<p>My parents have been making about $130,000/year but now that one has been laid off, it's down to $20,000/year. They don't lose the job until the end of August. Will this change my financial aid situation for the upcoming fall semester?</p>
<p>Call the financial aid office at your college. They can give you the information that you need.</p>
<p>Sorry to hear about the job loss. My husband lost his job, which meant a 60% income loss for us, and obviously he can no longer cosign loans for our daughter.</p>
<p>Also there is the question of any severance packages that your parent may receive. At least with this much advance notice, perhaps your parent will be able to obtain another job resulting in hopefully no loss of income.</p>
<p>Contact your school for more info, but I’m thinking it isn’t likely that they will make any changes for the upcoming school year. Good luck.</p>
<p>Agree, let the school know. They seem to all handle this differently from doing nothing to adding alittle something but there isn’t much anecdotal information that colleges make big changes to finaid packages right away. My kids’ colleges did nothing expecting that I would secure work within the year when my job ended. Talk to your parents and make sure they can still afford your college out of their savings, severance etc. If they can’t you could consider postponing starting college for a year if they need you to do so.</p>
<p>Contact the school now, but expect that they will take a “wait and see” attitude. There are several reasons why they won’t immediately just throw grants your way:</p>
<p>1) Your dad isn’t unemployed YET.</p>
<p>2) His income for 2012 will still be highish. (Your income this year will NOT be $20k. If that’s your mom’s income then add that to your dad’s earnings from Jan 2021 to Aug 2012. Your dad earns about $110k per year. He’ll have earnings for about 7 months…so he’ll have earned about $60k for 2012. Add that to your mom’s income, that’s $80k (plus any severance).</p>
<p>3) He may get a severance pkg and/or unpaid vacation.</p>
<p>4) He may find another job rather soon…maybe even before this job ends.</p>
<p>Hopefully your dad will find work soon. Aid is largely based on the previous year’s income (2011) and your parents’ income for this year won’t be low. </p>
<p>Does your school promise to “meet need”?</p>
<p>Due to the large number of folks who have become unemployed, the federal government has permitted financial aid offices to reduce a “dislocated worker”, that is, the unemployed parent’s income income so that federal aid may pertain. This alleviates the issue of last year’s income affecting the current year’ college payments. </p>
<p>Sounds great? Well, in some cases, yes. In your case, it is possible that the income can make you PELL eligible. With only $20K income from the other parent, if the unemployed parent is considered “dislocated”, then it greatly reduces the income to the %$20K figure, BUt this is all at the discretion of the financial aid officer, and will depend on the circumstances, and it applies only to federal aid. GIven that PELL maxes out at $5550, that may not be a huge amount towards a lot of tuitions, especially private school ones. The school itself is under no obligation to use its funds accordingly, and if they do not guarantee to meet full need, it can be a moot point.</p>
<p>But in a state where state aid is dependent on federal EFC and is a factor, where PELL kicks in and the Stafford becomes subsidized and if the school also has SEOGs and Perkins loans, it can add up.</p>
<p>Many schools will require a short period of unemployment - the time period varies by school - before they will adjust income. They can adjust the expected income for the unemployed parent to 0 … or they can use the income earned to date and adjust the expected income for the remainder of the year to 0. How it is handled depends on the school. This is a Professional Judgment issue, and schools are given some guidance but no hard & fast rules. </p>
<p>The fact that your other working parent earns so little is important. If the second parent made a bunch more, the loss of income might not result in grants. In your case, however, there is a good possibility the net result will be a Pell grant. However, understand that there may not be much more … meaning, your income can be adjusted to 0, but that doesn’t mean there will be an increase in aid that will match your need.</p>
<p>Talk to the school’s aid office. They will give you guidance.</p>
<p>^^^</p>
<p>How can someone be called “dislocated” while he’s still employed? He’s not out of a job until August.</p>
<p>With only $20K income from the other parent</p>
<p>So, does that mean that the dad’s income from THIS YEAR (2012) won’t count at all? I can see not counting 2011 income, but to not count 2012 income seems odd. What if the parent earned $200k this year and was then laid off? Would a school exclude that 2012 income, look only at the lowly spouse’s income and declare them Pell eligible? That sounds nutty. </p>
<p>I can see doing the adjustment if the main bread winner is laid off early in the year and won’t earn much/anything for the current year. But, to exclude income earned for more than halfway thru the year (or more) seems wrong. The family isn’t living on $20k this year.</p>
<p>Until the parent is unemployed, nothing can be done. As stated already, the FAFSA uses last year’s information. And that is what the awards, if any, use. Kelsmom states that schools have a period of time that they will wait before giving the designation of dislocated worker. All of that comes under professional judgment and will vary from school to school and perhaps even from financial aid employee to employee. I would expect that the professional judgement would include consideration such as when the unemployment occurs in the year, and other factors as well.</p>
<p>Still, unless the school is in the full need met category, it isn’t going to make a whole lot of difference most of the time. When all factors such as income made that year, unemployment benefits are taken into consideration, all a student may get is some subsidization of Stafford loans. The one case I know of this sort resulted in just that. However, if things are such that there is a true hardship for the year, the PELL and other federal,state and college money can come into play. So it is something to discuss with the financial aid office.</p>
<p>I realize that the FA officer can use PJ and adjust, but it seems odd that a family who will likely earn about $80k this year (plus any severance/vacation time) PLUS unemployment checks, would somehow have the dad’s 2012 income erased and qualify for Pell. </p>
<p>I can see that happening if the dad stopped working in Jan or Feb, but not in Aug when over half of his income will have been earned for this year. Why should a family that earns $80k+ this year qualify for full Pell while a family that earns $50k this year won’t?</p>
<p>Hopefully the dad will find a new job within the next 2 months so this won’t be an issue.</p>
<p>Because the system is not fair in all regards. This is where PJ enters. When so many families have wage earners losing jobs, it causes a crisis to all involved, including the colleges. If I received notice that my DH was going to lose his job this August, all our household assets, expenditures and future expense will come under scrutiny. Though financial aid officers will not act on any upcoming event, they recognize as does the government, that when there is a job loss, there will be cuts in whatever the family is spending money, and an item to cut will be school. It would be total folly to spend that large amount of money when income has been cut off, even if there may be job prospects. I know a number of kids who immediately took a gap year when that happened. The uncertainty alone would cause a responsible parent to put thing like college on hold until there is a balance. </p>
<p>So a financial aid officer can take a look and see what is reasonable. Can the school make it possible for those students to continue with some aid? We are not talking one or two students here. The reason this “dislocated worker” categroy and remedy came about is because enough cases were arising that it was putting the whole system into jeopardy. When things happen in large numbers, the impact to everyone starts to be felt, and that is when some form of relief often becomes available, not to help any of the individual but to soften the blow to the system at large. </p>
<p>Kelsmoms can probably tell us more about how this works in practice and what forms of PJ are used when a family who was making a nice income has the main wage earner become unemployed.</p>
<p>Using PJ for loss of employment is tricky. For example, adjusting the income of a family whose sole breadwinner earned $80,000 so far this year (just an example) to 0 due to loss of income can be done … it is within the guidelines. The student would get Pell, at the least, to help the situation. Where it gets interesting is when you consider the fact that this family did earn $80,000 this year. There are so many students whose parents earn just over the amount that would make them eligible for Pell who don’t ever get any help. But then consider that the prior year’s earnings are never considered … so a few months one way or another would make the student whose parent lost his job a legitimate 0 EFC, anyway. It is just moving up the timetable.</p>
<p>It is very important to keep from getting bogged down in the discussion of what is and is not fair when it comes to finaid. It is what it is, and aid offices strive to work within the guidelines and help as many people as possible. They can’t help all, and they can’t always be perceived as “fair,” but they do their best … as best they can.</p>