FAFSA renewal impacts on aid packages - will our costs skyrocket if finances improve?

You're asking smart questions. Yes, financial aid packages are typically for one academic year only, and you must complete the FAFSA annually. Changes in income can significantly impact your aid eligibility year-to-year. A few points: 1. You don't need to report income changes mid-year for the current aid package - it's based on the tax year information already submitted 2. Next year's FAFSA will use the new tax information, which could result in a substantially different Student Aid Index (SAI) calculation 3. Many families experience "aid shock" in sophomore year when their financial situation improves 4. Some schools offer better aid packages for freshmen to attract students, then reduce institutional aid in subsequent years (called "front-loading") I suggest having a conversation with the financial aid office about your specific situation. Some schools will work with you on a 4-year projection if you explain your circumstances.

ur gonna get KILLED on next years fafsa lol. happened to me. dad was unemployed freshman yr so i got full pell grant + state grant + need scholarship from school. then he got job back and boom - sophomore year EVERYTHING disappeared except loans. went from paying almost nothing to like $18k outta pocket. college financial aid is a TRAP!!

My son just finished his junior year, and we've seen this roller coaster firsthand. When I switched jobs after his freshman year, our income went up about $35K, and his grants were reduced by about $9K the following year. The financial aid formulas aren't linear - it's not like you lose dollar-for-dollar what you gain in income, but it can still be substantial. One thing we learned: appeal the financial aid package EVERY YEAR. Many schools have an appeals process where you can explain circumstances not reflected in your tax returns (medical expenses, supporting other family members, etc).

Financial aid counselor here! Your concerns are extremely valid. The Federal Student Aid formula used for determining your SAI (Student Aid Index, formerly EFC) is primarily income-driven, so substantial income changes will affect your aid eligibility each year. Here's what you should know: 1. For every FAFSA year, schools generally award based on the financial information from the specific tax year required (two years prior to the academic year) 2. Pell Grants and need-based aid are most affected by income increases 3. Merit scholarships (if your daughter received any) typically aren't affected by income changes as long as she maintains the required GPA 4. Many schools have institutional aid that can partially offset the loss of federal need-based aid I strongly recommend scheduling a meeting with the financial aid office to discuss a multi-year forecast. Bring documentation of your husband's previous income and projected future income. Some schools will work with you on a plan to prevent dramatic year-to-year changes.

I spent HOURS trying to get through to someone at Federal Student Aid to discuss exactly this situation with my twins last year. Kept getting disconnected or stuck on hold forever. Finally discovered Claimyr (claimyr.com) and they got me connected to an FSA agent in about 15 minutes. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent I spoke with explained that income increases typically affect need-based aid formulas most drastically in the $0-$80,000 income range. Once you get past that threshold, additional income has less impact proportionally. They also told me about some options for institutional aid that might replace lost federal aid.

i wonder if you could just not report the new job??? like what if you just don't mention it on next year's fafsa?

Another thing we did to prepare for the aid reduction: we took the money we saved from the good freshman year aid package and set it aside specifically for sophomore year when we knew aid would decrease. Essentially, we kept our budget constant by pretending we were paying the higher amount all along and banking the difference.

My situation was reversed - had good income when my kid started college then lost my job sophomore year. Had to do something called Professional Judgment Review with the financial aid office where they adjusted the FAFSA based on current year income instead of past tax returns. Maybe they can do something similar for increases too?

ALSO watch out for the CSS Profile if your kid's school requires it!!! It asks for WAY more financial info than FAFSA and calculates aid differently. Home equity, retirement accounts, etc can all factor in depending on the school. Some schools are SUPER stingy with aid thru that system.