Tag Archives: Finance

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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Many More Youth are Entitled to Stimulus Checks

Q: Some of the college youth in my foster youth program have already received their COVID-19 stimulus payments from the government, but others have not. What accounts for this difference and what should I tell youth who have not yet received payment?

A: Many people are entitled to a stimulus payment but are unaware how to receive it. Youth who have a social security number, are not claimed as a dependent on anyone else’s tax form, and earn less than $75,000 gross annually (or within these parameters if they are married, head of household or parenting) qualify for funding. As of April 13, 2020, many people automatically received direct deposits in their bank accounts if they filed 2018 or 2019 tax returns and have a bank account on file with the IRS. Everyone falling outside of this scenario must either wait a bit longer or take action to receive their check.

If the youth filed 2018 or 2019 taxes but did not provide bank account information, they should expect to receive a physical check in the beginning of May. They can also visit the IRS website to update their bank account information. However, even if they did not file a tax return, they can still receive payment by filling out this IRS form. A youth who receives Social Security Insurance (SSI) or Social Security Disability Insurance (SSDI) with no dependents, will also automatically receive a payment.

In general, qualified single filers will receive $1,200, and potentially more, if they are married or parenting. Youth are encouraged to apply, even if they are unsure if they qualify. They can check the status of their check at any time here and refer to a Q&A by the Alliance for Children’s Rights for further information on eligibility and common scenarios.

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Expanded Eligibility and Timing for Unemployment Insurance

Q: Many of the youth who I work with are part-time workers or a part of the gig economy, and they have either lost their jobs or had their hours reduced, as a result of the coronavirus. Can they still file for unemployment? 

A:

Yes, and they should apply as soon as possible. California has expanded unemployment insurance eligibility to include self-employed workers, freelancers, independent contractors, and part-time workers for up to 39 weeksMany youth who work as Lyft or Uber drivers, babysitters, dog walkers, or tutors, among other jobs, are now protected. In addition, youth who still have a job and had their hours reduced are also protected.  

In general, to qualify for unemployment insurance in California, one must have lost their job or experienced reduced hours through no fault of their own; met certain earnings thresholds during a base period; and be actively seeking new employment. To check their eligibility, youth should register as soon as possible with the State of California Employment Development Department on their phone or computer or call 1-800-300-5616 for directions on how to apply by phone, mail, or fax. 

If they qualify, youth can receive weekly benefits from $40-450, depending on their previous earnings, and right now, if approved, they would get an additional $600 week until the end of JulyFunds will arrive approximately 2-4 weeks after approval, so youth are encouraged to apply as soon as possible and should be prepared to “recertify for benefits” every two weeks. 

For more information refer to this fact sheet created by the Alliance for Children’s Rights. 

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