Income Adjustments

The FAFSA makes the assumption that the best estimate of a family's current financial resources is the income and resources they had in the prior year. Due to extenuating circumstances, this may not actually be the case.

If the income information reported on the FAFSA does not adequately reflect a family's financial situation, UM's financial aid staff has the authority to make adjustments to the FAFSA data that may result in a change to a student’s aid eligibility.

Adjustments are not made for such things like regional differences in cost of living, the purchase of a new or used vehicle or an accounting of personal income against monthly bills. All adjustments are made at the discretion of staff in the financial aid office.

UM does not use a form to process requests for changes due to extenuating circumstances. Rather, guidance on requesting an adjustment are available on the Letter of Unusual Circumstances Instructions.

Income Adjustment Options

Staff in the financial aid office can adjust figures that appear on the FAFSA (e.g. Adjusted Gross Income) depending on the circumstance.

If the FAFSA data is changed, the resulting EFC will often not result in a change in federal aid eligibility.

Typically only two things happen:

  1. A student gains eligibility for the Federal Pell Grant or the amount of the grant is increased.
  2. A student becomes eligible for more Federal Direct Subsidized Loan funds. However, there would be a corresponding dollar for dollar decrease in eligibilty for Federal Direct Unsubsidized Loan funds.

If a parent, student, or student's spouse has lost a job, retired, or otherwise had a substantial loss of income, adjustments can be made to the income figures reported on the FAFSA.

In such a case, the student should submit an estimate of income for the academic year (July 1 through the following June 30). The estimate should include itemized amounts of unemployment benefits, severance pay, worker’s compensation and any other taxable or untaxed income reported on the FAFSA.

If a family paid a substantial amount toward medical bills in the prior or current calendar year, an adjustment may be made to account for this unusual expense.

Adjustments can only be made for payments actually made by the family for after tax expenses. It can include anything that the IRS allows to be claimed, such as doctors bills, the cost of prescriptions, medical supplies and insurance premiums paid with after tax funds.

It does not include bills paid by an insurance company, over the counter medication, or health insurance paid with pretax dollars (since they are already removed from income figures).

If a student or family member was receiving a benefit that was reported as an income resources on the FAFSA, and that benefit will not continue through the academic year, an adjustment can be made for the loss of this benefit.

The discontinuation of child support or social security survivors benefits would be examples of adjustments that would be considered.

Sometimes the Adjusted Gross Income on a tax return (which is reported on the FAFSA) is inflated due to the required reporting of a one-time occurance. Examples include, early withdrawal of funds from a retirement plan or the capital gains reported upon the sale of an asset. This results in the appearance of much greater financial strength then actually exists.

These "lump sum distributions" can be removed from the income by financial aid staff if they deem it appropriate. The nature of the distribution is taken into consideration, as well as whether it involves an actual available cash resource. If there was a cash distribution, the student will be asked how the cash was spent or invested.

The following situations may result in a drastic change in a family's financial strength for which the financial aid staff may make changes to the FAFSA data:

  • Dependent student's parents separate or divorce
  • Student's parent or spouse dies
  • Student separates or divorces

If one of these situations occurs, a student should write a letter with the effective date, supporting documentation (e.g. death certificate), and an accounting of which income and resources are attributed to each individual.

If a dependent student marries after filing the FAFSA they may request reclassification to independent student status. To do so, they must be married, request the change, and have it approved before the end of the first term they receive aid in the academic year. Students who make this request will be required to provide a copy of the marriage certificate and submit the Spousal Information Worksheet.

For any of the circumstances below, the student should write a detailed letter describing the situation and provide documentation to support their request.

Adjustments can be made if a dependent student's parent is enrolled at least half-time as a degree seeking student at a college that is eligible to participate in the federal aid programs.

Adjustments may be made if a family is paying private school tuition at an elementary or secondary school. There must be a documented necessity for the private school education other than personal choice.

Any other situation not described previously will be considered. However, all requests are at the discretion of the staff in the financial aid office and not all requests are approved.