Citing Covid, Department Of Education Urges Colleges To Consider Financial Aid Appeals

The U.S. Department of Education issued a Dear Colleague Letter on Friday, January 29, 2021 to encourage college financial aid administrators to use professional judgment to approve financial aid appeals, especially when students or their parents lose their jobs or are otherwise affected by the COVID-19 pandemic.

The Higher Education Act of 1965 provides college financial aid administrators with the authority to make adjustments to the college’s cost of attendance or the data elements on the student’s Free Application for Federal Student Aid (FAFSA) when a student’s ability to pay for college is affected by special circumstances. The adjustments must be made on a case-by-case basis and supported by adequate documentation.

Special circumstances generally involve differences, such as changes in income from the prior-prior year and financial circumstances that differentiate a family from typical families.

The 2021-2022 FAFSA is based on income from 2019 federal income tax returns. Since this income is from before the pandemic and more than a third of American workers lost their jobs during the pandemic, the prior-prior year income may not be reflective of the family’s ability to pay for college during the academic year.

High unreimbursed medical expenses are another reason why a student might qualify for a financial aid appeal.

The number of financial aid appeals at some colleges have tripled as a result.

College financial aid administrators may hesitate to increase the number of approved financial aid appeals during the pandemic because the U.S. Department of Education uses the percentage of students receiving professional judgment adjustments as a factor in selecting colleges for a program review.

The Dear Colleague Letter eliminates this concern because it tells college financial aid administrators that the U.S. Department of Education “will not negatively view increased use of professional judgment or use it as a selection criterion for a program compliance review for the 2021-22 award year.” This extends guidance previously issued for the 2019-2020 and 2020-2021 award years. The U.S. Department of Education recognizes that “appropriate use of professional judgment by a school is likely to increase in the current economic environment.”

The Dear Colleague Letter also provides colleges with the authority to reduce or set to zero a student or parent’s adjusted gross income (AGI) and income earned from work when they are receiving unemployment benefits. Documentation can include a letter from a state unemployment agency or other evidence of the recent receipt of unemployment benefits. Recent is usually defined as within the last 90 days.

Similar authority has been provided previously for people affected by past natural disasters. Secretary DeVos, however, did not provide such authority.

The Consolidated Appropriations Act, 2021 permanently mandates both of the flexibilities discussed by the Dear Colleague Letter during future qualifying emergencies. The law amends section 479A of the Higher Education Act of 1965 (20 USC 1087tt) to add a new subsection (f) concerning the use of professional judgment during a disaster, emergency or economic downturn. These changes are effective starting on July 1, 2023.

To appeal for more financial aid, families should contact the college financial aid office to ask about their process. Some colleges have a form on their web site while others ask the family to write a short letter that summarizes the special circumstances and their financial impact on the family. In both cases, the family should include copies of documentation of the special circumstances with their appeal.

The web site for my book, How to Appeal for More College Financial Aid, includes a free downloadable tip sheet about how to appeal for more financial aid for college.

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