College aid amid a pandemic means extra documentation

As the health and economic pandemic continues to swirl, another college financing season is about to begin. While the process is always onerous, this year many familieswill need to send extra documentation highlighting any changes to their financial condition as a result of the pandemic (or any other reason).

It’s important to remember that many of the forms that grantors and lenders require— including the all-important Free Application for Federal Student Aid or FAFSA— are based on 2019 tax returns and financial statements, which is not going to capture the impact of COVID-19.

For those who have seen a drop in income or assets— including those who are already enrolled— you will need to followup all formal applications directlywith each school to which the student is applying in order to submit your case to “professional judgment.” This is a process where the family highlights “unusual situations or circumstances that impact your federal student aid eligibility.” The financial aid administrator at each college has the discretion to override the normal outcome on a case-by-case basis, which may result in additional grants.

Regardless of your situation, the process begins with the completion of the FAFSA, which determines howmuch students and their families will receive in college grants, scholarships and loans.

It is available on Oct. 1 for academic year 2021-2022. According to theDepartment of Education (DOE), which administers the FAFSA program:

Federal student aid includes three different kinds of financial help: grants, low-interest loans andwork-study funds (a parttime job on or near campus). It is important to distinguish among the three; otherwise, youmight find end upwith a nasty surprise in four years.

Your username and password combination (FSA ID) will serve as an identifier to allowaccess to personal information in various DOEsystems. You can apply online for an FSA IDat any point, even before you are ready to complete the form. Guard the FSA IDwith your life— there have been instances of hacking and phishing for this vital and important information.

“There is no income cut-off to qualify for federal student aid. Many factors, such as the size of your family and your year in school, are taken into account,” according to theU.S. Department of Education’swebsite.

FAFSA is also used for some state and school financial assistance.

Unlike most loans, the government will not consider a credit score as a means of qualification (except for Direct PLUS Loans). Also, youwon’t need a cosigner to get a federal student loan in most cases.

The process goes a lot faster if you assemble the following information before you begin: Social Security numbers for the student and parents (this may require contacting an ex, so be forewarned); the student’s driver’s license number, if applicable; federal tax information; records of untaxed income, such as child support; and current bank-account and investment information.

TheDOEcan access your tax information through the IRS Data Retrieval Tool. Using your FSA ID, the site will transfer you to the IRS in order to retrieve the data.

In addition to FAFSA, there is another step to take. Also onOct. 1, log on to the College Board’s CSS/Financial Aid Profile, which is used by nearly 400 colleges, professional schools and scholarship programs to award nonfederal aid. The CSS requires morework because it is a more detailed accounting of the family’s finances, but it could be worth it as the CSS distributes about $9 billion in awards.

Important note: You should submit both the CSS and the FAFSA as early as possible because some money is awarded on a first-come, first-serve basis.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website atwww.jillonmoney.com.