Is Your Student Dependent or Independent?

A reader recently asked about being treated as dependent on or independent when it comes to financial aid. What does it matter, he asked, and how is it decided?

Federal and state programs provide 70% of our nation’s financial aid. They use taxpayer dollars to help students cover their college expenses. But there has long been a national consensus that the student’s family ought to pay as much of these costs as it can before the hard-earned tax dollars of its friends and neighbors are used to help it’s children.

So the big question becomes, “who is the student’s family?” For decades federal law has answered:

  • The student and his or her parents, if the student is financially dependentupon those parents; or
  • The student alone — or the student and spouse, if the student is married — if the student is financially independentof mom and dad.

Years ago, the law treated a student as independent if the parents were willing to increase their taxable income (and their federal income tax) by not claiming that student as a tax exemption. Congress found that many affluent parents chose to pass on claiming children in college because their families would qualify for more financial aid than they saved on their taxes. As a result, the “exemption test” gave way to an alternative set of circumstances under which Congress concluded it’s unreasonable to expect parents to support their children. With a few additional exceptions, these include being:

  • 24 or older as of January 1 of the school year to which the student’s FAFSA applies; or
  • A graduate student; or
  • Married; or
  • A parent with his or her own children; or
  • Someone with his or her own dependents; or
  • In the military; or
  • A veteran.

Any student meeting any one of these conditions is classified as an independent student. Parental finances are not reported on the student’s FAFSA and not used to determine the student’s “Expected Family Contribution (EFC)” — i.e. what the family is considered to be able to devote to the student’s college expenses by marshaling every dollar it possibly can for that purpose.

If none of the circumstances listed above describe the student, than he or she is treated as a dependent student for financial aid purposes. The FAFSA collects this student’s parental data, and those data are used to establish the student’s EFC, thereby positioning the student and parents, not other Americans, to act as the “first payer” of the student’s higher education expenses.

College Affordability Solutions provides a variety of services to the parents of current and prospective college students, including advising about how to complete the FAFSA. Call (512) 366-5354 or email collegeafford@gmail.com to learn more.

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