Impacts of COVID on Income and Financial Aid – A Scenario

This scenario applies to any college providing need-based financial aid with the FAFSA serving as an application for determining financial need.

One of the main reasons why a FAFSA is filed is to get a Expected Family Contribution (EFC) number. The EFC is calculated by the Ministry of Education using information on FAFSA. This is an estimate of the student and family’s ability to pay college expenses for the upcoming school year. The lower the CEF, the more money the student needs. Conversely, the higher the CEF, the less money the student needs.

School year 2022-23:

  • FAFSA is filed using the 2020 base year income.
  • If the student and family’s income in 2020 was abnormally low due to COVID, this could provide a lower EFC than would be calculated under normal circumstances.
  • The student receives need-based financial aid scholarships based on the lower CFE.

School year 2023-24:

  • FAFSA is filed for the student’s second year using the 2021 base year income.
  • If the income of the student and their family in 2021 was higher than in 2020, this could result in a higher EFC than the previous year.
  • Depending on the change to the CEF, the student may no longer be eligible to receive need-based financial aid received in the previous year. Or, if the student is still eligible, the scholarship may be for a lesser amount.

There are a few important things to consider in this situation.

  • Most institutions do not have funds to replace need-based financial aid scholarships once you no longer qualify.
  • This does not apply to scholarships offered on the basis of merit against financial need.

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