The Risks of Independence

The Risks of Independence

Your clients’ kids can get a lot more student aid if they qualify as “independent students.” But it’s nearly impossible to qualify.

When parents realize that they haven’t saved nearly enough money for college, some of them start wondering if it’s time to kick their child out of the house.

Well sort of.

What parents actually begin contemplating is whether their college-bound teenagers, if they would start living on their own, could qualify as independent students. Moms and dads also wonder whether their child would be considered independent if they stopped claiming the teenager on their income tax returns.

I can see why parents are eager to pursue this option. After all, independent students enjoy a much easier time qualifying for need-based aid. Here is an example that illustrates why:

Let’s say that our hypothetical parents make $200,000 a year, but have saved a modest amount in their college fund. Parents earning that kind of income are typically not going to qualify for any need-based aid at even the most expensive colleges. Their children can qualify for merit scholarships from many schools, but the families will still usually face significant costs. If the teenager qualifies as independent, however, he will almost certainly be eligible for the federal Pell Grant, which is reserved for low-income students. The maximum Pell Grant for the coming school year is $5,635. The teenager would also probably qualify for state assistance, as well as need-based aid from his college.

Having one’s kid make the switch to living on her own can easily save a family tens of thousands of dollars in college costs. If this sounds like too good of a deal for families, it is. The federal financial aid rules make it extremely difficult for students to be considered independent. It's easy to appreciate why it's tough for teenagers to qualify. If it was simple to do, millions of students would be declaring themselves independent and taxpayers would have to pick up much of the college tab.

The federal government asks 13 questions to determine if a student should be treated as independent for financial aid purposes. A student has to answer "yes" to one question to get the green light. Here are four questions that will eliminate the chances of most undergraduates to qualify as an independent student:

1. Are you at least 24 years old?
2. Are you married?
3. Are you a veteran or currently serving in the armed forces?
4. Are you pursuing a master's degree or in a doctorate program?

Most of the other nine questions are focused on whether students are homeless, a product of foster care or have children of their own that depend on them for support.

It's safe to tell clients that going the independent route will almost never work.

What I find unfortunate are the students who really are on their own, but who don't qualify as independent. I have a hard time buying the argument of parents who explain why they are refusing to help their children with college costs this way: I put myself through college and the experience was good for me. Now I expect my kids to do the same.

When I recently wrote about this issue on my blog,, I got an email from a dad of seven kids who proudly stated that he is making his children shoulder the college tab themselves. Here is an excerpt of what Dan wrote:

Wah, wah, wah. The youngsters today expect everything and cry if they don’t get it. I expect my children to pay for their own college just like I did. Suck it up babies, you are not getting a free ride to college, you will actually need to work your way through. “Work,” what a concept, you don’t know what it means yet, but you will. And if you are paying for the books and the tuition maybe you will realize that spending hard earned money on beer parties isn’t smart, LOL

My first reaction to this email was that this dad was never going to get a father-of-the-year award. Clearly this parent is not in touch with financial reality. College prices have soared since he was in college and a kid working part-time cutting lawns or working at the Cineplex isn't going to earn anything approaching what it would take to pay for college.
I'm certainly not suggesting, by the way, that parents should pick up the entire tab, but making children pay all college costs because his father is out of touch is unfortunate.

What was more shocking to me is that Dan boasted in his email that two of his children are attending college as independent students. He had his children live on their own after high school and work for a year before heading to college. He also stopped claiming them on his taxes. As I mentioned earlier, this strategy will not qualify a young adult as an independent student.

What Dan might not realize is that the penalty for financial aid fraud is stiff. Committing fraud when filing for financial aid can land the filer in prison for up to five years with a maximum fine of $20,000.

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