How do families handle FAFSA changes if their financial situation is different? Life is constantly changing and current financial circumstances may be different than the tax information reported on the 2020-2021 FAFSA form. If this is so, follow the below steps to report your current financial circumstance.
Here are things you need to review if you are a family facing this problem.
- Understanding Your FAFSA Base Year
On October 1st, the FAFSA form became eligible for the 2020-21 school year submission. For the 2020-21 FAFSA, parents and students will be using their 2018 tax return information. This is called Prior Prior and 2018 is considered the base year. Under the current rules, the FAFSA needs to reflect the IRS tax information submitted for that base year. In most cases, it will need to be done using the FAFSA and IRS process called the Data Retrieval Tool or DRT.
- Using DRT to Submit FAFSA
The colleges verify the FAFSA information through a process called Data Retrieval Tool or DRT. This FAFSA interface is with the IRS. The IRS and the DRT tool transfers the tax return information directly onto the FAFSA form. To import this information the tax information needs to match the input exactly. Before disbursing financial aid, colleges need to ensure that the information is reported correctly.
The problem is that this imported information cannot be changed or even seen by the person who is submitting the FAFSA. This inability to see or change a person’s number was done to minimize personal identity issues that occurred a few years ago.
- Submitting Your Financial Changes
This will require the family to submit these changes to each college that your child is applying to. This should be done via a letter. Please check with the financial aid office as some colleges may have a formal form process.
In most cases, some additional information such as a layoff notice or a recent pay stub will be required. If you delay the notification until 2020 then using that year’s tax return may be used and is often requested by the college for documentation reasons.
During this process, a family may hear the word professional judgment in reference to their income change notification or appeal. This refers to the ability of the financial aid administrators at the college to make adjustments to a student’s federal aid based on special financial circumstances provided by the family. It is important that the family knows that it is a professional judgment at that specific college and not all changes in financial circumstances will result in a positive financial adjustment for the family. Depending on the college, each result can be different and will be based on their financial situation and the need of the college for the student.
- Timing of Financial Change Notification
The timing of telling a college of your financial change may impact the student’s admissions to that college. A family’s ability to pay is considered in the admission and award letter process. Even if the college promotes that they are need-blind, a families’ ability to pay could be a factor.
If you notify the college during the application process, the initial financial award will better represent what your net cost will be. You still may be able to negotiate more but it will tell you what schools want your child and what they are willing to give you. By telling the school early, it may reduce the stress of the application process.
The other approach is to delay the notification and then appeal the award once your child is accepted. By doing this, you do improve your child’s acceptance chances but you will still need to go back to each college and explain the financial change. This could increase the emotional stress since you will need to wait and find out if you can afford the college.
- Common Reasons Submitting Appeals
The FAFSA form is the gateway to need-based funding and can help many families pay for college. Some circumstances that may warrant a FAFSA appeal would be a loss of job, divorce, separation or death. Other areas that may change your income could be an unexpected expense that may not be covered by your insurance. This could include medical, dental or even unexpected nursing, special needs expenses or money spent caring for an elderly parent. Natural disasters such as floods, earthquakes, fires, tornadoes or hurricanes that result in damage or loss of residence should also be reported if there is a significant loss.
FAFSA Financial Change Summary
So, what are then the next steps? Currently, a family’s initial FAFSA submission may not show the changes in their financial position since it is based on taxes from 2018. It is important for families to report any significant changes in writing to the Financial Aid Office. Included with the written details should be all the necessary documentation and numbers to support the new change in income. We recommend the written letter be short, polite and concise. This will help the Financial Aid Office understand the changes.
If you have any questions, we recommend that you contact the financial aid office at your college for assistance. The PayForED website also includes a list of trained financial advisors or CFSLA. These financial professionals specialize in college funding and student loan strategies.