Household Size and Number in College
The rules for including someone in household size are as follows:
- The student is always included, even if the student isn’t living at home.
- The student’s parents are included, if the student is dependent. If the student’s parents are separated or divorced, only the custodial parent is counted.
- If the student is dependent, the student’s siblings and children are included if
- they will receive more than half their support from the student’s parents during the award year, OR
- they would be considered dependent based on the dependency status questions (i.e., they could answer no to all of the dependency status questions)
- The student’s siblings do not need to be students or to live at home to be included.
- If the student is independent, the student’s children are included if they will receive more than half their support from the student during the award year.
- The student’s children do not need to be students or to live at home to be included.
- Foster children are not included.
- Unborn children may be included if they will be born before or during the award year and will receive more than half their support (from the student, if the student is independent, or the student’s parent’s, if the student is dependent) during the award year.
- The student’s spouse is included, if the student is independent. If the student is separated or divorced, the student’s spouse is not included.
- If the student is dependent, other people may be included if they live with and receive more than half their support from the student’s parents and will continue to receive more than half their support from the student’s parents.
- If the student is independent, other people may be included if they live with and receive more than half their support from the student and will continue to receive more than half their support from the student.
The rules for including someone in number in college are as follows:
- The student is always included.
- Other members of the household, except the parents, may be included if they are or will be enrolled at least half time in a program that leads to a college degree, certificate, or recognized education credential at a Title IV institution and for whom the family may reasonably be expected to contribute to their postsecondary education. (West Point and other service academies do not count as Title IV institutions, so siblings who are attending a service academy are not included in the number in college.)
- The parents are included at the discretion of the financial aid administrator if they are or will be enrolled at least half time in a program that leads to a college degree, certificate, or recognized education credential at a Title IV institution.
These definitions are based on Sections 474(b)(3), 475(f), 480(k) and 480(l) of the Higher Education Act.
Graduate and professional students are automatically independent. The question then arises whether they can be included in household size and the number in college for a sibling’s FAFSA. The answer is that they can, if they will receive more than half their support from the sibling’s parents during the award year. They do not need to be living at home. It is inappropriate to exclude graduate students simply because they are independent. This situation is quite common among law students, where the parents are paying for law school.
Similarly, other family members who are automatically independent, such as a child who is 24 years old or older or a child who is married, may still be counted in household size if the 50% support test is satisfied. Some financial aid administrators will require evidence than the family is helping pay for the college education of an independent student before counting that student in the number in college figure. They may also require documentation that the family is providing more than half the support of the independent student.
Members of the household do not need to be related to the student. The language concerning “other persons” only requires that they live in the household and receive more than half their support from the family. The entire purpose of reporting the household size is to trigger the income protection allowance, which represents a modest living allowance for each person in the household. The use of the 50% support test ensures that any unrelated individuals are actually being supported by the family. The Federal need analysis methodology does not use the same definition of dependent as the IRS. Accordingly, it is appropriate to include a significant other in household size if the significant other lives with and is supported by the family. It is not uncommon for a family to take in one of the children’s classmates when the classmate’s parents have kicked him or her out of the house. If the classmate lives with and is supported by the family, it is appropriate to include him or her in household size. Foster children and children for whom the family is the legal guardian are not included in household size because they fail the 50% support test.
Some financial aid administrators will not allow a significant other to count as a member of the household for independent students with no other dependents, because they consider such a situation to be similar to an independent student with just a spouse. The need analysis formula used for independent students without dependents other than a spouse is more limited (with regard to the calculation of IPA, APA and the state and other tax allowance) than the formula used for independent students with dependents other than a spouse. The financial aid administrators feel that an unmarried couple should not be treated as having greater financial need than a married couple, all else being equal. Instead of including the significant other in household size, they allow the student an adjustment for cash support paid on behalf of the significant other or the amount of the IPA increment for an additional household member. The different treatment usually does not have a significant impact on the EFC either way. (Financial aid administrators may want to consider whether a common law marriage situation exists in such situations.) Note that this situation only occurs with couples who have no children or other dependents and who are independent. In all other situations counting the significant other in household size does not give an unmarried couple more favorable treatment than a married couple.
If a significant other or other person supported by the family is included in household size, income and benefits received by that person in his/her own name are generally not reported on the FAFSA. Only income and benefits received by the student and parents are reported on the FAFSA. So a student who is part of an unmarried couple gets to exclude the income received by his/her significant other. Note, however, that the student must provide more than half of the significant other’s support in order to count the significant other as a dependent.
An unmarried couple does not really get more favorable treatment than a married couple when both members of the family are students. With a married couple, both get to be independent, even if neither satisfies the 50% support test. With an unmarried couple, only the spouse who provides more than 50% support for the other gets to be independent, if either of them provides more than 50% support. If neither of them satisfies the support test (e.g., due to financial assistance from the couple’s parents), neither will be independent. Marriage usually leads to more student aid in such situations.
One could even argue that a live-in domestic employee, such as a nanny, aupair or nurse, should count as a member of the household if the family provides more than half their support. Use of a nanny or aupair is quite common among medical school and nursing students, because the parent is often subjected to 24-hour rotations. Likewise among single parents. The nanny lives with the family, eats all meals with the family, goes on vacation with the family, and is generally treated as a family member. However, if the domestic employee lives in a separate apartment, even one that is attached to the family’s primary residence, they do not satisfy the requirement that they live with the family. Also, they must not only live with and receive more than one-half of their support, but continue to receive more than one half of their support during the award year. Of course, in most cases the family would be better off asking for professional judgment in such cases, since an aupair or nanny or nurse usually costs more than the incremental IPA adjustment for an additional member of the household.
Financial aid administrators should not permit a person to be included in household size when doing so violates any laws. Many municipalities have ordinances that limit cohabitation by more than a certain number of unrelated persons. The number ranges from municipality to municipality, but is typically between 3 and 5 inclusive. So if the municipality prohibits more than 3 unrelated persons living together and the student has two roommates in addition to the live-in boyfriend or girlfriend, the significant other should not be included in the household size even if the student does provide more than 50% support.
A person can be included in an independent student’s household even if the student did not have enough income during the prior tax year to support that person, so long as the student currently has enough income, is providing more than half that person’s support, and will continue to do so throughout the award year.
Financial aid administrators occasionally get requests for professional judgment for students who have a sibling enrolled in a non-Title IV institution, such as a foreign university. In some cases the sibling is enrolled in an accredited US college that would otherwise be an eligible Title IV institution but which voluntarily did not enter into a program participation agreement. Although neither the FAFSA instructions nor 34 CFR 668.56 (Items to be verified) include the eligible institution restriction, the Higher Education Act clearly does. So technically, if the family were to include the sibling in the number in college and the financial aid administrator were to accept it during verification, the school would be in compliance with the regulations. However, the Higher Education Act clearly indicates that such students should not be included in the number in college. Financial aid administrators seem to be divided as to whether to include or exclude such a sibling from the number in college. Those that include the sibling require the sibling’s college to be accredited by an accreditation agency recognized by the US Department of Education.
If a couple is separated, the spouse should not be included in household size, as a key aspect of separation is the maintenance of separate households.
The rules for counting children in household size can lead to double-counting the children in cases involving divorce. For example, if the non-custodial parent of the dependent student is paying child support and the child support represents more than half the student’s support, the non-custodial parent gets to count the student in his household size. Likewise, the custodial parent gets to count the student in her household size because the student is dependent. This is because the law specifies that a child is counted in the household size if either the support test holds or the child is automatically dependent. The treatment for independent students who are divorced is different. Independent students who are divorced can only count their children in household size if they satisfy the support test. Financial aid administrators should not make an adjustment in either situation, since this dichotomy is apparently intentional. Note that when the non-custodial parent counts the child in household size, he does not get to report the child support paid on Worksheet C. The custodial parent always reports child support received on Worksheet B.