Question: I am a parent. My child will go to college in fall of 2013. I just lost my job. Our 2012 incomes are too high to get any financial aids (due to the few extra months pay I received as severance package). If cannot find another job, our income will drop more than 50% in 2013. Should I still apply financial aid this year, or wait until next year ?
Answer from Mark Kantrowitz. Whenever there is an unusual family financial circumstance, the family should ask the college for a professional judgment review (PJ). Some colleges call this a special circumstances review or a financial aid appeal. The family can ask for PJ at any time after applying for financial aid, even in the middle of the academic year. Unusual circumstances include anything that changed from last year to this year or anything that distinguishes the family from typical families. Examples of the former include job loss and salary reductions. Examples of the latter include high unreimbursed medical expenses and high dependent care costs (e.g., for a special needs child or for an elderly parent).
In examples involving job loss, the college financial aid administrator can choose to switch the family from last year’s income to an estimate of this year’s income. Estimated income will include severance pay and unemployment benefits, as well as income from a new job if the wage-earner finds new employment. Since the financial aid applications are heavily weighted toward income, this can have a big impact on eligibility for need-based aid. Note that most colleges perform a holistic review, so if you lost your job but just won the Mega Millions lottery, don’t expect an increase in financial aid eligibility.
To initiate a professional judgment review, call the college to ask about the college’s procedures. Some colleges have a form designed to elicit the most common unusual circumstances. Other colleges ask the family to write a letter summarizing their circumstances. In either case, the family should provide copies of documentation of the unusual circumstances, since the PJ process is driven by documentation. For example, when a family asks for PJ for job loss, they should provide a copy of the layoff notice and proof of recent receipt of unemployment benefits (within the last 90 days). It is also helpful to provide details about the other parent’s income if both parents work. Also note whether the parents have taken a hardship withdrawal from their retirement plan accounts, as this can artificially inflate income.
ABOUT THE AUTHOR
Mark Kantrowitz is an alumnus of the first year of the Research Science Institute in 1984 and a member of the board of trustees of the Center for Excellence in Education. Professionally, he is publisher of Fastweb.com and FinAid.org, the leading web sites about planning and paying for college. He is also the author of two Amazon.com bestsellers, the most recent of which is Secrets to Winning a Scholarship.