Proponents argue that if there are students declaring themselves financially independent even though their parents could help them pay for their education, there is less money left for those who may need it. But some financial-aid officers say the proposed age limit is arbitrary and unfair.
The issue is being strongly debated partly because Federal aid to students is shrinking at a time when the cost of attending college is going up.
Meanwhile, the proportion of students claiming financial independence is rising, according to Department of Education figures. Of the more than 2.5 million Pell Grant recipients in the 1979-80 academic year, 33.8 percent, or about 857,000, were independent. The estimate for 1981-82 is 40.1 percent of the more than 2.7 million recipients, or about 1.1 million.
Pell grants, named for Senator Claiborne W. Pell, Democrat of Rhode Island, are intended primarily for low-income students. ''We have been seeing a number of students coming and saying, 'What do I do to be independent?' or a parent saying, 'What do I do to make my child independent?' '' said Jacqueline Foster, Yale's director of undergraduate financial aid.
Under the proposed Federal changes, along the lines of rules applying in New York State's Tuition Assistance Program, a student younger than 22 would not be considered independent unless both parents were dead or the student was the ward of a court. An older student would have to meet conditions similar to those that now apply for the year before the application: the student cannot be declared as an exemption on a parent's tax return, he cannot receive more than $750 from his parents, and he cannot live at home.
Advocates of the proposed changes, which were put aside by Congress until next year, say that they are a reaffirmation of the role of parents as the primary source of money for education.
Francis J. Hynes, vice president for grants and scholarships of the New York State Higher Education Services Corporation, said: ''We recognized a little bit earlier than the Federal officials that you had to apply some stronger test regarding the under-22 age because of the potential for parents to deliberately determine that they weren't going to support the student.'' But others argue that parents may not be willing to pay for a student's education, and that in many cases the family as such does not exist.
John Taylor, the financial-aid officer at Manchester Community College in Manchester, Conn., said the proposed age limit ''flies in the face of the trend to the unfortunate disintegration of the family.''
''More and more people face being on their own without any assistance from their family,'' Mr. Taylor said. ''They should not just be eliminated because of an arbitrary formula.''
At Manchester, ''the type of students we see are coming from households where education is not necessarily the highest priority,'' Mr. Taylor added. ''They are out on their own and working in jobs where they are underutilizing their skills, and they want to come back to school to increase their skills.''
Independent status, however, is not always a guarantee of more aid - because such students are expected to contribute virtually their total income toward education while the parents of dependent students, who have other substantial financial obligations, are governed by more generous rules.
''The truly independent student is being penalized because of the flood of so-called independent students,'' said Panelle Paderewski, assistant director of the College Scholarship Service. One solution, she said, might be to assess independent students at the same rate as parents of dependent students. But this could not be done, she added, until the definition is made stricter.
Most private colleges already apply stricter standards to independent students than to the dependent ones in giving awards from Federal campus-based programs or their own scholarship programs, and they often ask the former for documentation, such as rent receipts and tax returns, to prove their status.
The campus-based programs include Supplemental Educational Opportunity Grants, National Direct Student Loans and College Work-Study.
Most state grant programs, on the other hand, follow the Federal guidelines. An exception is Pennsylvania, which conducted a study to measure the cost of having students switch from dependent to independent status for financial-aid purposes. Of the state's 1981-82 Pell grant applicants, 22 percent of those who called themselves independent had been dependent in the previous year.
Because of their new status, these students qualified for about 10 percent more aid, according to Jerry S. Davis, director of research and policy analysis of the Pennsy*lvania Higher Education Assistance Agency. THE study showed further that of the people who were denied aid as d ependent students but were later given aid as independent students, a bout half came from families with incomes above $24,000, and a f ourth came from families with incomes above $30,000.
''Presumably, those students should have access to some family resources,'' Mr. Davis said. In California, students must be independent for three years before their application for aid instead of one year, as in the current Federal standards. A study by the California Student Aid Commission showed that 48.7 percent of the students applying for aid in that state would be independent by Federal standards, but only 41.1 percent would be independent by the state's standards.
One aim of the study was to see if California should adopt the Federal standards. The commission recommended against it. ''We felt that to go to the Federal standard could lead to abuse of that definition,'' said Donald Hills, research director of the commission. ''If someone has been away from their parents for only a year, should they really be considered independent?''Continue reading the main story
You might think that moving out of your parents’ place means you’re ready for the real world. You’re not alone.
About 40 percent of millennials believe that reaching financial milestones like paying rent is the surest sign of independence, according to a Bank of America survey.
Regardless of where you live, however, the Department of Education (DOE) might still see you as a dependent. This status matters when it comes to receiving federal aid for college.
Here’s how to determine whether you’re truly independent or dependent, plus how that could affect your path to campus.
Independent and dependent student definitions
To receive financial aid from the federal government, filling out the FAFSA annually is a must. Your ability to receive government-funded grants, loans, and work-study opportunities is partly decided by your dependency status.
If you’re a dependent student, you’ll report your family’s income on the FAFSA, as it’s assumed you’ll have help paying for college. As an independent student, you’ll report your financial information (and your spouse’s).
Because being independent might lead to greater access to federal aid, you’ll need to prove your filing status. You won’t just self-identify and move on.
Consider these factors that determine your dependency:
- 24 or older
- Married or have a dependent
- A graduate or professional student
- A veteran or a member of the armed forces
- An orphan, a ward of the court
- An emancipated minor or homeless
To be deemed independent, you must fit into one of those buckets. If you don’t, you’re a dependent.
4 ways your dependency affects your financial aid
The requirements of being an independent student in the eyes of the DOE are pretty close to non-negotiable. You can’t change your age, marital status, and grade level at the drop of a hat.
So although you’re not in control of your dependency status, it’s important to be aware that how you’re classified affects how much federal aid you can receive.
Here are all four ways your status affects your finances.
1. Maximum borrowing amounts
Federal loan borrowing limits are decided by your dependency status and year in school. Freshman and sophomore students who are categorized as independent, for example, can borrow $4,000 more in loans per year than their dependent peers. Upperclassmen independents can borrow $5,000 more.
Here are the maximums for federal loans:
There’s one loophole to the dependent student definition. If your parents aren’t eligible for a Direct PLUS Loan to help pay your tuition, you could receive additional Direct Unsubsidized Loan funds.
It’s also important to point out that dependency status is not as big of a deal in the world of private student loans. With that said, as an independent student, you might be hard-pressed to find a cosigner if your parents are out of the picture.
2. Eligibility for grant aid
Although your eligibility for federal aid isn’t mentioned in the DOE’s dependent student definition, there’s still a connection. After all, dependent students are assumed to have more financial support from home. With higher Expected Family Contributions (EFC) than those of independent students, they’re less likely to receive need-based aid.
Work-study programs are based, in part, on financial need. Traditionally, grants are also need based while scholarships are often awarded for merit, like high marks in the classroom.
The DOE’s four grants are all need based:
- Federal Pell Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- Teacher Education Assistance for College and Higher Education (TEACH) Grant
- Iraq and Afghanistan Service Grant
Unlike loans, these grants are a form of gift aid. They don’t need to be repaid.
3. Qualifying for in-state tuition
If you’re an out-of-state student, you might think it’s easier to score an in-state tuition rate as an independent. That’s not necessarily true.
As a dependent student, you’d have to prove that you and your family lived in the school’s state for as long as two years before enrolling.
As an independent, you’d have to prove you earn and spend your own money. Providing bank statements and tax returns would be a good start.
Although your dependency status can change your path toward establishing residency for in-state tuition, it’s a rocky path nonetheless.
4. Receiving a tax deduction
Like the Federal Student Aid office, another branch of the federal government might classify you as a dependent — the Internal Revenue Service (IRS).
If you remain a dependent during your student loan repayment, you — and your family — should be aware of the tax implications. The IRS allows you to deduct up to $2,500 in paid federal and private loan interest from your taxable income. To be eligible, you can’t be a dependent on someone else’s tax returns.
Your parent could claim the student loan interest deduction if they took out a loan for you. But you could only claim it if you’re an independent.
Consider your dependency status
If you’re not sure whether you’re an independent or dependent student, check out the DOE’s infographic quiz. Once you know where you stand, you’ll know how you’re affected.
Most importantly, knowing your dependency status can help you understand your maximum loan allowances as well as your access to federal grants. You might not be able to go from a dependent to an independent overnight, but at least you can plan for your reality.
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