Tag: financial aid terms

Yesterday, one of our companion sites received a helpful email from an administrator in the Financial Aid Office of University of the Sciences in Philadelphia, PA. Ms. Pamela Ramanathan pointed out that when it comes to dependent student vs. independent student status on the FAFSA, “Students must provide parent information on the FAFSA unless they meet the qualification for independent student. Not being claimed on your parents’ tax return does NOT make a student independent. Even if students are not claimed on their parents’ tax returns, they usually still have to provide parent information.”

This is the kind of insight that is valuable for having come straight from an expert working with real people in real situations. Thanks, Ms. Ramanathan! The clarification prompted a curiosity to know more about this FAFSA issue.

What’s the difference between Dependent Student and Independent Student status on the FAFSA?

Essentially, dependent students must report their parents’ income and assets on the FAFSA in addition to their own. Independent students report their own income and assets (and those of their spouse, if they’re married). Generally, they do not have to report their parents’ income or assets.

In fact, it’s easier to define independent student status first, because dependent student status, well, depends on whether or not you fit independent student status.

Reminder: If you’re planning to enroll in a higher education program that starts between now and June 30, 2010, you must file a 2009-2010 FAFSA. If your education program doesn’t start until after July 1st, you’ll submit the 2010-2011 FAFSA.

Definition of “Independent Student

For federal financial aid eligibility, you are an independent student IF AT LEAST ONE of these criteria applies to you:

  • You are 24 years old or older (Born before Jan. 1, 1986 for the 2009-2010 FAFSA; born before Jan. 1, 1987 for the 2010-2011 FAFSA).
  • You’re married on the day you apply for financial aid (even if you are separated but not divorced).
  • You are or will be enrolled in a master’s or doctoral degree program (beyond a bachelor’s degree) at the beginning of the academic year* your FAFSA is for, 2009-2010 or 2010-2011.
  • You’re currently serving on active duty in the U.S. Armed Forces for purposes other than training.
  • You’re a veteran of the U.S. Armed Forces. (A “veteran” includes students who attended a U.S. service academy and were released under a condition other than dishonorable.)
  • You have children who will receive more than half their support from you during the FAFSA academic year*.
  • You have legal dependents (other than your children or spouse) who live with you and who receive more than half their support from you now and through June 30, 2010 for a 2009-2010 FAFSA or June 30, 2011 if you’re filing a 2010-2011 FAFSA.
  • When you were age 13 or older, both your parents were deceased and you were you in foster care or a dependent or ward of the court.
  • As of the day you apply for aid, you are an emancipated minor as determined by a court in your state of legal residence.
  • As of the day you apply for aid, you are in legal guardianship as determined by a court in your state of legal residence.
  • At any time on or after the July before you file your FAFSA, your high school or school district homeless liaison determined that you were an unaccompanied youth who was homeless.
  • At any time on or after the July before you file your FAFSA, the director of an emergency shelter program funded by the U.S. Department of Housing and Urban Development determined that you were an unaccompanied youth who was homeless.
  • At any time on or after the July before you file your FAFSA, the director of a runaway or homeless youth basic center or transitional living program determined that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless.

These are the standard criteria for defining an independent student on the FAFSA. If none of them applies to you, you are considered a dependent student.

You can find additional details and downloadable tip sheets on dependent student vs. independent student status, parents and stepparents, and dependent students in special circumstances at Student Aid on the Web Publications, Forms, and Brochures.

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* A number of “independent student” criteria are restricted to specific academic years. For the purpose of federal financial aid and the FAFSA, relevant academic years are defined as:

  • 2009-2010: July 1, 2009 to June 30, 2010
  • 2010-2011: July 1, 2010 to June 30, 2011

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July 1, 2009 — The student loan interest rate on new Subsidized Stafford Loans for undergraduates drops to 5.6% today, a new low intended to make federal loans more palatable for students considering higher education. If you’re a laid-off worker thinking about going back to school for new education or training, this applies to you, too. Subsidized Stafford loans for undergrads are based on financial need; there is no age restriction for eligibility.

The interest rate for new Subsidized Stafford loans for graduate students, new Unsubsidized Stafford loans (not need-based), and new PLUS loans are unchanged from the 2008-2009 financial aid year: 6.8% for Graduate Subsidized Stafford loans and all Unsubsidized Stafford loans, 8.5% for PLUS loans taken out through the FFEL program, and 7.9% for PLUS loans taken out through the Direct Loan program.

However, interest rates also drop on variable-rate Stafford loans and PLUS loans issued between 1998 and 2006. For a student still in school, or whose loans are already in repayment, grace period, deferment, or forbearance, the rates on these loans now range from 1.8% to 3.28%. A table on the Department of Education’s website lists all the Stafford and PLUS loan interest rates effective today. You may be able to consolidate your existing student loans issued before 2006 at one of these rates.

While federal student loan interest rates go down, the upper limit on Pell Grants goes up: the maximum amount for Pell Grants for the 2009-2010 school year is now $5,350. Pell grants are awarded to students whose FAFSA, the Free application for Federal Student Aid, calculates Pell grant eligibility.

To qualify for Pell grants and the low interest rates on federal student loans, you must fill out a FAFSA every year.

The Wall Street Journal outlines the intricacies of federal loan interest rates and fees.

Financial aid definition for the day: the difference between “Lender” and “Loan Servicer.” A student loan lender and a student loan servicer are two different roles, although some financial institutions may be both (for example, Sallie Mae). A student loan Lender is a financial institution, bank, or lending organization that actually loans you the money for your student loan. A Loan Servicer is an organization that monitors the loan transactions and collects the money for the lender, but is not necessarily the organization providing the loan funds.

If the Obama administration succeeds in its proposal to eliminate the FFEL program and handle all federal student loans through the Direct Loan program, then the U.S. Treasury will be the Lender and the four financial institutions recently selected by the Department of Education will be the Loan Servicers handling future federal loans.

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