How To

Back to School After a Layoff? Don’t Forget Financial Aid

(photo: iStockphoto) 

You’ve been laid off and want to return to school. It’s a path many unemployed individuals consider, whether it’s because they hope it will give them an edge in this competitive job market, or they’ve been wanting to continue their education for a while but never mustered the courage to exit the workforce voluntarily.

Whatever the reasons for your decision, one thing you should definitely do is apply for federal financial aid. Grants and subsidized federal student loans can go a long way in decreasing the monetary burden of continued education — especially in a situation like yours, where money is tight.

But many unemployed people – especially those who’ve lost their jobs within the past year, encounter a problem. When filling out the FAFSA (the Free Application for Federal Student Aid form), they are determined ineligible for grants and subsidized federal student loans because they earned too much money the previous year, while they were still employed.

What should you do if you find yourself in this situation?

Don’t give up. You can actually make a case for yourself by filling out a special circumstances form and show that you are no longer earning what you did on your last tax return. 

What is a Special Circumstances Form?

You submit this form to the schools of your choice to request  that they reevaluate your financial aid status for reasons such as a job loss, pay cut, high medical expenses or divorce.

Where to Find Special Circumstances Forms

You can get one from your university financial aid office online or in person. You must fill out your FAFSA first. If you can’t find the form on the financial aid section of your school’s website, call the financial aid office. Have last year’s tax form in front of you when you fill it out, as well as your latest paystub to prove a pay cut or a termination notice if you’ve been laid off – if you have it. If your financial situation has changed because of a divorce or medical expenses, you should provide a copy of your divorce decree or the medical bill.

Processing Time

Processing may take several weeks, so it is crucial that you turn in your form as soon as possible. If you apply to a school nearby, go to the financial aid office in person to submit the form. Have a financial aid counselor double-check that you filled out your form completely and with any proof needed. Ask how long processing will take and follow up after the suggested processing time. The financial aid office may request additional information or have further questions. Staying on top of the process could help you get your financial aid faster.

Additional Sources for Retraining and Career Guidance

Federal financial aid isn’t the only way of getting financial help after a layoff. Consider these sources:

* Government Retraining Programs

The U.S. government has set up over 300 One-Stop Career Centers across the country to help you find a new job, hone resume and interview skills, and help you find federal or state government sponsored retraining programs for a new career. If you qualify for a retraining program, you could receive a tuition voucher. To find out which careers you could potentially train for via government funding, go to the Education and Training Finder.

Will utilizing government retraining programs effect unemployment compensation eligibility? According to a Department of Labor spokesman, “it used to be the case that in some states entering education or training meant that an individual could no longer receive unemployment benefits.  This is because some states had laws that said an individual must be actively seeking employment to qualify for benefits.” It is now possible to use both government-supported retraining programs and unemployment due to changes that occurred in this presidential administration.

* Severance Packages

Your severance package from your employer could help you cover tuition costs. Many employers actually offer retraining stipends as part of their severance packages. You could use that money to pay for whatever form of education best fits your needs, whether that’s attending a culinary institute, a university, or enrolling in an apprenticeship program or certification course.

* University Career Centers

If you previously graduated from a university or community college, don’t hesitate to reach back to its career center. Many education institutions help graduates find work years after graduation. These centers can also guide you towards your next career field before you seek further education.

Consider All Retraining Options

Filling out a special circumstances form can make a huge difference in your out-of-pocket costs for returning to school. But don’t eliminate other options such as government-sponsored programs. Once you are certain of your new career path, use all available resources to find the least expensive way to get the education you need.   

 Reyna Gobel is a freelance journalist who specializes in financial fitness. She is also the author of Graduation Debt: How To Manage Student Loans and Live Your Life.