Financial Aid Offices Told to Give More Help

The Department of Education has issued an advisory to college financial aid officers around the country urging them to give more help to students from families suffering from the recession. College officials warned that while they can now be a little more flexible and give more help to people who've recently lost their jobs, there still isn't enough money to give every student what he or she feels is needed. But overall they have praised the move and braced for a flood of appeals for more grants and loans.

"The message is: 'We are encouraging you to do what's in the best interest of the students.' That will have a measurable change," predicted Phillip Day, president of the National Association of Student Financial Aid Administrators.

Federal officials on April 2 asked colleges to contact parents who might have lost their jobs and remind them that they have the right to appeal for more financial aid because of "special circumstances."

"I would ask you to reach out to your students (and prospective students), particularly those who seem to have hit a rough patch, to make sure that they know there may be ways that you can help," wrote Daniel T. Madzelan, acting assistant secretary for postsecondary education.

Most colleges hand out financial aid, such as federal Pell Grants, based on the student's income and expenses for the previous year, as reported in the student's Free Application for Federal Student Aid. Generally, the higher a family's income, the less aid the student receives.

But Madzelan urged college aid officers to use their "professional judgment" and replace last year's higher incomes with this year's lower incomes for students or parents who have lost their jobs or taken pay cuts.

That could make a big difference for families whose adjusted gross incomes will now fall below the $40,000-or-so threshold that typically qualifies students for federal Pell grants. (The formula for determining whether a student is needy enough to get a Pell grant is quite complicated. Some critics even say it is unfair.) Those students could receive anywhere from $890 to about $5,000 in Pell grants. And those with good grades could get another $750 to $4,000 in SMART grants. Students also could become eligible for cheaper federal loans and various state and other scholarships.

Students or parents who got into economic trouble last year can even file an appeal retroactively to see if they now qualify for aid for the semester that started in September of 2008.

Besides pay cuts and job losses, financial aid officers are permitted to adjust the FAFSA for medical expenses and other unavoidable family expenses, such as care for a relative.

Barry Simmons, who heads financial aid for Virginia Tech, said that some college aid officials have refused to consider appeals in the past because they worried that the Department of Education would penalize them if they didn't follow the strict letter of the law. And many colleges simply don't have the manpower to consider individual financial aid appeals. But Simmons expects more parents and students to use Thursday's letter from the Department of Education to clamor for more help. "I just sent an E-mail out to the staff with a copy of the letter, saying 'Are we ready?'"