Will Unemployment Benefits and Stimulus Payments Impact Financial Aid?

Q: If a student receives unemployment benefits during COVID-19, do they need to report them as income on the FAFSA? What about other benefits like stimulus payments or emergency aid a student receives from their campus?

A: Unemployment benefits, including those received in connection with the Coronavirus pandemic, must be reported as income on the FAFSA.  Since the FAFSA is on a prior-prior year basis, this income, which will be reported on their 2020 federal income tax return,  and would be reported on the 2022-2023 FAFSA but would not impact their current financial aid award.

In contrast, Economic Impact Payments, or stimulus checks, are not considered taxable income and do not affect their financial aid eligibility, either now or in the future. These checks do not need to be reported on the FAFSA.

In addition, emergency financial aid grants to students and other financial aid received from the government in connection with the Coronavirus pandemic do not need to be reported as income on the FAFSA and do not affect students’ financial aid. Emergency aid from other than a governmental source, however, including emergency aid made available by a college campus not paid for by CARES Act funding, may be considered “Estimated Financial Assistance” and may reduce a student’s financial aid award. In this scenario, students should request that the financial aid office exercise professional judgment to increase the student’s cost of attendance to make room for the aid.

For further information on student emergency aid and taxation, refer to the U.S. Department of Education’s guidance.

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