The Federal Reserve has lowered interest rates over the past few months. Here’s how their actions affect you.
Taking a shot at getting extra financial aid never made more sense than in the fall of 2020.
The economic upheaval associated with fighting COVID-19 has cut or eliminated a string of paychecks for many parents of students.
Many college students who might have picked up extra money during the summer working as lifeguards, wait staff, retail clerks or bartenders couldn’t find work. Or if they did, many couldn’t work as many hours as they had in the past.
The money just isn’t there.
Appeals for more financial aid already were up 70% at Michigan State University through early August from the same time last year, with 394 appeals being filed thus far, according to Rick Shipman, executive director of financial aid at MSU.
Gold prices are soaring: Just don’t expect a big windfall selling your jewelry
“And more are coming in,” he said, noting that MSU has offered $1.2 billion in financial aid so far to more than 60,000 applicants.
“The primary reason for appeals this year is loss of income and most of that stems from coronavirus disruptions,” Shipman said.
“Some parents have lost their jobs entirely while others have had significant reductions in earnings as employers had to cut back on hours or pay rates,” Shipman said.
“Tragically, some have lost family members, which introduces significant and often complex changes in their financial situation.”
Experts say colleges can take anywhere from two days to two weeks to process an appeal, depending on the college and staffing levels. And given that some staff may be working remotely, it could be wise to plan for extra delays.
But taking the time to appeal could result in an extra $3,000 to $5,000 or so in financial aid, according to some experts. Each family’s situation will be different, so some may not qualify for any extra aid or may get far less money.
How do you request more financial aid?
The first step is to contact your college directly to go through what’s needed for an appeal.
Shipman said too often those appeals from families who not have reached out to the financial aid office first tend to be incomplete, and then the school must contact the family for more information before an appeal can be processed.
The best bet: Don’t wait until the very last minute to ask for extra help. The pool of money is limited and more students could be looking for extra assistance after the dramatic job losses in the recession of 2020.
“Even before the pandemic, job loss and income reductions were the number one reason why families would appeal for more financial aid,” said Mark Kantrowitz, author of “How to Appeal for More Financial Aid.”
“As soon as you get the layoff notice,” Kantrowitz said, “file an appeal.”
Families should realize, he said, that the pandemic could make the process a bit more time consuming, too.
“Some colleges have an appeals committee that reviews financial aid appeals,” Kantrowitz said.
“It is more difficult for them to meet remotely, even with Zoom. They need to be able to share the documents securely.”
Students who will attend college this fall are receiving financial aid based on the income the families had two years ago, as required to be submitted on the Free Application for Federal Student Aid, or FAFSA.
Yet given the widespread hardship that has taken place since March, those numbers on your 2018 income tax return might not accurately reflect a family’s ability now to pay for college.
You’d need to file an appeal for more financial aid after major life-changing events, such as a divorce, disability, death or job loss. Students may ask a school to reconsider how much money the family can afford now to contribute to cover their college bills.
Most colleges may make an adjustment to the financial aid package corresponding to the change in income, Kantrowitz said.
Kantrowitz noted that colleges can take into account the money you made during any 12-month period if earlier data from 2018 for the 2020-21 academic year doesn’t reflect your ability to pay for college during the upcoming academic year.
“Most often they will choose to estimate income for the current calendar year,” he said. “Or the calendar year that overlaps with the academic year.”
So they’d take into account the salary and wages that you received until the date of the layoff, plus any severance pay, plus any unemployment benefits.
But if that total exceeded for some reason your annual wages in 2018, the college wouldn’t make an adjustment for the 2020-21 year.
It might get slightly trickier if the $600 a week extra in federal unemployment benefits somehow drove up your total income.
“But, since that has run out, it might be that their total income for the year is less than before, in which case they will get some additional aid,” Kantrowitz said.
Some colleges could look forward to the next year and they may figure that the unemployment benefits will end and the severance will run out, he said.
Remember, the extra aid could also include more student loans in some cases, which need to be repaid.
Take a look at your extra COVID-19 expenses
Students should consider added expenses too, as a result of the social distancing and other measures put into place to combat the virus.
“If a student needs a computer or internet access because their classes have moved online, they should appeal for the additional expense,” said Kantrowitz, who is also publisher and vice president of research for Savingforcollege.com.
“If a student is disabled and was receiving an accommodation at the college, but now has to buy the same equipment for home use, they should appeal for additional financial aid,” he said.
Be prepared to support your claims
But remember, you cannot file an appeal if you’re simply anticipating a layoff somewhere down the line.
Be prepared to pinpoint — and document — the specific financial upheaval, such as a job loss, furloughs, reduction in the family’s income, extra expenses associated with the pandemic. Focus on circumstances that are beyond the family’s control.
“Colleges focus on actual changes, not hypothetical or speculative changes,” Kantrowitz said.
Other key points to successfully appealing for financial aid include:
- Write a one or two page letter of appeal. Kantrowitz suggests that you don’t ask for a specific dollar amount but summarize what happened to the family’s finances.
- Get copies of documents to back up your claim of financial hardship. You’ll want copies of layoff notices, copies of paperwork involving unemployment benefits, medical bills, letters from outsiders, such as school counselors and doctors, who might be familiar with the family’s situation.
All federal and State of Michigan financial aid requires filing a Free Application for Federal Student Aid or FAFSA, as does much of the financial aid from some colleges.
Most families who want to appeal will be updating the data submitted through the FAFSA.
Kantrowitz noted that the changes to the FAFSA data elements must be made by the college.
“Families cannot appeal for more financial aid by changing the data elements on the FAFSA themselves,” Kantrowitz said.
“If they try to do that, it will get rejected. Changes have to be approved by the college and backed up by adequate documentation.”
MSU’s Shipman said the federal rules require specific documentation to support changing the FAFSA data.
“For instance, if a parent lost income, we need to have verification of that from the employer and information about unemployment income if that applies,” Shipman said.
“That documentation allows us to change the income and tax information on the FAFSA. If a family had unexpected expenses due to the coronavirus disruptions, such as the need to relocate for purposes of isolation, we would need different documentation,” Shipman said.
Be prepared for the possibility that extra aid isn’t as much as you’d like. But given the financial stress on colleges and the need to keep students attending college, some say the odds now could be in your favor.
Read or Share this story: https://www.usatoday.com/story/money/2020/08/24/financial-aid-appeal-college-students/5620250002/