should complete a FAFSA to get access to low-cost federal student loans.

You can find more FAFSA FAQ, explanations and definitions, and a downloadable section by section instruction booklet at the federal student aid website, Completing the FAFSA.

Indiana — President Obama visited Indiana today, another state whose budget crisis has forced a 30% cut to the amount of state financial aid awarded to each student who applied for it. The number of Indiana students who applied for state financial aid shot up 60,000 this year! (Yes, you read that right: 60,000 more students applied for state financial aid this year than last year.) There just wasn’t enough money in the budget for the State Student Assistance Commission to offer fully funded state grants to everyone who applied.

In Elkhart County, where the president discussed the purpose and dispersal of the stimulus bill money, the themes were unemployment, getting people back to work, the collapse of old manufacturing, and the rise of new energy and fuel-efficient automotive technology. Needed: an educated middle class looking forward to new jobs, trained for new technology, and rebuilding prosperous communities.

Fortunately, several Indiana colleges and universities are stepping up to help their students stay in school. Indiana Tech, Manchester College, Grace College, University of Indianapolis, University of Saint Francis, Trine University, Wabash College, and Huntington University have all dug deep into their pockets to cover the gaps in thousands of students’ financial aid. Indiana University-Purdue University Fort Wayne enrollees are not so fortunate; the university advised its students that it can’t provide additional financial aid on such short notice.

Illinois — As in Michigan and Indiana, the Illinois budget shortfall required the elimination of funding that would have provided state financial aid for 130,000 college students, and reduction of one state grant, the Monetary Assistance Program, by half. In past years, Illinois college students had until August to apply for state financial aid. This year, accurately anticipating a huge increase in applications, the Illinois Student Assistance Commission changed the deadline to May 15. They tried to get the word out, but thousands of students missed the early cut-off.

We checked the federal financial aid website for the FAFSA policy on unanticipated changes to a student’s financial situation. Unfortunately, once your FAFSA has been processed, you can’t make any changes to reflect the loss of state aid. It says, “If your financial situation changes, check with your financial aid administrator.”

Financial aid administrators in Illinois seem to be equally stuck, for now. Nevertheless, it would be terrific if Illinois schools, like their Indiana peers, could find the resources to keep their students from having to drop out this fall.

“Education Pays,” a College Board report on the benefits of higher education to families, communities, and society, documented higher earnings, higher contributions to state taxes, lower unemployment levels, and lower poverty levels for workers with college degrees than for those without. A tax base that can’t pay taxes, or worse, has to leave the state for education or work, can’t help the state recover from recession.

Other possible solutions to the state financial aid crisis? Illinois and Indiana, along with many other states, received stimulus bill education funding a few months ago and may be about to get another installment a month early. Covering state financial aid shortfalls wasn’t one of the intended uses of this federal funding, but a small investment in college students now may restore an educated state workforce in the long run.

Otherwise, a later-enrolling accredited online program may work for students whose campus semester starts without them.

There have been a lot of stories in the news lately about the large number of states having to cut state financial aid out of their budgets, affecting millions of college students. If you were counting on, or awarded, a state education grant to help you with your education expenses, you should review the financial aid award letter you got from your school to be sure you understand its information.

Student Aid Report and Financial Aid Award Letters

After you filed your FAFSA, you should have received a Student Aid Report (SAR) that told you how much the federal government concluded you can afford to contribute to your college costs. Your SAR also listed any Pell Grant or other federal grant that you qualified for.

The financial aid award letter from your school tells you how much financial aid it has given you, based on your SAR. The financial aid may come from a combination of sources, including federal grants and student loans, state education grants, and school grants or scholarships.

Financial aid award letters can seem just as complicated as the FAFSA itself, however. Knowing what to look for in your award letter will help you figure out how much “free” aid you’re getting in grants or scholarships, how much aid is in loans, and how much you will still need to come up with on your own.

The experts at the FinancialAidLetter.com website review examples of financial aid award letters from six schools, translating the jargon into plain English and decoding what the award letters are really saying (or not saying).

Vague information about expenses and fees not included in the tuition

One common problem with financial aid award letters is vague or confusing information about what is actually a group of different costs. Also, expenses such as fees, books, computer services, transportation, and housing are not usually considered part of tuition, but financial aid award letters often do not make this clear or list these extra expenses separately. Your award letter should list each cost of attendance and each financial aid award separately so that you know exactly what you’re paying for and what types of aid you’ll have to repay, if any.

Schools may add private loans to your financial aid without explanation

In order to cover costs not covered by federal, state, or school grants or federal loans, your school may add a private loan to your financial aid package, often from the school’s “preferred lender.” If the award letter doesn’t clearly label and explain the private loan, it may give you the impression that some of your costs are being covered by the school itself when the money will actually come from a loan you’ll have to repay, perhaps at a high rate of interest or under terms and conditions unfavorable to you.

State budgets under pressure in 2009

Many states are having to make very difficult choices about what they will fund this year. In states where financial aid has been cut back, students who received a state education grant last year or were counting on getting one this year may be disappointed on short notice. Check your financial aid award letter for information about your state grant and call your school’s financial aid office as soon as possible if you have any doubts.