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The Free Application for Federal Student Aid (FAFSA) asks whether the student, the student’s spouse (if the student is married) or the student’s parent(s) (if the student is a dependent student) is a dislocated worker. This question is important for those who have been laid off or who have been struggling due to a loss of income or underemployment. Answering “yes” to these questions may enable the applicant to qualify for the simplified needs test or automatic zero EFC (Expected Family Contribution).
This question is prone to error, as many applicants misinterpret it as including anybody who has lost a job. It is important to read the definition of a dislocated worker carefully. If the student, the student’s spouse or the student’s parent is incorrectly reported as a dislocated worker, it may cause the FAFSA to skip some questions. When the FAFSA is corrected later, the applicant will need to answer those questions. This can cause delays in the determination of eligibility and receipt of financial aid funds.
A dislocated worker is defined in the Workforce Investment Act of 1998 (29 USC 2801) as a person who falls into one of the following categories:
A person who voluntarily quits his/her job or who is terminated for cause is not considered to be a dislocated worker.
If a parent answers “yes“ to the dislocated worker question on the FAFSA, he or she may be asked to provide proof of his or her status as a dislocated worker. Documentation can include a copy of the termination notice, paperwork demonstrating the recent receipt of unemployment benefits and a letter from the employer indicating that the employee is unlikely to be recalled for at least six months.
A displaced homemaker is someone who satisfies all of the following criteria:
The applicant may be asked to provide documentation to support claims of dislocated worker status. Such documentation may include, but not be limited to, the recent receipt of unemployment benefits, copies of employer termination and layoff notices, copies of previous years’ federal income tax returns (to demonstrate a reduction in income), copies of death certificates or copies of divorce decrees and separation agreements.
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