Independent vs. Dependent: How it Affects Your Student Loans

Filling out the Free Application for Federal Student Aid (FAFSA), may leave you with several pressing questions. Specifically, people often question whether they’re independent vs. dependent. There’s no common answer to this question that works perfectly for everyone. Your response can significantly impact how much federal financial aid you’ll be eligible to receive. It’s important to learn more about what goes into these classifications and how it can affect you in your specific situation.

What Difference Does Independent vs. Dependent Make? 

The FAFSA uses a student’s independent vs. dependent status to calculate how much aid the student needs. This aid can often take the form of grants, subsidized loans, or unsubsidized loans. In general, students classified as “dependent” will qualify for less federal aid because the government assumes their parents or guardians will help them with college costs. (This assumption is what lies behind the “expected family contribution” (EFC) generated on the FAFSA). Independent students may qualify for more federal aid, this includes those who are older, married, or with a child, .

Dependency status can also come into play if one is hoping to qualify for in-state tuition rates. A student’s in-state status is based on their parent’s (or parents’) residency. This residency may require parents to formally change their custody or visitation agreement to establish the student’s college state. Independent students who live on their own on or near campus generally won’t qualify for in-state tuition rates unless they’ve been living in the state for a specified amount of time pre-dating their college enrollment.

Considered Factors

Here’s a few common factors the FAFSA relies on to determine whether a student should be classified as independent vs. dependent. These classifications are relatively fluid and can change as students’ circumstances change (more on that below).

Some of the questions that will be asked in determining whether a student is a dependent or independent include: 

• Can a student be ‘dependent’ on someone else’s tax returns? 
• Will the student be age 24 or older at the start of the school year?
• Does the student have dependents, like a child or spouse, who rely on the student for their support?
• Is the student an “unaccompanied youth” who is homeless or at risk of becoming homeless?
• Will the student be working on a master’s or doctorate degree?
• Is the student an emancipated minor, have they spent time in foster care,or have they previously declared a ward of the state?
• Is the student currently serving on active duty in the U.S. armed forces?

If a student answers “no” to all the above questions but the first one, they’re likely a dependent. Contrarily, a student is ‘independent’ if they answer yes to one of the other questions. This list isn’t exhaustive, and other factors like military status or marital status may also impact the ultimate decision. However, these questions can give students a good idea of whether they’re likely to fall on the independent or dependent side of the scale; and, accordingly, how much student aid they might qualify for.

More than half of all students who complete the FAFSA are classified as independent, though this figure is somewhat skewed by graduate students (who tend to be independent). Only around 14.7 percent of undergraduate students are deemed independent. 

Can You Change Your Dependency Status?

Some students labelled dependent may feel discouraged that their family cannot help them financially. However, a lack of family assisted funds isn’t a sufficient reason to classify a student as an independent.

However, in other situations, the student may seek a change in dependency status based on a change in circumstances. Here are some examples of particular circumstances to consider when determining your financial aid eligibility.

• Parents who are wholly unable to contribute to your education. If your parents have low income, high debt, or a large family, they may wind up with an EFC of $0. EFCs of $0 can make you just as eligible for certain loans and grants as you’d be if you were an independent student with the same level of assets. If your parents’ financial circumstances have changed since they filled out the FAFSA, it’s worth amending this information to reflect the situation more accurately.
• Incarcerated, hospitalized, or deceased parents. Parents who’re incarcerated, hospitalized, or institutionalized may be deemed unable to help with your education. Also, adult orphans can qualify for independent status. 

Dependency Status Action Steps

If your situation falls into one of these categories, there are a few things you can do. First, report accurate, timely information to the FAFSA. Next, attain permission to make specific changes. You can update your dependency status or the number of people in your household by amending the form online. You can also update your name, mailing address, and other contact information at any time. Notably, if you have a change in marital status, check with your school to figure out your next steps. 

In addition to reporting specific changes to FAFSA, you also may want to contact your school’s student loan office to see if you’re eligible for a “dependency override.” A dependency override allows your school to manually change your status even if the FAFSA criteria disagrees. Dependency overrides are tough to get because schools are limited to performing only a handful per year. However, your school’s loan office can work with you to determine your eligibility or see what options allow you to reduce your college costs.