Student Aid Secrets: Tweak Demographic Information

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Demographic information, such as the number of children in college, household size, divorce and separation and dependency status, can affect eligibility for need-based financial aid.

Number in College

The number of children in college enrolled simultaneously can have a big impact on the Expected Family Contribution (EFC), since the parent contribution portion of the EFC is divided by the number of children in college. (The CSS/Financial Aid PROFILE form uses a different adjustment to the parental contribution when there are multiple children in college.) For example, twins, triplets and other multiples may qualify for more need-based financial aid than children who do not overlap in college. While it may be too late to implement such a family planning strategy, the impact on eligibility for need-based financial aid may influence the parents’ thinking about whether to allow a child to skip a grade or take a gap year between high school and college.

Parents are not normally considered in the number of family members in college, ever since Congress changed the rules in 1992. However, if the parents are continuing their education at the same time as their children, they can appeal to the college financial aid administrator for a professional judgment review. Some colleges will adjust the number in college or subtract the amount the family paid for the parent’s education from the parents’ income (minus employer-paid tuition assistance or other reimbursements of college costs), if they can verify that the parent is genuinely pursuing an undergraduate or, in some cases, a graduate degree or certificate.

It is also important to recognize that the number of children in college may change from one year to the next, affecting financial aid eligibility. For example, suppose a family has two children separated in age by one year. When the eldest child enrolls in college, the family will have just one child in college. The next year they will have two children in college at the same time, potentially increasing the amount of financial aid for each of the children. When the youngest is a senior in college, however, the family will be back down to one child in college, increasing the family’s EFC and, thereby, reducing the amount of financial aid.

Note that an increase in the number in college will not reduce the EFC when the parent contribution is less than about $1,000. While the parent contribution is divided by the number of children in college, the income protection allowance will decrease with each additional child in college. This yields an increase in available income that may offset the impact of splitting the parent contribution among multiple children when the parent contribution is already low.

Household Size

Household size also affects eligibility for need-based financial aid, but, to a much lesser extent. However, families sometimes forget to count all members of their household. The most common errors include failing to count the student in the household size, failing to count an unborn child in the household size, failing to count an adopted child and failing to count children who don’t live in the home but who receive more than half their support from the parents. For example, if the student’s parents are divorced and the custodial parent has remarried, not only must the stepparent be counted in the household size, but also the stepparent’s children, if they receive more than half their support from the stepparent. (If the stepparent’s children are counted in the household size, they may also be counted in the number in college if they will be enrolled in college during the award year.)

Do not, however, count foster children. Also, while the family may regard a pet as a member of the family, pets cannot be counted in household size.

Divorce and Separation

When a student’s parents are divorced or separated, only one parent is responsible for completing the FAFSA. The student may qualify for more need-based financial aid if this parent is the one with the lower income. (Note that the income of a stepparent must be included if the custodial parent has remarried.) To some extent, the parents can control which parent is responsible for completing the FAFSA by controlling where the student lives. This parent, called the custodial parent, is the parent with whom the student lived the most during the 12 months ending on the FAFSA submission date. Switching parents in subsequent years may raise suspicions, unless the family can document a change in the child custody and living arrangements.

Dependency Status

Independent students may sometimes qualify for more aid than dependent students, since parent income and asset information is not reported on the FAFSA of an independent student. But, sometimes qualifying as an independent student will increase the Expected Family Contribution (EFC) instead of decreasing it. The federal need-analysis methodology has three formulas, one for dependent students, one for independent students without dependents other than a spouse and one for independent students with dependents other than a spouse. Students who become independent through marriage may not necessarily qualify for more financial aid, especially if they substitute spouse income and assets for parent income and assets. Also, cash support from an independent student’s parents must be reported as untaxed income to the student. (Cash support includes money, gifts and loans, plus expenses such as food, clothing, housing, car payments or expenses, medical and dental care and college costs paid by others on the student’s behalf.)

In any event, it is difficult for an otherwise dependent student to become independent. The main methods under the student’s discretionary control are marriage, having a child or dependent other than a spouse, enlisting in the military, enrolling in graduate or professional school or waiting until age 24 to enroll in college. Dependency overrides, which are made at the discretion of the college financial aid administrator, are reserved for unusual circumstances that are unlikely to be under the student’s discretionary control.

Based on data from the 2011-2012 National Postsecondary Student Aid Study (NPSAS), only 13.3% of undergraduate students under age 24 were independent in 2011-2012. (About seven eights (85.4%) of independent undergraduate students were independent because they were over age 24.) Of these, 54.5% were independent because they had dependents other than a spouse, 23.7% because they were married (15.0% because they were married and had no dependents other than a spouse), 5.2% because they were veterans and 2.5% because they were serving on active duty in the U.S. Armed Forces. Less than one percent were independent because of a dependency override.

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