Personal Finance

Financial aid might fall short for these college students next year. Here’s why

Key Points
  • Families can start filing the Free Application for Federal Student Aid on Oct. 1. This financial aid would be earmarked for the 2021-22 school year.
  • The amount of help you’re eligible for will be based on your 2019 income tax returns. Those documents may paint a much rosier picture of household finances and may not reflect financial hardships families are dealing with in 2020.
  • Get ready to file an appeal at your school’s financial aid office if your package doesn’t accurately reflect your current siutuation.
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Financial aid packages for next year might be woefully short for college students whose parents have lost their jobs amid the Covid-19 downturn.

Students can begin applying for financial aid as early as Oct. 1. That's the first day they can fill out the Free Application for Federal Student Aid for the 2021-22 school year.

Submitting that application is the first step toward obtaining scholarships, grants and loans.

Here's the catch: Funding for the 2021-22 school year is based on an applicant's 2019 income tax return.

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Coronavirus has rocked the economy, with millions of people out of work.

That means those 2019 tax figures may not necessarily reflect the reality many families are facing — and they may end up with less aid at the outset.

Full-time undergraduate students received an average of $9,520 in grants, $4,410 in federal loans and $1,280 in other aid during the 2018-19 school year, according to the College Board.

That means students who file a FAFSA will need to talk to their school's financial aid office and let them know their 2019 income tax return may not reflect their current siutation.

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"When it comes to the Oct. 1 date, getting your data in is step one," said Carlo Salerno, vice president for research at CampusLogic, a provider of financial aid technology.

"Step two is, 'How early can I get in front of the financial aid office and let them know that my circumstances may not look like the tax return?'" he said.

Filing an appeal

The appeals process involves the student, the school and its financial aid office.

"The college has the authority to make changes [to the financial aid package] when it's supported by adequate documentation," said Mark Kantrowitz, publisher of

Students may have to file a form to appeal the award, while other institutions may require a letter.

Be ready to present copies of relevant documents to show hardship.

Those documents include notices from the unemployment office, which show the receipt of benefits, or a termination letter from a former employer.

If your family incurred significant unreimbursed medical expenses this year, bring copies of those bills and any documents that prove you paid copays and deductibles, said Kantrowitz.

Specificity is everything.

"Be specific about the dates and the amounts, state what date you lost your job and how much of a difference it makes in your pay," Kantrowitz said.

Be proactive


The timing of the appeals process can vary from one institution to the next.

"Be patient but be persistent, because sometimes schools will say they don't start taking appeals until Dec. 1 or January," said Joseph Messinger, co-founder of Capstone Wealth Partners in Dublin, Ohio.

Freshmen who were aggressively recruited might have an advantage if they can find someone to advocate for them at the school, said Messinger.

The other reason why it's important for students to act quickly is that colleges themselves are facing financial difficulties.

Right now, get yourself in the system.
Carlo Salerno
vice president for research at CampusLogic

Public colleges depend on funding from their states, which are currently looking at a big decline in tax revenue.

"Many colleges are going to be under pressure, and their costs don't necessarily go down," said Kantrowitz.

With out-of-state students wanting to stay close to home and international students getting tangled in red tape, college budgets will take a hit, he said.

Ready your paperwork

In addition to your 2019 income tax return, you'll also need your driver's license, Social Security numbers and bank statements to file your FAFSA.

Take some time to gather any additional documentation you'll need for the appeals process down the line.

"Right now, get yourself in the system," said Salerno. "The sooner you get it completed, the sooner the federal government can disburse the information and you can apply for state grants and scholarships."