We’ve covered a lot in our FAFSA series the past few weeks! However, we also know that not everyone has the same household situation and yours might be unique. If you do have a unique household situation, it’s important to know all of the facts when it relates to the FAFSA and how you can best leverage your situation to maximize your financial aid outcome. Here are 3 unique situations when filling out the FAFSA you may find yourself in.
Separated or Divorced Parents
40-50% of families have or will experience divorce in the US. While this situation is more common, it is unique when it comes to the FAFSA and how the application should be approached.
We get asked often how do go about this process in separated or divorced families. Whose income and assets do we report or do we have to report both? Here’s a breakdown:
– It’s actually a lot simpler than it seems: Use the information, income and assets for the household the student lives in 51% or greater of the time
– Technically, a student should report all household income in the space they reside 51% of the time. For example, if the student is living with a parent who is also dating, engaged, or married to someone else who is not biologically related to the student, their income should still be reported as part of the household income as well.
– If there is a joint custody situation, it may require further legal inquiries into determining whose home the student lives in the majority of the time.
Parent / Close Family Member is a Business Owner
If a parent or close family member (directly related to the student or related by marriage) of a student owns their own business, the value of that business would not count in the household income / assets. Here’s a breakdown on the details:
– The value of the business does not have to be included when the parents or close family member owns more than 50% of the business and if that has less than 100 full time employees. The “value” of the business can include things like: land, building, inventory, etc.
– Farms are a little bit different: If a student lives on a farm, this is considered their primary residence and it is not considered an investment farm, so the above would apply. However, if the farm is simply owned as an investment, and the student does not live there, it would be considered in the household assets.
Student Who is Independent
If you are a student who is fully independent, emancipated, or responsible for the household income of your family or dependents, then you’ll need to take some extra steps when filling out the FAFSA.
– The student must prove they are a ward of the state or are providing 60% or more of their income for living expenses, etc completely on their own.
– If a student has emancipated from their parents they will have to provide legal proof of this.
Providing the correct info in the FAFSA is essential for a number of reasons. The main one though? You could be overstating your actual ability to provide a certain amount of financial aid and could miss out on your fair share of free financial aid. Understanding the rules, definitions and even strategy (think of it like tax strategy) are often invaluable in getting a larger share of the financial aid pie.
Have more questions or another unique situation that we didn’t cover? We’re always a phone call away!