Dependency Status Dilemmas

Today’s Objectives

• Understand the differences between the definition of dependent the Internal Revenue Service (IRS) uses and the definition the Department of Education (ED) uses

• Review the dependency status questions

• Discuss specific scenarios you may see in your office

IRS “Dependent” and FAFSA “Dependent” Not Equal

IRS Definition

The IRS defines the term dependent as

• A qualifying child

• A qualifying relative

• Several criteria to determine dependency status on the FAFSA

• To be considered independent a student must answer “yes” to 1 of the dependency status questions

Age, Marital Status, and Degree Questions

Age, Marital Status, and Degree Questions

• Were you born before January 1, 1991?

• As of today, are you married?

• At the beginning of the 2014–2015 school year, will you be working on a master’s or doctorate program?

Penny

• 20 years old

• Has no dependents

• Completed 2013-2014 FAFSA in January

• Got married on February 14, 2013

• Has lived with her fiancé since 2012

• Pays 50% of their living expenses

• Parent provides very little financial support

Penny came into the office in March 2013 stating that her friend told her she should have waited until she got married to complete the FAFSA. Can she change her information after

February 14 ?

Do you change her marital status to married and thus make her independent?

Change Marital Status

• FAAs have the discretion to require an applicant to update his/her marital status, if the institution determines the update is necessary to:

Address an inequity; or

Reflect more accurately the applicant's ability to pay

Change Marital Status

• When a student changes marital status using FAFSA on the Web

• EFC will not be calculated and reject 21 is set

• Confirmation message:

“You reported a marital status date that is after the date you submitted your original FAFSA. Therefore, we cannot calculate an estimated Expected Family Contribution (EFC). You must contact your Financial Aid Administrator (FAA)”

• Only a FAA can override the reject

Penny

After Penny got married on February 14 she realized it wasn’t the best decision for her and after 10 months of marriage got divorced on December 15, 2013. It is now January 15 and she is in the process of completing her 2014-15 FAFSA

Penny

Based on the following information will what is Penny’s dependency status?

• Age 21

• Doesn’t have dependents

• Receiving alimony of $500 per month

• Living with parents and pays $250 for rent

Answer is: Dependent

Military Service Questions

Military Service Questions

• Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training?

• Are you a veteran of the U.S. Armed Forces?

Military Service Questions

The student is independent if he/she is

• A veteran

• On active duty in the U.S. Armed Forces for purposes other than training

Veterans

To be considered a veteran, the student must have been

• In active service, including basic training

• Released under a condition other than dishonorable

National Guard Members

• National Guard and Reserve members are only considered veterans if they were called up to active federal duty by presidential order for a purpose other than training

• The student must have had a character of service that was not dishonorable

Documentation

• Financial Aid Office can request a copy of the DD214

• Certificate of Release or Discharge from Active Duty

• Character of Discharge must be anything other than dishonorable

Leonard

• 19 years old

• Was called to active duty by order of the state governor

• Will complete active duty in May 2015

How Should Leonard Respond?

Are you a veteran of the U.S. Armed Forces? NO

• If a National Guard or Reserve enlistee is called to active duty only for state or training purposes, they are not a veteran for financial aid purposes

Dependents Receiving Support

Dependents Receiving Support

• Do you now have or will you have children who will receive more than half of their support from you between July 1, 2014, and June 30, 2015?

• Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2015?

Children Caveats

• Children do not necessarily need to live with the student

• The student needs to be providing more than 50% of the child’s support

• Unborn children can be included

• The student must provide more than 50% of the unborn child’s support from date of birth to the end of the award year

Leslie

• Has a son - Dillon

• Lives at home with her parents

• Parents pay all of Leslie’s expenses for Dillon

• Has no income

• She does not receive any support from the father

How should Leslie respond?

Do you now have or will you have children who will receive more than half of their support from you

between July 1, 2014, and June 30, 2015? NO

• If the student is living with a parent who is paying for most of the household expenses, the parent would usually be considered the primary source of support to the child

• If one or both parents are directly or indirectly providing more than 50% support for the child

Receiving Support to Raise a Child? YES

• Leslie receives child support and participates in the Supplemental Nutrition Assistance Program (SNAP)

• This is the primary support for her child and amounts to more than 50% of the child’s support

Bernadette

• Lives on her own with her child

• Earns $3,500/year

• Receives Temporary Assistance to Needy Families (TANF)

• Receives child support from the father that amounts to more than half of the support for their child

How should Bernadette respond?

Do you now have or will you have children who will receive more than half of their support from you

between July 1, 2014, and June 30, 2015?

If Bernadette is receiving money for the child from any source other than her parents, she would be independent if that support accounts for more than half of the child’s support

Howard

• Answered Yes to question about having child and

providing more than half of the support for the child

• Howard is the father of Bernadette’s child

Did Howard complete his FAFSA correctly? YES

• Howard would also be able to count the child as a dependent and in his household size

Not every student fits this example

Documentation

If you are questioning the student’s response, what type of documentation do you collect to determine if the student is providing more than half of their child’s support?

Dependent Caveats

• For a dependent other than a child to be included, that person must live with AND receive more than half of their support from the student as of the FAFSA signing date and continue to do so for the remainder of the award year

Not in the Care of Parents

FAFSA Questions

• At any time since you turned age 13, were both of your parents deceased, were you in foster care, or were you a dependent or ward of the court?

• As determined by a court in your state of legal residence, are you or were you an emancipated minor?

• As determined by a court in your state of legal residence, are you or were you in a legal guardianship?

Caveats

• A student who was an orphan—both his or her parents were dead—by age 13 or older is independent even if he or she was subsequently adopted

• A student who was at any time since the age of 13 a foster child or a ward of the court is independent even if his or her status changed later

Caveats

• A student is a ward of the court if the court has assumed legal custody of him or her

• In some states the phrase ward of the state is used

• This is considered the same as a ward of the court for dependency status

• Someone who is incarcerated is not considered a ward of the court

Caveats

• To be considered emancipated or in a legal guardianship, the arrangement must have been adjudicated by a court in the student’s state of legal residence

• Students in legal guardianship to their parents are not considered independent

Sheldon

• Sheldon states he is in a legal guardianship on the FAFSA

• During verification Sheldon indicates

• Mom is still alive living in another state, dad is deceased

• Mom sent Sheldon to live with his grandmother when he was 13 years old

• Mom visits occasionally during the holiday

Is Sheldon Independent for Financial Aid Purposes? NO

• Grandma never legally adopted Sheldon, nor is she Sheldon’s legal guardian

Unaccompanied, Homeless Youth

McKinney-Vento Homeless Assistance Act

• The College Cost Reduction and Access Act, which added these dependency statuses, references the McKinney-Vento Homeless Assistance Act

• This act requires every school district designate a homeless liaison

FAFSA Questions

• At any time on or after July 1, 2013, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?

• At any time on or after July 1, 2013, did the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?

FAFSA Questions

• At any time on or after July 1, 2013, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?

Definitions

Definition of Term • Homeless—lacking fixed, regular, and adequate

housing, which includes living in shelters, motels, or cars; or temporarily living with other people because the student had nowhere else to go

• Unaccompanied—the student is not living in the physical custody of a parent or guardian

• Youth—the student is 21 years of age or younger or is still enrolled in high school as of the day the FAFSA was signed

Caveats

A student is eligible for homeless youth status if he/she meets the homeless definition and was determined to be homeless by:

• A school district homeless liason

• A director of an emergency shelter program funded by HUD

• The director (or designee) of a runaway or homeless youth basic center or transitional living program

Documentation

• Currently, the homeless questions are not subject to verification

• If you question the student’s answers, you may request documentation from:

The school district homeless liaison

Director of the shelter or transitional living center

Reporting Homeless Youth Determination on FAFSA

• FAA Access to CPS Online

• Select “4 – FAA homeless youth determination” in the Dependency Override field in FAA Application Entry or FAA Correction Entry

• The Paper FAFSA

• Select new Homeless Youth Determination circle under “College Use Only” section

• Electronic Data Exchange

• Enter a Dependency Override field value of “4”

Amy

• Amy ran away from home during her senior year in high school because her father was abusive

• Amy has always been able to stay with friends

Is Amy an unaccompanied homeless youth?

When Making a Determination

• Review dependency questions of FAFSA

• If student cannot answer “Yes” to any of the questions, FAA must determine if student is

An unaccompanied youth who is homeless

Self-supporting and at risk of being homeless

When Making a Determination

• It is important that you examine students’ living situations and claims on a case-by-case basis

• Use legal definitions to determine eligibility

When Making a Determination

• Seek assistance

• Local school district homeless liaisons

• State homeless education coordinator

• National Center for Homeless Education

• serve.org/nche

• National Association for the Education of Homeless Children and Youth (NAEHCY)

• naehcy.org

When Making a Determination

• Request documentation from recognized third parties, examples include:

• Employer, mentor

• Counselor, clergy, social workers, doctors

• College access programs

• People with whom student may be staying

• Use discretion and respect student privacy

Resources

• Chapter 2 of the Application and Verification Guide

• IRS Publication 17

• National Association for the Education of Homeless Children and Youth

• naehcy.org/ legislation-and-policy/higher-education

• National Center for Homeless Education

• center.serve.org/nche/index.php

Conclusion

These dependency status questions are not only confusing to us, they are confusing to our students

Helping students get through the questions will ensure each student gets the aid for which he/she is eligible

SAVE THE DATE! FASFAA 2015

May 19-22 2015 Renaissance World Golf Village Resort, St. Augustine, Florida