Definition of a Dislocated Worker

The College Cost Reduction and Access Act of 2007 (CCRAA) made dislocated workers potentially eligible for an Automatic Zero EFC or Simplified Needs Test. The change became effective for the 2009-10 award year.

Under the Workforce Investment Act an individual is a dislocated worker if he or she falls into one or more of the following categories:

  1. A person who:
    • was terminated or laid off from employment or received a notice or termination or layoff; and
    • is eligible for or has exhausted his unemployment compensation, or is not eligible for it because he had insufficient earnings or performed services for an employer that weren't covered under a state's unemployment compensation law; and
    • is unlikely to return to a previous industry or occupation.
  2. Anyone terminated or laid off from employment or received a notice of termination or layoff as a result of any permanent closure of, or any substantial layoff at, a plant, facility, or enterprise.
  3. Anyone employed at a facility at which the employer made a general announcement that it will close within 180 days.
  4. Anyone employed at a facility at which the employer made a general announcement that it will close.
  5. A self-employed person (including farmers, ranchers, or fisherman) who is unemployed because of natural disasters or because of general economic conditions in his community.
  6. A displaced homemaker who:
    • has been providing unpaid services to family members in the home; and
    • has been dependent upon the income of another family member but is no longer supported by that income; and
    • is unemployed or underemployed and is having difficulty obtaining or upgrading employment.

Someone who is receiving unemployment benefits is not necessarily a displaced worker. For example, an individual who is laid off from a law-enforcement position could likely return to the same occupation, disqualifying him from dislocated worker status. On the other hand, a person who was employed at an automobile plant that closed is unlikely to return to the same occupation.

Institutions are not required to verify dislocated worker status. Absent other documentation, self-certification in the form of a statement signed by an applicant that he or she meets the definition of a dislocated worker is sufficient. However, if the school has any conflicting information about the applicant's status as a dislocated worker, it must resolve the conflict before disbursing Title IV aid.

Using professional judgment, a financial aid administrator may adjust an applicant's response to the dislocated worker question to reflect a change in the independent student's or parent's employment situation after he or she submitted the FAFSA. Note that changing the answer to the dislocated worker question from NO to YES will only qualify the applicant for the SNT or automatic zero EFC if the applicant also meets the income criterion. As with all professional judgments, such a decision must be based on the applicant's special circumstances and sufficient documentation of the independent student's or parent's situation. The CCRAA added status as a dislocated worker to list of PJ examples included in Section 479A of the statute.


Publication Date: 8/6/2009

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