Parents, Dependents, and Financial Aid: Clarifying Relationships and Reporting
By Joe Messinger, CFP®
September 18, 2020
When dependent students apply for financial aid whether via the FAFSA or CSS Profile, they will have to provide parental information as part of the process. Some questions can come to mind. What students are independent? When are they considered dependent? Who are the “parents”? What happens in situations like divorce, unmarried partners, etc.? With so many family situations and two different type of financial aid applications with different requirements, it can get confusing.
When is a student independent?
Under the FAFSA, an independent student does not have to report their parents’ financial information on financial aid applications. (CSS Profile institutions may ask for parental info.) Whether or not a student is independent does not rely on whether or not a parent claims that student on their tax returns.
The FAFSA has a checklist of questions to determine if a student is independent including if the student:
- was born prior to 1998
- is married or separated but not divorced (A married student must report their spouse’s financial information on the financial aid application.)
- is working on master’s or doctorate degree
- has children of their own, and they pay for more than half of the child’s expenses
- is an emancipated minor
- is currently serving in the armed forces or is a veteran.
If the student answered “yes” to any of these, that student is independent for federal financial aid purposes.
Sometimes students need a dependency override.
In situations where students don’t know where their parents are, or they have been abused and removed from the home, or the parent is incarcerated, students can request that the college’s financial aid office provide them with an override. Higher education institutions have been given the authority to declare a student independent although only 2% of undergrad students have been granted this override.
If declared independent, students don’t need to provide financial information on those absent parents. The override process is cumbersome, and paperwork to prove the student’s situation will be necessary. When completing the FAFSA, the student indicates that their parent’s financial information is not available. The FAFSA submission will be marked as incomplete, and the student must reach out to the college about it.
When a student is dependent, what parental information needs to be reported?
Parents can come in many forms. “Mom” and “dad” might be biological, adopted, foster, or legal guardians. Parents can be unmarried or same sex or deceased. A student might have mom, dad, stepmom, and/or stepdad. Families consist of lots of options. Understanding whose financial information to report is important. Don’t want to over report or neglect something!
The FAFSA and the CSS Profile have slightly different considerations regarding parents and what information to include.
Let’s start with the FAFSA first.
On the FAFSA, “parent” means the legal (biological or adopted) parent or stepparent. It can also be the person determined by the state to be the student’s legal parent. Not all parents are included on the FAFSA though.
The following people are NOT considered parents for financial aid purposes (unless they have adopted the student): grandparents, widowed stepparent, foster parents, legal guardians, aunts or uncles, older brothers or sisters.
- If the parents are married to each other, both of them report their financial info.
- If the parents live together but are not married (whether that means they were never married, got divorced, or are separated), both of them report their financial info.
- If the parents are not married and do not live together, the financial information of the parent the student lived with more than 50% of the past year or custodial parent is reported.
- If the parents are not married and do not live together but the student lived with both parents equally, then the parent who provided the most financial support reports their information.
- If the custodial parent is remarried, the stepparent’s financial information is reported as well.
- If one of the parents is deceased (even if within the past year), their financial information is not reported.
- If the student lives with legal guardians or foster parents, their financial information is not reported; however, their financial support of the student is counted as income to the student.
- If the parents are a married same sex couple, both of them report their financial info.
- If the parents are undocumented immigrants and the student is a US citizen, include the parent’s financial information using 000-00-0000 as their social security number. The college’s financial aid office may require additional information. Because someone who isn’t a citizen cannot get a FSA ID to sign the form online, the student will have to print the signature page from the online form. Additional instructions can be found here.
Note: When the FAFSA asks about the education of a student’s parents, they are seeking info about the biological or adopted parents–not any stepparents.
In the event a parent refuses to provide financial information, a process exists for the student to follow. That process can be found here.
How does the CSS Profile approach parental information?
When the biological parents are divorced or separated, the CSS Profile uses a different approach than the FAFSA, and it can vary by the university. When parents are divorced or separated, colleges may request the financial information of both parents, no matter who the custodial parent is. The list of colleges and whether or not they want the financial information of non-custodial parents can be found here. The two parents access the application separately to complete it. The instructions can be found here. If a student does not have any contact with the non-custodial parent, they can request a waiver.
In general, the questions on both the FAFSA and the CSS Profile will step a student through the process of reporting the correct information. However, families come in many different varieties, and students want to make sure they are not reporting more than they need to on their financial aid application.
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