Answers to Common Questions about Dependency Status and Financial Aid

Answers to Common Questions about Dependency Status and Financial Aid

Will my daughter’s chances for receiving financial aid be higher if

we don’t claim her on our taxes? Household income is about $85,000 and

she did not qualify for financial aid through the FAFSA. She is in a

community college and is 20 years old. She recently moved out of our

home but we are paying her college tuition. She has not received any

scholarships.

— Danielle V.

It does not matter whether you claim your daughter on your income tax

returns or not; it will not affect her eligibility for federal student

aid. The IRS and the US Department of Education use different

definitions of dependency. The IRS definition is based on support. The

US Department of Education definition is based on the student’s age,

marital status and other qualitative factors. Unless your daughter

gets married, has dependents other than a spouse or joins the

military, she will continue to be considered a dependent student for

federal student aid purposes until she becomes 24 years old.

Don’t forget to claim the Hope Scholarship tax credit (also known as

the American Opportunity tax credit) on your federal income tax return

based on amounts you paid for her tuition, fees and course materials.

I recently moved away from home. I’m working a part time job and am

enrolled in college as a full time student. My mother is not really

supporting me on going to school and our relationship isn’t good. I

moved out of her home and receive no help from her or my father. I’m

living with a friend now and pay rent. When I apply next year for

financial aid do I file as dependent or independent?

— Andrew A.

Ask the financial aid administrator at your college for a dependency

override. Bring copies of letters from social workers, clergy and

other people familiar with your situation.

Colleges cannot grant a dependency override merely because the parents

refuse to contribute to the student’s college costs or to complete the

FAFSA or verification. The student’s self-sufficiency also isn’t

sufficient grounds for a dependency override.

But sometimes there are circumstances underlying the parental refusal

to help that can support a request for dependency override. For

example, colleges can grant a dependency override if there is a

hostile or abusive family environment that would make it unsafe for

the student to have further contact with his parents.

If a student doesn’t qualify for a dependency override, but the

parents have cut off all financial support and refuse to complete the

FAFSA, the most a college financial aid administrator can do is allow

the student to borrow from the unsubsidized Stafford loan program.

I am currently a college freshman. I am 18 years of age and I moved

out of my home in June. I currently pay rent among my other car, phone

and living expenses. I rent a room from a family in my city, work 30

hours a week and have 5 classes on my schedule. Is there ANY financial

aid or help I can get from anywhere? I’ve been told that its not

possible and I find it rather upsetting that a self-supporting 18 year

old student cannot get financial aid when they need it most,

considering their other financial responsibilities.

— Madison B.

A student’s financial self-sufficiency is not enough for the student

to qualify for a dependency override. Until you reach age 24, you are

considered to be a dependent student and your parents must complete

the FAFSA. If you have a good relationship with your parents, ask them

to complete the FAFSA. Tell them that it does not obligate them to pay

for your college education, but will enable you to get financial aid

such as student loans and grants.

I lost my job about one year ago. I live in my parents house with

my fiance and two kids. My fiance works full time and I am collecting

unemployment. My parents both work full-time but are not financially

responsible for me. Does the fact that my family and I live with my

parents affect the amount of FAFSA received? And also does my fiance’s

pay affect my FAFSA as well?

— Carolina V.

The word “fiance” is used when a couple is unmarried. This is in

contrast with the words “spouse”, “husband” and “wife”, which indicate

that the couple is married.

If you were married, you would be automatically independent and your

living arrangement would not affect your eligibility for federal

student aid. Likewise, if you are over age 24 you will be considered

to be an independent student.

Assuming that neither is the case, your dependency status is based on

whether you support a dependent other than a spouse. If you provide

more support to your children than your parents, you are considered to

have a dependent other than a spouse. Any support you receive from

your fiance and from government benefit programs counts as part of

your support to the children. But the support you provide must exceed

the support your parents provide, which includes the fair rental value

of the housing they provide for your children. You will need to do the

math to see if you and your fiance are providing more support to your

children than your parents. If you provide more support to the

children, you are considered independent.

If you are independent, your parents’ information is not reported on

your FAFSA. If you were married, your spouse’s financial information

would be reported on the FAFSA. Since you are not married, your fiance’s

income is not reported on the FAFSA. But any support provided by your

fiance or your parents to you or your children must be reported as

untaxed income on the FAFSA.

Will having my daughter claimed as a dependent on my parents’ tax

return affect my student loan/financial aid? I had no income

and put head of household on my financial aid application. I applied

for financial aid by myself and my daughter lives with my

mother while I attend school.

— Kenneth M.

If your daughter is claimed on your parents’ income tax return, it

means that your parents are providing more than half of her

support. (There are some slight technical differences in the

definitions of support used by the IRS and the US Department of

Education, but they are usually not manifest in a situation where the

student’s child is claimed on someone else’s income tax return.) If

having a dependent other than a spouse was your only basis for

independent student status, then you will be considered a dependent

student and your parents will have to provide their financial

information on your FAFSA. If your FAFSA is selected for verification,

the college will question your head of household status, given that

you have no income and do not have a qualifying child.

My 18-year-old brother is now under my care. I am 25 years old and

I work full time and I am also going to school full time. My mother

decided to move and left my brother without any financial

assistance. He is a sophomore at a community college. I do not have a

clue where to begin or what to do for him to get any financial

assistance. I do not know if I am supposed to claim him in order for

the FAFSA to help him out. If so, how do I start?

— Andrea A.

Talk to the financial aid office at your brother’s college about your

situation. Abandonment is sufficient grounds for a dependency

override, but the college will want independent third party

documentation of your family’s circumstances. Abandonment is defined

as a lack of significant contact or support for an extended period of

time, usually at least a year. If the college grants him a dependency

override, he will be able to file the FAFSA on his own. Any support

you provide him will then be reported as untaxed income to him on the

FAFSA.

Source: Fastweb

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