Financial Resource Center

Education


Parental Income Dings a Student's Financial Aid

by Ken O'Connor / May 21st, 2013

How liable are parents of college-bound students for tuition costs? It depends on the answers to some specific FAFSA questions. According to the Free Application for Federal Student Aid (FAFSA), the parents of new undergraduates are accountable for college costs based on household income and assets. However, according to some parents, the costs of a college education are supposed to be carried by the student entirely. There are cases of well-to-do families that offer little to no financial support for college, instead encouraging the student to figure it out herself. This is a blessing in the disguise of hard work for some students, but for others it could be a misguided disaster. In the world of financial aid, most students coming out of high school and living with their parents are considered a dependent, and any student 24 years of age or older is independent. Students who are dependents must include their parents' income as part of household income on the FAFSA. An independent student no longer includes parental income, but would include the income of her spouse if married. There are other qualifying questions on the FAFSA that can determine if a student can be classified independent, leading some inquisitive students to try and figure out ways to qualify for increased financial aid as a result of their answers. They realize that financial aid could be greatly increased if their parents' income were removed, but are unhappy when they realize that they will not qualify unless they meet the requirements. I had a lot of experience in dealing with this issue while working at a financial aid office. "But my parents don't help me with school!" is what I would hear from some students when I would explain financial aid methodology and why family income had to be counted. They had a point, really. How fair is it to count the income of parents for financial aid eligibility if the parents do not offer any support? While my sympathies were with the student, the policies of the Federal Department of Education offer no wiggle room. A student will have to answer Yes to one of the following questions in order to be considered an independent student. 1. Are you at least 24 years old? 2. As of today, are you married? 3. At the beginning of the 2013-2014 school year, will you be working on a master's or doctorate program (such as an MA, MBA, MD, JD, PhD, EdD, or graduate certificate, etc.)? 4. Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training? 5. Are you a veteran of the U.S. Armed Forces? 6. Do you have children who will receive more than half of their support from you between July 1, 2013, and June 30, 2014? 7. Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2014? 8. At any time since you turned age 13, were both your parents deceased, were you in foster care, or were you a dependent or ward of the court? 9. Are you, or were you an emancipated minor as determined by a court in your state of legal residence? 10. Are you, or were you in legal guardianship as determined by a court in your state of legal residence? 11. At any time on or after July 1, 2012, were you homeless or were you at risk of being homeless? Furthermore, if you do answer yes to any of these questions you will probably have to document the circumstances. For example, if declared an emancipated minor there will be court documentation confirming this. It will need to be submitted to your financial aid office if you are selected for verification review. Generally, students who are young and declared independent qualify for more financial aid because parental income no longer is counted. There are a number of students who have persevered through harsh circumstances leading to federal aid entitlements. The federal aid program was designed to create college accessibility for exactly these students, whose parents were perhaps incarcerated or otherwise separated from their children by court order. This is a far cry from the circumstances of students who have had a stable and safe home life, but are suddenly thrust into a college-choice conundrum. Students: You should be aware of your circumstances and what options are available. If including parent income as part of your FAFSA puts you out of eligibility for financial aid, this is the reality you will have to deal with. As always, be prepared to decide which school you will attend, accounting for what the costs are and what the benefits are. Consider other funding options, such as getting a job and working your way through school with some elbow grease. It could teach you an even bigger and better lesson about life. Parents: In my experience, the wisest path is through the middle ground between two extremes. On one side parents who do everything and pay for everything "college," leaving the student only responsible for showing up. On the other side parents who are neglectful and careless, assuming that telling the kids to figure it out themselves is the best option. Neither extreme is the best way to handle such circumstances. Parents should recognize that a student must assume as much responsibility as possible over college selection and funding process within reason. Parents should play a supportive role to assist the student in this process, stepping in much like a lifeguard when trouble arises. The effort toward independence is valuable for a young person to harness, lest it be wasted by parents that are no-shows or helicopters. As Lynn O'Shaughnessy from "The College Solution" puts it, "If you're a parent contemplating making your child pay for college on his or her own, please give it more thought." *** Ken O'Connor is a financial aid expert and the director of student advocacy at cuStudentLoans.org. Learn more about credit union private student loans and college planning by visiting his blog.
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