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Resources > FAFSA > FAFSA Income Change—What Happens if Your Financial Situation Changes?

FAFSA Income Change—What Happens if Your Financial Situation Changes?

When filling out the Free Application for Federal Student Aid (FAFSA), you and your child must report all the information correctly—otherwise, the application can be denied, and your child may lose the chance to get federal aid. But what happens if your income information changes after you’ve already completed and filed the FAFSA? 

In this guide, we’ll explain how to handle the FAFSA income change if you lose your job or get a divorce and reveal how these changes may affect your child’s financial aid.

What Information Can You Change on the FAFSA?

While most information on the FAFSA form can’t be changed, some types of data must be updated if any changes occur. These include:

  • Contact information—You have to update your phone number, email, and mailing address, as well as any other contact info if it changes after submitting the FAFSA
  • Social Security number (SSN)—The FAFSA requires you and your child to provide a valid SSN. Double-check your/your child’s SSN, and make sure to correct it if it’s wrong
  • Dependency status—If your child’s dependency status changes, you must update this information on the FAFSA. If they become an independent student for FAFSA purposes, they’ll also have to change the information related to their assets and income
  • Family size—A financial aid office may select your child’s application for verification to check if the provided information is accurate. In this case, you can update them on the changes regarding the number of family members in your family home if any changes occurred
  • Schools—If your child changes their mind about the schools they listed on the FAFSA, you can and should add new colleges or delete the existing ones from the list

What Special Circumstances Can Affect Financial Aid?

Some changes in your life after filing the FAFSA may affect how much financial aid your child will be awarded. This typically refers to dramatic changes in your financial situation that can motivate the financial aid office to recalculate your child’s aid eligibility, such as:

  • A drastic decrease in your family assets
  • Reductions in income due to loss of employment, natural disasters, or other circumstances
  • Unexpected medical or dental expenses which aren’t covered by health insurance
  • A serious illness, disability, or death of a family member or a household wage-earner
  • Loss of home resulting from a natural disaster or eviction
  • A change in marital status due to separation or a divorce
  • A change in your child’s marital status
  • Your child becoming pregnant
  • A reduction in the number of household members or an increase in the number of family members attending college

If any of these changes occur after you’ve submitted the FAFSA, contact the financial aid office at the colleges your child wants to attend as soon as possible. This will give them the chance to consider these changes when determining your child’s financial aid eligibility. However, you can also research scholarships to fill any income gaps if your child’s federal aid package isn’t enough to cover all college expenses.

What To Do if Your FAFSA Income Has Changed Due to Divorce

If you were married in the tax year you reported on the FAFSA but are now separated or divorced, the income you reported on the form needs to be updated if you filed your taxes jointly with your former spouse.

You’re no longer considered married for FAFSA purposes if you and your former partner don’t live together anymore. In such cases, the child only needs to provide the information of the parent who provided them with the most financial support in the last 12 months. If both parents provided the same amount of support, then the child must include the information of the parent with the greater income.

If you and your former spouse filed a joint tax return in the FAFSA tax year, you must contact the financial aid office of every college your child is applying to and explain your situation. You may be asked to submit a copy of your tax return and explain which income belongs to you. You might also need to complete a separate form to demonstrate the division of income between you and your former spouse.

To calculate individual income from a joint tax return, you can:

  1. Access your or your ex-partner’s income by checking your/their employers’ W-2 forms 
  2. Find annual earnings on the tax return for the year the FAFSA applies to
  3. Review other forms that include information on your/your spouse’s yearly income

What if Your Income Has Decreased After Completing the FAFSA?

If your marital status remained the same but you experienced a significant decrease in income after filing the FAFSA, you should contact the financial aid office at the schools your child applied for and explain the situation. Here’s how to do this:

  • Send a letter/email to each financial aid office to explain your income change, providing both the reason for your income decrease and the time it occurred
  • Include any relevant documentation, such as a letter from your employer (if your income decreased because you lost your job)
  • Prepare to answer any questions the financial aid office may have or to submit additional information or documentation they ask for

Does the FAFSA Income Loss Make Your Child Eligible for More Financial Aid?

The short answer is yes—the less reportable income your child includes on the FAFSA, the more financial aid they’re eligible to get. However, this only refers to need-based aid like direct subsidized loans or Pell Grants because these aid options require a student to express financial need to qualify for aid.

If you want to increase your child’s chances of receiving need-based aid, you should report any income changes or losses immediately. This can help you secure more funds by lowering your child’s Student Aid Index (SAI)—a metric used to determine the size of the financial aid package they’ll qualify for.

Aid Options Unaffected by the FAFSA Income Change

If you’ve only experienced minor changes in your income after filing the FAFSA, your child’s chances of getting need-based aid may not improve, but you can still rely on non-need-based aid for help. The most popular loan options that don’t assess eligibility based on family income are private loans and Direct PLUS loans. The former is typically used as the last resort to help with the college costs you were unable to cover using federal aid and college savings, while the latter provides two higher education financing options:

  1. Parent PLUS—A Direct PLUS federal loan made to an eligible parent borrower
  2. Grad PLUS—A Direct PLUS federal loan made to a professional or graduate student

Although income doesn’t play a part when assessing your child’s qualification for private and Direct PLUS loans, your and your child’s credit score impacts the outcome of your application. Both lenders assess your and your child’s credit history upon application, and if it doesn’t meet their standards, your child may not be approved for the loan. 

A great way to help your child start their credit building journey early and improve their chances of obtaining college loans is to rely on platforms like FreeKick. While the CARD Act of 2009 makes it difficult for children to establish a credit profile (as it prohibits anyone under 21 from obtaining a credit card), FreeKick offers a simple solution through parent-sponsored credit building for children as young as 13.

FreeKick—Premium Credit Building and ID Protection

Provided by Austin Capital Bank, FreeKick is an FDIC-insured deposit account and subscription service that lets minors and young adults aged 13 to 25 start building credit with their parent’s help. The platform also offers comprehensive identity monitoring and protection services for your whole family, covering up to two adult parents and six children.

Start Building Your Child’s Credit Early With FreeKick

By getting an early start at credit building, your child can potentially save over $200,000 in their lifetime since a strong credit score improves their chances of securing favorable terms and interest rates when obtaining loans. This way, your child can obtain college loans more easily, but they can also:

  • Get a credit card
  • Secure rental housing
  • Obtain financing for a vehicle
  • Find a better job

FreeKick helps your child establish a good credit profile—starting at the age of 13—through parent-sponsored credit building. Here’s how to activate the service: 

  1. Create an Account—Visit FreeKick.bank and choose a plan that best fits your family’s needs and budget
  2. Set It and Forget It—As soon as the account is activated, FreeKick automatically starts building your child’s credit over the next 12-month period
  3. Keep Growing—When the initial 12 months end, you can either renew the account and keep building your child’s credit or close it and get a refund of your initial deposit

Keep Your Child’s Identity Protected With FreeKick

Shocking data reveals that a child’s identity is stolen every 30 seconds, while college students are one of the groups that most frequently experience identity theft. 

If you don’t protect your child’s personal information, identity criminals can steal it and use it to apply for FAFSA in their name. This makes your child’s application invalid, and they may lose the chance to get financial aid.

For this reason, FreeKick provides a comprehensive set of identity monitoring and protection features for both adults and minors. Here’s what the service includes:

Services for Adult Children and ParentsServices for Minor Children
Credit profile monitoring
SSN monitoring
Dark web monitoring for personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Lost wallet protection
Court records monitoring
Change of address monitoring
Non-credit (Payday) loan monitoring
Free FICO® Score monthly
FICO® Score factors
Experian credit report monthly
Credit profile monitoring
SSN monitoring
Dark web monitoring for children’s personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Sex offender monitoring—based on sponsor parent’s address

FreeKick Pricing

FreeKick has a plan for every family’s needs and budget. Both available plans are FDIC-insured up to $250,000. Find more details in the table below:

FDIC-Insured Deposit AmountPlan Fee
$3,000$0 (Free)
No deposit$149/year

Help your child establish a strong credit history early and protect yourself and your whole family from identity theft—sign up for FreeKick today.