What Is a Dislocated Worker on the FAFSA?

The Free Application for Federal Student Aid (FAFSA) is the primary application for federal student aid programs, helping students access financial assistance for higher education. Historically, the FAFSA included a specific question about “dislocated worker” status, which influenced aid eligibility. However, with the FAFSA Simplification Act, this question was removed from the form for the 2024-2025 aid year and beyond. Understanding the former definition provides insight into how such economic circumstances were considered for financial aid.

Understanding the Dislocated Worker Definition (Historical Context)

For FAFSA cycles prior to 2024-2025, a “dislocated worker” referred to an individual who lost employment due to specific economic conditions or circumstances beyond their control. This status could apply to the student applicant or their parent(s). The Department of Education outlined several criteria for this classification:
Receiving unemployment benefits due to layoff or job loss, and unlikely to return to a previous occupation.
Laid off or received an official layoff notice from their employer.
Self-employed but became unemployed due to broader economic conditions or natural disasters.
Military spouses who experienced job loss due to relocating for a permanent change in duty station, or who were unemployed or underemployed and facing difficulty finding or upgrading employment.
A “displaced homemaker,” typically a person who previously provided unpaid services to their family, was no longer supported by a spouse, was unemployed or underemployed, and struggled to find or advance in employment.

It is important to note that, generally, if a person voluntarily quit their job, they were not considered a dislocated worker, even if they were receiving unemployment benefits.

How Dislocated Worker Status Used to Affect FAFSA Eligibility

Identifying as a dislocated worker on previous FAFSA applications impacted the calculation of the Expected Family Contribution (EFC). The EFC measured a family’s financial strength and their ability to contribute to college costs. A lower EFC generally increased a student’s eligibility for need-based federal student aid. For instance, dislocated worker status could lead to a “simplified needs test” or an “automatic zero EFC” for eligible applicants.

The simplified needs test allowed certain applicants to bypass reporting asset information, which could result in a lower EFC. An automatic zero EFC meant the FAFSA determined the family had no ability to contribute to educational costs, maximizing eligibility for federal grants and other need-based aid. This status indicated to financial aid administrators that the family was experiencing financial hardship due to job loss, which was then factored into the overall aid determination. While dislocated worker status could reduce the EFC, it did not guarantee a specific amount of aid, as actual aid packages depend on various factors, including the student’s cost of attendance and available funding.

Addressing Financial Hardship on the FAFSA

For the 2024-2025 FAFSA and subsequent cycles, the specific question about dislocated worker status has been removed as part of the FAFSA Simplification Act. This means applicants will no longer directly indicate this status on the federal form itself.

Despite the removal of the direct question, educational institutions may still consider a family’s current financial situation, including recent job loss, through a process known as “professional judgment” or “special circumstances” appeals. If a family experiences significant changes in income or employment after completing the FAFSA, they can contact the financial aid office at their chosen college or university. Schools may request documentation such as layoff notices, unemployment benefit statements, or a signed explanation of the circumstances to verify the situation. This allows schools to make adjustments to a student’s aid eligibility based on current financial hardship, even without a specific FAFSA question.