According to the United States Department of Labor, 6.3 million Americans faced unemployment as of December 2018. If you're one of them when you complete your Free Application for Student Aid (FAFSA), you may be a dislocated worker. This status may affect which financial aid options are available to you and the total amount of aid you can get. A displaced worker is generally one who becomes unemployed through no fault of their own and who is unlikely to return to their job or industry in the foreseeable future.
TL;DR (Too Long; Didn't Read)
FAFSA considers you a dislocated worker if you lost your job or got laid off for a reason beyond your control and you don't expect to be able to work in that same role or industry again. There are other definitions as well for military spouses, stay-at-home parents and individuals whose workplaces are shutting down within 180 days.
Definitions of Dislocated Worker
FAFSA has several definitions for a "dislocated worker." You're considered a dislocated worker the moment you're laid off. You're also a dislocated worker if you're still working but your employer has informed you or announced that they intend to close in the next 180 days. Self-employed people become dislocated workers when change in economic conditions or a natural disaster prevents them from continuing their work. If you were a stay-at-home parent and you're now separated or divorced, you may qualify if your ex is not supporting you.
You generally aren't considered a dislocated worker if you left your job voluntarily, but an exception exists for military spouses. If you had to quit your job to relocate because your military spouse transferred elsewhere, you're a dislocated worker in spite of the fact that you quit your job rather than losing it. In some cases, the status of your parents or spouse as a dislocated worker can also affect your FAFSA eligibility.
Expected Family Contribution
A dislocated worker status can have a significant impact on your Expected Family Contribution (EFC). The EFC is a measure of your family's ability to pay for your education. The lower your EFC, the less you are expected to pay on your own. This number is a rating and not the specific dollar amount you must pay toward your education.
The federal government uses various factors to compute the contribution. Your EFC takes into account your income, the number of people in your household and how many members of your household currently attend college. Schools use this number to determine financial aid eligibility and amounts. Declaring yourself a dislocated worker benefits you by reducing your EFC, taking it to zero in some cases.
Handling Supporting Documentation
The college you're applying to may request supporting documentation to back up your FAFSA. Keep any and all correspondences you receive from your employer and unemployment office to help prove your dislocated worker status. You may need to show termination or layoff notices from your employer, tax returns showing your income reduction or unemployment benefit receipts. Displaced homemakers may need to provide separation papers, a divorce decree or a death certificate to prove the loss of financial support from another person.
The school's financial aid office can answer any questions you have about the dislocated worker status and its specific impact on your federal student aid eligibility.
Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.