Tutorial: Student Financial Information on the FAFSA

Filing the FAFSA, 2015-2016 Edition (Cover)
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Section 5 of the Free Application for Federal Student Aid (FAFSA) asks about the student’s taxed and untaxed income as well as the current net worth of the student’s assets.

The treatment of student income and assets is similar to the treatment of parent income and assets, with an exception for cash support received by the student.

  • Cash support received by a dependent student’s parents is not reported as income on the FAFSA.
  • Cash support received by a dependent student from the student’s custodial parent(s) is not reported on the FAFSA.
  • Cash support received by a dependent student from other sources, including the non-custodial parent, grandparents, aunts, uncles and other third parties, is reported as untaxed income to the student on the student’s FAFSA.
  • Cash support received by an independent student from all sources other than the student’s spouse, if any, is reported as untaxed income to the student on the student’s FAFSA.

Students may wish to use the IRS Data Retrieval Tool to transfer information from their federal income tax return into the FAFSA.

FAFSA Student Tax Information

FAFSA Student Financial Information

Additional Considerations for Independent Students

There are some additional questions and issues that apply only to independent students.

Spouse Income and Assets Must be Reported

If the student is married at the time FAFSA on the Web (FOTW) is submitted, the spouse’s income during the base year and the current net worth of the spouse’s assets must be reported in addition to the student’s income and assets, even if the student was not married during the base year. Prenuptial agreements do not affect this federal requirement.

Simplified Needs Test and Auto-Zero EFC

Independent students are eligible for the simplified needs test, but not all independent students are eligible for auto-zero EFC. Independent students with dependents other than a spouse are eligible for auto-zero EFC, but independent students without dependents other than a spouse are not eligible for auto-zero EFC.

Student Household Size (Independent Students)

FAFSA Student Household Size

The number of family members in the student’s household is used to calculate the student’s income protection allowance. The income protection allowance, which is based on a minimum standard of living, is subtracted from the student’s income (and the spouse’s income, if the student is married) to calculate available income. A greater household size will result in a lower figure for available income, yielding an increase in the student’s eligibility for need-based financial aid.

The following persons should be included in the student’s household size:

  • The student applicant should always be counted in household size.
  • The student’s spouse, if the student is married, except if the spouse is not living in the household because of death, separation or divorce. A spouse who is on active duty in the U.S. Armed Forces should be counted even if he or she is not living in the household because of the military service.
  • The student’s children should be counted in household size, if the student (and his/her spouse, if married) will provide more than half of their support from July 1, 2015 through June 30, 2016. Unborn children (including multiple unborn children) may be counted if they will receive more than half their support from birth through the end of the academic year. The student’s children are not required to live with the student.
  • Other people (aunts, uncles, grandparents, elderly parents, etc.) should be counted in household size only if they currently live with the student and will continue to do so from July 1, 2015 through June 30, 2016 and the student (and his or her spouse, if married) will provide more than one-half of their support and will continue to provide more than half of their support from July 1, 2015 through June 30, 2016.

Children of the student may be counted in household size even if they do not live with their parents because it is not uncommon for the student to be supporting a child who does not live with the student. For example, the student may be separated or divorced and the child might live with the other parent. The child will be counted in household size if the student provides more than half of the child’s support.

Stepchildren may also be counted in household size, if they pass the support test, described below.

When determining whether the student supports a member of the household, it does not matter whether the student claims the child as a tax exemption on the student’s federal income tax return. The support test used for federal student aid purposes is different from the support test used for federal income tax purposes.

Support is measured against the full year. If the student starts supporting a child mid-year, the support provided for the remainder of the year must be more than half of the child’s support for the entire year.

Support includes direct financial support, such as money, gifts and loans. It also includes food, clothing, housing, transportation (e.g., car payments, insurance, fuel and maintenance), medical and dental care and insurance, and college costs. It also includes indirect financial support, such as money paid to a third party to pay for expenses for which the child or other person is responsible.

Whether the student provides more than half support is measured by comparing support received directly or indirectly from the student’s parents against support provided by other sources. The student must count benefits received on behalf of the child as part of his or her support of the child. This includes money from government assistance programs (e.g., TANF, SNAP) and the student’s spouse or significant other, not just the student’s income and assets.

Foster children are not counted in household size.

Child Support and Household Size

If the student provides more than half support for a child, count the child in household size and do not report any child support paid for that child.

If the student provides less than half support for a child, do not count the child in household size, but do report any child support paid for the child.

If a child is counted in household size, any child support paid by the student for that child is not reported on the FAFSA. Only child support paid for children who are not counted in household size (i.e., children for whom the student does not provide more than half support) is reported on the FAFSA. Child support paid reported on the FAFSA is subtracted from income. If a person is counted in household size, an allowance for the support of that person is subtracted from income as part of the basic living expense allowance. Counting a child in household size and reporting the child support paid for that child would effectively double-count the support of that child.

Number in College (Independent Students)

FAFSA Number in College

This question asks the independent student about the number of family members who are or will be enrolled on at least a half-time basis in a degree or certificate program at an eligible postsecondary institution during the award year (July 1, 2015 and June 30, 2016).

The number in college has a big impact on eligibility for need-based aid because the expected family contribution for an independent student is divided by the number in college. (The number in college is also used to reduce the income protection allowance because most living expenses for college students are considered as part of the college’s cost of attendance figure.)

Only people who are counted in household size may be counted in the number-in-college figure.

The student is always counted in the number of college, even if the student will be enrolled less than half-time.

Students who are enrolled in a U.S. military academy are not counted in the number in college because the federal government pays for their college costs, not the family.

FAFSA Student Financial Information Continued