FAFSA job loss & settlement money - must I report both to financial aid offices?

Yes, you need to report both the job loss AND the settlement. The settlement is considered income for FAFSA purposes, and schools perform verification that could flag unreported income. When you submit your special circumstances form (each school calls it something different), you'll explain both changes. Your job loss may decrease your Expected Family Contribution, but the settlement will be counted as untaxed income, which could potentially offset some of that adjustment. Be completely transparent - financial aid officers have discretion and are usually understanding about job loss situations.

ur definitely supposed to report it but honestly? my cousin got a workers comp settlement last year and didnt tell financial aid and nothing happened. the fasfa people dont have access to ur bank accounts so they wont know unless u tell them. just my 2 cents but its ur call obviously

Going through something similar with my daughter's FAFSA. Lost my job in February after submitting in January. The financial aid office told me to file a "Change in Circumstances" form. Every school calls it something different. Good luck!

Financial aid counselor here. You absolutely need to report both the job loss and settlement to each school. Here's why: 1. The job loss creates a "special circumstance" that can potentially increase aid eligibility 2. The settlement counts as untaxed income for FAFSA purposes under the "money received or paid on your behalf" category 3. Each school will handle this differently using professional judgment Contact each school's financial aid office directly and ask for their "Professional Judgment" or "Special Circumstances" form. Most will require documentation of both the job loss and settlement. Be completely transparent - not reporting the settlement could be considered fraud and result in penalties if discovered later. Many schools will consider spreading the settlement over multiple years rather than counting it all as income for a single year, especially if it's meant to replace lost future income. This is at their discretion, though.

FYI you can't actually update your FAFSA for income changes after submission - you have to work directly with each school. I spent HOURS trying to reach someone at Federal Student Aid to update my daughter's FAFSA after my husband lost his job and kept getting disconnected or stuck on hold forever. Such a frustrating process!

My daughter's school actually reduced her aid package after we reported my severance payment, even though I lost my job. They counted the entire amount as income for that year which pushed us into a higher SAI bracket. I'd recommend asking each school about their specific policies regarding settlements before disclosing.

Just wondering, what field did u work in? My dad lost his job too after our FAFSA was submitted and we're trying to figure out our options.

Does anyone know if unemployment benefits need to be reported too? I'm getting those in addition to my severance package.

Thanks everyone for the advice. I'm going to contact each school's financial aid office this week. I'll be honest about both the job loss and settlement, but will specifically ask if they can consider prorating the settlement over multiple years since it's meant to help until I find new employment. I appreciate all the insights!

As someone who went through a similar situation last year, I can't stress enough how important it is to be completely transparent with the financial aid offices. I initially hesitated to report my severance package after a job loss, but I'm so glad I did. While it did impact our aid calculation initially, the financial aid counselor at my daughter's school was incredibly helpful and worked with us to spread the severance over two years instead of counting it all as income for one year. This made a huge difference in our aid package. The key is to contact each school individually since they all have different policies for professional judgment reviews. Also, make sure to emphasize that the settlement is meant to bridge you until you find new employment - this context really matters to aid officers. Wishing you the best with your son's college journey!

I'm in a very similar situation - just lost my job two weeks ago after submitting FAFSA in January, and I also received a severance package. Reading through all these responses has been incredibly helpful! I was really torn about whether to report the severance since it might hurt our aid eligibility, but after seeing the advice from the financial aid counselors here, I realize I need to be completely transparent. The point about schools potentially spreading the settlement over multiple years is particularly encouraging. I'm going to contact each of my daughter's schools this week to submit their special circumstances forms. Thanks to everyone who shared their experiences - it's so helpful to know we're not alone in navigating these complicated situations!

I went through a very similar situation two years ago when I lost my job right after submitting my son's FAFSA. I received a $38,000 severance package and was terrified about how it would affect his aid. Here's what I learned: definitely report both the job loss and the settlement to each school individually. I contacted 6 different schools and got 6 different responses - some counted the full severance as one year's income, others spread it over 2-3 years, and one school even excluded a portion of it from their calculation entirely. The key is being proactive and honest from the start. I provided my termination letter, severance agreement, unemployment documentation, and a detailed letter explaining my situation. Most schools were surprisingly understanding and worked with me through their professional judgment process. Don't let fear of the settlement amount keep you from reporting the job loss - that change in circumstances could significantly help your aid eligibility. Just be prepared that each school will handle it differently, so you'll need to have individual conversations with each financial aid office.