Becoming an "independent student" for financial aid purposes?

Paying for College
1

<p>Our daughter was accepted to and is now attending a very expensive East Coast LAC as a freshman. </p>

<p>She LOVES it there, but we have a problem.</p>

<p>When D applied, our family income was rather low (under $40K annually). As a result, D received a very generous financial aid award from the college she's attending, which charges no tuition for families making less than $40,000 per year. </p>

<p>However, now that D has finally matriculated after taking a gap year, my wife (who, like me, is self-employed) has gotten a new client and, at least for now, her income as greatly increased. Our combined income will now be approximately $60-90,000 annually (although this could easily change at any time … the vagaries of self-employment).</p>

<p>I'm worried that this good news will now, ironically, put us in the dreaded financial aid "danger zone" -- parents' income too high to get a good financial package but too low to actually afford to pay her college bills given what I fear could be a disastrous decrease in D's future financial aid awards.</p>

<p>As a struggling, low income family for many years, we were unable to save much for college, and we've already cut expenses to the bone (we buy all our clothes at thrift shops, buy cars and electronics used on craigslist, no cable TV in 20 years, no health insurance in 10 years, etc.).</p>

<p>My understanding is that, were our daughter to be considered an "independent student" for financial aid purposes, all financial aid calculations would be made based on her own income and assets, NOT on her parents' income and assets. Our daughter has virtually no income or assets (her parents have only very small amounts in savings and IRA accounts), so it seems this might help ensure a good financial aid package for each of her remaining three years in college, regardless of potential increases in her parents' combined income.</p>

<ul>
<li><p>Should our daughter become an "independent student" for financial aid purposes? </p></li>
<li><p>What, exactly, would our 19-year-old daughter need to do to establish "independent student" status with regard to financial aid?</p></li>
</ul>

<p>I believe "independent student" status happens automatically when the student hits age 25, but I believe students can make this happen before then. My understanding is that as long as we don't declare D as a dependent on our tax returns, and she files her own individual tax return, she can declare herself as an "independent student" for financial aid purposes. </p>

<ul>
<li>Have I got all this right?</li>
</ul>

<p>Any answers, suggestions, information, advice, tips, leads, links, etc. on this topic would be MOST appreciated.</p>

<p>Thanks very much!</p>

2

<p>It’s very unlikely your D could be considered independent. If it were that simple, every family with a good income would go that route. </p>

<p>Besides your D would have to show that she’s been independent for a full year …has she done that? But, even with that, highly unlikely</p>

<p>If you’re used to being thrifty, continue being so and use the extra money for college. You have the new income NOW…you won’t have a lower FA pkg until next year.</p>

<p>BESIDES…for 2012, your income will not be that high.</p>

<p>Our daughter has virtually no income or assets</p>

<p>?? So…you’d be claiming that she lives on air during the school year and on breaks??</p>

3

<p>

No, that is completely wrong. Whether you claim your daughter as a dependent or not for tax purposes is completely irrelevant as far as FAFSA is concerned. Dependent for taxes and dependent for FA purposes are completely different things. (we had not claimed my son for 2-3 years when he returned to school and he was completely financially independent, but for FAFSA purposes he was still considered our dependent as he was under 24)</li>
</ul>

<p>Independency on FAFSA is determined by a series of questions (non related to taxes) to which the student must be able to answer yes to one. They are basically age (over 24), married, a veteran, have a dependent of their own they provide at least 50% support for, both parents deceased, and a couple of others.</p>

<p>It is very unlikely your daughter will be independent for FA purposes unless she is 24, marries, has a child (and income to support it), or is a veteran. If it was that easy, all students would be independent.</p>

<p>

Doesn’t matter if she was completely independent for a full year, she would not be independent for FA purposes. That is not even a question used to determine dependency on FAFSA. My son was completely independent for 2-3 years and his then girlfriend had been independent for even longer. They were both under 24 when they decided they needed to go to school and both were considered dependent for FA. Her dad is a doctor so her 1st year all she got was unsub loans. She turned 24 the following year and was then independent for FA.</p>

4

<p>Short answer: no.</p>

<p>

</p>

<p>[Will</a> I need my parents’ information?](<a href=“http://www.fafsa.ed.gov/help/fftoc02k.htm]Will”>http://www.fafsa.ed.gov/help/fftoc02k.htm)</p>

5

<p>Thanks for all your comments. I hope others will continue to chime in.</p>

6

<p>chrisrb - </p>

<p>No, m2ck is not “guessing”! As she, and everyone else on this thread has explained to you, your daughter cannot get independent status just because you don’t feel like paying her tuition.</p>

<p>If you’ve gotten by on under $40 k up to now, then you’ll just have to continue to do so . . . or spend more and borrow the money to pay your daughter’s tuition. Really, what is that that makes you think your daughter’s college should subsidize your more comfortable lifestyle???</p>

<p>The one thing you can do, however, is explain to the college the special circumstances (e.g. your medical expenses) that make it difficult for you to pay the full amount of tuition that would be expected. The school can make an exception, if the circumstances are compelling.</p>

7

<p>Swimcatsmom and annasdad gave me all the information I think I really need. Thank you both.</p>

<p>–</p>

<p>dodgersmom: </p>

<p>My wife and I both are self-employed with pre-existing conditions and essentially uninsurable till 2014, assuming Obamacare holds up. Just because a couple suddenly has an uncertain, probably temporary increase in income doesn’t necessarily mean they enjoy a “more comfortable lifestyle.” With new major medical bills ($75K emergency surgery last month without insurance), and the possibility of more and worse at any moment with nothing to protect us, I assure you, our lifestyle hasn’t changed.</p>

<p>You’re right … I don’t like the prospect of having to drain what little we have in IRAs to pay today’s outrageously high tuition costs. In most modern nations families never really have to worry about this (as was the case in the U.S. until the last couple of decades), but that’s another thread. </p>

<p>All I’m trying to do here is get information that might be of help to us, like everyone else. There’s no need to be presumptuous or rude in responding.</p>

<p>I’d already planned to alert the college’s financial aid department to our unexpected new medical bills … but thanks for the suggestion.</p>

8

<p>chrisrb - </p>

<p>So sorry you think I was “rude” . . . but it was certainly no more so than your dismissive comment to m2ck (that you’ve since deleted) that you weren’t interested in her “guesswork”!</p>

<p>I didn’t mean to imply, though, that you were spending your newfound “wealth” on hot tubs and fancy cars. The reality is that for many families, affording health care is a luxury . . . and, yes, in your circumstances, that may mean having to decide between health care and college tuition. I hope the college takes that into consideration in deciding your expected contribution.</p>

9

<p>Depending on what your actual figures are for 2012, though your aid may go down, your DD may still retain a goodly amount. Looking at the NPCs, most schools show a drastic drop in aid above the $100K in income. Run some numbers and see how it goes.</p>

<p>I didn’t think Dodgersmom was being rude either. She was just pointing out that you now have some money that you lhad not had in the previous years so that some of it could more easily go to the college costs. Where it usually becomes tough to pay college is when families have their money tied up in things that make it onerous to divest themselves of it. A home is one thing as well as commitments and lifestyle that one gets entrenched in. It’s almost better to fritter the money away on shopping and entertainment as one can stop that cold turkey. Not so easy to suddenly get rid of your cars and get less expensive ones or sell one’s home and downsize that way. </p>

<p>So you know that you are getting some extra and can plan for it. Your DD may have to come up with some ways to pay to, like finding a job or working more hours if she has a job. Your medical expenses should certainly be communicated. </p>

<p>It’s tough , I know. Few windfalls don’t have bills or needs that have been delayed waiting for them. But the colleges are not interested in things like you can finally replace your unreliable clunker and fix that hole in your roof that is becoming a true pitfall. Or that you have back bills that need to be paid off. THough if those are in a business setting, they may be able to be offset business expenses. something to discuss with your accountant. Just as it is wise to spend down money sitting in accounts for repairs and purchases needed in the near future before one’s child goes off to college and the fin aid forms are filed, so it might be the time to incur some business expenses bringing down your net income. Because, yes, income is what the financial aid process hits the hardest.</p>

10

<p>If you have high medical expenses not covered by insurance in the tax year you are reporting on FAFSA, you can ask the school for a special circumstances adjustment to reflect those medical expenses. Ask your school what you need to do and what documentation you must provide.</p>

<p>We had to do that my daughter’s first year of college. We had insurance, but my husband was very sick and our uncovered share of the medical expenses for the year was quite high. The school had us list all his uncovered medical expenses, with supporting documentation (it was about an inch thick). The income protection allowance includes an amount for health costs (something like 11% of the income protection). Our expenses above that amount were used by the school to reduce our income on FAFSA. The adjusted figures were rerun through the EFC formula and a new reduced EFC was produced. </p>

<p>There is no way of reporting this yourself on FAFSA, but the school can make professional judgement adjustments, at their own discretion, in such situations.</p>

11

<p>dodgersmom:</p>

<p>My comment to mwck was rude, you’re right … which is why I deleted it. </p>

<p>Too bad you didn’t exercise similar editorial control over your own presumption and tone:</p>

<p>–</p>

<p>“Really, what is that that makes you think your daughter’s college should subsidize your more comfortable lifestyle???”</p>

<p>–</p>

<p>The comment was certainly presumptuous. Maybe you were just responding to my own inappropriate remark to m2ck. Perhaps you didn’t mean to be rude, but that’s certainly the way it sounded to me. And maybe I’m a bit oversensitive. Health, education, and keeping a roof over our heads is a huge deal for our family, as I’m sure it is to yours.</p>

<p>As for having to choose, in this country, between health care, education, and a roof over one’s head … you’re right again. It’s a reality – a SHAMEFUL reality – that in the wealthiest country the world has ever known a great many people only get to have one of these (no matter how hard one works, or how hard one’s child works and what heights they achieve year after year in school). How one can be said to possess some kind of right to “life, liberty, and the pursuit happiness” without all three is beyond me. But again, that’s another thread.</p>

<p>Anyway, I’m grateful for all the comments. Thanks to all.</p>

12

<p>chrisrb - </p>

<p>What you probably don’t realize is that you’re not the first parent (and you certainly won’t be the last) who wants to find a way to get their child’s financial aid calculated without parental income being taken into account. And I’d guess that I’m not alone in not taking kindly to someone who appears to be trying to do an end run around the system. So if I seemed hostile, I apologize. In your case, though, the solution really is much more straightforward . . . the numbers speak for themselves. I hope the financial aid office recognizes that.</p>

13

<p>Reading this thread I am struck by the fact that OP’s daughter attends “a very expensive East Coast LAC” and gets free tuition. Should OP’s increased income result in financial aid package that the family can’t manage, a less expensive state school, a year or two taken off to earn tuition, some student loans, or some combination of these may be necessary alternatives. Certainly OP’s daughter will get her education one way or the other, and in any case has benefited from a full year of free tuition. The railing against the American education system seems misplaced here. The pursuit of happiness has never meant that everyone gets exactly what they want.</p>

14

<p>An “end run around the system?”</p>

<p>Really, dodgersmom?</p>

<p>Actually, I was curious about what the rules were.</p>

<p>If it’s okay for quarter-billionaires to pay as little tax as the rules require, and this is a highly-laudable and all-American thing to do, it’s certainly quite all right for a parent like me to try to find out how to legally pay as little tuition for his daughter’s education as the rules require.</p>

<p>What’s good for big fish is good for little fish too. That’s the American Way. Or it should be.</p>

<p>MommaJ: equality of opportunity, not of result, was my point in quoting Jefferson. That’s supposed to be a fundamental value of ours. In the American education system today, clearly, it’s becoming less and less so. That’s a shame, and ought to change. Highly relevant to this particular discussion, in my view.</p>

15

<p>*Quote:
Besides your D would have to show that she’s been independent for a full year …has she done that? But, even with that, highly unlikely</p>

<p>================
Doesn’t matter if she was completely independent for a full year, she would not be independent for FA purposes. .*</p>

<p>Right…I didn’t word that correctly. Of course, being self-supporting is not a criteria for being independent on FAFSA. I meant to just make the point that the D isn’t earning any money so even trying to put forth the idea (if that were a criteria) that she is independent would be laughable since she has no income or assets. Even if she got full aid for school, that doesn’t cover summer costs, and such. </p>

<p>The OP has to realize that if there were some gymnastics famillies could do (not include child on taxes, etc), then EVERYONE would do those things. Giving up a child as a tax deduction isn’t a biggie if it meant the child would now have a 0 EFC and get more aid.</p>

<p>As I alluded to above, since it is late in the calendar year, the wife’s sudden increase in income may not greatly affect the total income for 2012…which is what the next FA pkg will be based on. </p>

<p>What year in college is this student? If she’s currently a soph, then her aid for junior year may have little change. Her aid for senior year may have some change, but maybe not so much that would be unaffordable. </p>

<p>Of course, if the family has $75k in medical bills, then some kind of adjustment should be sought.</p>

16

<p>mom2collegekids:</p>

<p>Unfortunately, our daughter is a freshman this year, so she’s got three more aid packages in her future. Next year’s aid package should still be pretty good, I think, since it’ll be based on 2012 tax returns, which won’t show that big an increase in income. </p>

<p>My main worry (though this is a good problem to have, certainly) is if the new work my wife is doing lasts more than another year or so (she’s now a weekend 24-hour home care aid to a 97-year-old cancer patient, making much better than average wages, in addition to the housework she’s done for various clients for years) AND my own business picks up, we could well have one or two very bad aid packages to contend with.</p>

<p>In keeping with the behavior of possible future presidents and good ol’ American values, I’m trying to find a way to pay as little as possible while getting as much as possible, within the rules.</p>

<p>As long as we have the extra income, we’ll probably be all right, in any case … unless one of us is hit with another emergency surgery or some other major medical problem before we’re able to find a health insurance company that 1. will insure us at all, given our pre-existing conditions, and 2. won’t send us to the edge of bankruptcy (or over it) despite the increase in income (have you priced insurance on the private market for two self-employed adults aged 40 and 55 with pre-existing conditions, lately?).</p>

<p>At least now I know to scratch the “independent student” idea off the list … which, though disappointing, is actually very helpful, which is why I like CC.</p>

17

<p>Chrisb, play around with the NPC for the particular college. You can get a better idea as to how much more you will be required to pay. If your daughter’s college is one that guarantees to meet full need, and is generous that way, the increases in your income may well be affordable and fair increases in cost. ALso, if those parts of expenses attributable to medical costs should be submitted as they can be taken into consideration. </p>

<p>The way present rules are for FAFSA if there is another job crisis with signifcant loss of income or loss of job, that can be reported and dealt with under the “displaced worker” provisions, along with any medical issues that arise. All of that has to be dealt with on a personal basis through professional judgement of the financial aid officers of that school. It would be a good idea to establish a relationship with them on the part of your daughter. I was on generous aid while in college, and the financial aid office knew me well. I made sure of that. If any goodie made its way there, I was first in line and on their minds if I were eligible for it.</p>

18

<p>As you say, your D’s FA pkg should be good for soph year.</p>

<p>If the FA pkg is bad for junior year, then she might want to consider asking the school for a gap year. She could work and do some volunteer work or something related to her major during that year. She can earn about $6k that year without affecting aid for the next year. </p>

<p>Then during that gap year, you could set some money aside in case the year she returns also has a higher family contribution. </p>

<p>Again, this may all be for naught. If you can show lots of medical payments, then the school may still give great aid. You need to talk to them about this.</p>

19

<p>Remember that if your student wants to take a year off at any point in time, they should request a leave of absence from their school. This would mean that they would not need to reapply for admissions.</p>

<p>Also, if your student is receiving any merit aid, you need to find out if that will be still be available to them if a leave of absence is taken.</p>

<p>Don’t just take a “gap year” without getting those questions answered.</p>

20

<p>Chrisb, just something to keep in mind, along the lines of what is said over and over to those of us whose regular income is in the range you expect for 2013. Would you rather not have the income? This is not meant to be rude, and I hope it doesn’t come across that way, but if your wife had not chosen to accept this job, you would not have this “issue” with the possibility of facing a higher EFC. I will face that higher EFC with my 3 children over the next 11 years (there will be one year with 2 in school). </p>

<p>A higher income means your daughter will pay a higher share of her cost of attendance, but not any higher than someone who has had that same family income for the past 10 years. Which would you rather be? The family that has lived on $40,000 and now has an extra $50,000 to split with the college, or the family that has only learned to get by on the full $90,000 and will have to figure out what to cut to afford the $25,000 they are expected to pay to the college? </p>

<p>My advice would be to continue to live as if you made $40,000 and save as much of the rest as you can. You’re both self-employed, so you are familiar with the way your taxes are calculated - with that increased “income” will come increased expenses, so your net income will not increase as much as you are expecting, and you will not be expected to contribute all of it.</p>