“How do I file as an independent on the FAFSA?” or “How do I qualify as an independent student?” are some of the most common questions asked this time of year.  Once students and parents start digging into the FAFSA form, they quickly realize that independent students have lower EFC’s and therefore have a much better opportunity for financial aid than dependent students.  When this realization is coupled with the common position that “College is my student’s responsibility, not mine…” families quickly look to find out what does it take for a student to file as an independent on the FAFSA form.  It’s difficult… very difficult.

It is not as simple as not claiming your child as a dependent on your tax forms.  That is only a very small, if even insignificant aspect of student dependency status.  Below are the questions that the FAFSA form uses to determine dependency.

1. Are you older or will you be older than 23 during the award year?
2. Are you married?
3. Are you working on a graduate level degree?
4. Are you currently serving in the US Armed Forces other than training?
5. Are you a veteran?
6. Do you have children you support more than 50%?
7. Do you have other dependents you support more than 50%?
8. At any time since you were 13 regardless of present condition… are your parents deceased, or in foster care, or a ward of the court?
9. Are you or were you an emancipated minor as determined by a court?
10. Are you or were you in legal guardianship as determined by a court?
11. At any time on or after July 1, 2008, did your high school or district determine you to be an unaccompanied youth who was homeless?
12. At any time on or after July 1, 2008, did the director of an emergency shelter or federally funded transitional housing program determine you were a unaccompanied, homeless youth?
13. At any time on or after July 1,2008, did the director of a runaway or homeless youth center determine you to be an unaccompanied youth who was homeless or were self-supporting at risk of being homeless?

Questions 1 through 8 were the standard dependency questions for years.  Not until last year have the questions been expanded.

These questions are pretty straight forward.  If the student can answer “yes” to any of the above questions, then they can file “independent” status.  If they cannot answer “yes” to any of the above questions, then the student will be considered a dependent student.  In some very unusual circumstances, students can get a waiver from the financial aid office at the college which they are enrolled.  But a parent’s desire for a student to take care of their own college expenses is far from likely to merit a waiver from a financial aid officer.

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The FAFSA income protection allowance used to compute financial aid eligibility is taking a big jump for 2010’s dependent student filers.  According to the Department of Education, the income protection allowance is being increased from $3,750 (2009/10) to $4,500 (2010/11).  This is the largest single year increase I can recall in 10 years.

The income protection allowance is the amount of money a dependent student can earn in a non-work-study job, before that money is assessed towards their expected family contribution (EFC).  The increase of the allowance will allow students to earn more money without fear of losing half of it on their EFC.  This is very good news for many students who feel they are being punished for taking responsibility for their own education costs.

Here’s how this works.  Under the 2009 rules (applied to 2008 income), a student who earned $5,000, would be assessed on $1,250 of their income towards their EFC.  This would increase their EFC by approximately $625.  This year, the student earning $5,000 will be assessed on only $500 of their income; increasing their EFC by approximately $250.

Now here’s the really good news.  For many students, this will mean they could earn up to $7,000 or more in 2009 without it negatively impacting their expected family contribution.  How is this so?  Remember that work-study income is not assessed towards the EFC at all.

So let’s assume that a student is awarded a work-study position at their college for $2,500.  They work this job over the school year.  The student can have a second part time job or a summer job as well where they earn up $4,500 for a total of $7,000 in annual income… and not increase their EFC.

The key is maximizing work-study income.  The more you can gain in work-study, the more benefit the student gets out of their income protection allowance.  If the student can get $1,500 in work-study, they can earn $6,000 total.  If they can get $3,000 in work-study, they can earn $7,500 total.  This is an excellent example of why you always want to include work-study in your FAFSA application.

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There were some significant changes in the FAFSA with regards to dependent/independent status of students.  This is very important considering independent students are often eligible for much more financial aid than dependent students.

Previously, the FAFSA had a very hard 7 question test to determine whether or not the student was a dependent or independent student.

• Is the student older than 23?
• Is the student working on a graduate level degree?
• Is the student married?
• Does the student have children that they support more than 50%?
• Does the student have other dependents living with them?
• Are the student’s parents deceased, or is the student a ward of the court?
• And finally, is the student a veteran?

The questions were virtually impossible to get around.  Although the student may have been a position of recieving no support from their parents, they could not be an independent student unless they could answer “yes” to one of the above questions.

Now let’s look at the new set of qualifying questions FAFSA is using for 2009…

1. Are you older than 23?
2. Are you married?
3. Are you working on a graduate level degree?
4. Are you currently serving in the US Armed Forces other than training?
5. Are you a veteran?
6. Do you have children you support more than 50%?
7. Do you have other dependents you support more than 50%?
8. At any time since you were 13 regardless of present condition… are your parents deceased, or in foster care, or a ward of the court?
9. Are you or were you an emancipated minor as determined by a court?
10. Are you or were you in legal guardianship as determined by a court?
11. At any time on or after July 1, 2008, did your high school or district determine you to be an unaccompanied youth who was homeless?
12. At any time on or after July 1, 2008, did the director of an emergency shelter or federally funded transitional housing program determine you were a unaccompanied, homeless youth?
13. At any time on or after July 1,2008, did the director of a runaway or homeless youth center you to be an unaccompanied youth who was homeless or were self-supporting at risk of being homeless?

If the student can now answer “yes” to any of the above questions, they are considered independent and typically eligible for much more financial aid.

The question that is likely to get a lot of attention from many parents is #9 — Are you an emancipated minor as determined by a court.  Over the years, I have had a number of people ask me if it would make any difference if their student was declared emancipated.  Previously, the FAFSA had no means of indicating emancipation.  Obviously, that has changed.  This could mean the potential of thousands of students seeking emancipation.

My concern is what are the hidden ramifications of emancipating a minor.  I asked Attorney Elizabeth Cervantes for an opinion.  Here is a summary or her comments…

Emancipation in some states is not a cut and dry process.  Some states have a defined process, others are vague. 

Courts most often will require the minor to show they can support themselves.

Courts typically want to keep the family intact.

Eligibility for additional financial aid may not be a sufficient reason for the court to grant emancipation.

If you are going to investigate emancipation, I highly encourage you to seek professional, legal advice early in the process.  You can contact Elizabeth Cervantes at the law firm of Katz, Huntoon & Fieweger in Moline, Illinois at the following email address — ecervantes@katzlawfirm.com

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