Use your knowledge of career management to fill in the missing elements of the following diagram.

The FAFSA form is the first step in the financial aid process. Because it’s important to complete the form correctly, this chapter discusses some of the more difficult questions that arise. While the chapter follows the organization of the paper application and the ISIR, the guidance applies equally to the FAFSA online. To see how FAFSA data are used to calculate the expected family contribution, refer to Chapter 3.

The FAFSA form is organized as steps, each consisting of a group of related questions. There are also instructions on how to fill out the form. The guidance in this chapter supplements those instructions and explains why some of the questions are needed on the FAFSA. For a fuller list of justifications, go to the regulations.gov website and see the 2020–21 Data Elements and Justification document (please note that you can view last year’s document since we did not publish a document for 2021-2022).

Students can get advice on filling out the FAFSA online at https://studentaid.gov/resources. You may want to link to this reference from pages that students use on your website or use certain graphics, videos or publications referenced on the site when working with your students.

The parents mentioned are those of dependent students. The numbers in parentheses are for the items as they appear on the SAR, ISIR, paper FAFSA, and FAA Access to CPS Online. As of the date the FAFSA form is signed, it is considered a “snapshot” of the family’s information that can be updated only in certain circumstances and only for certain items; see Chapter 4.

The following sections discuss many of the important questions found within each Step on the FAFSA form.

This step identifies the student and establishes his or her aid eligibility based on factors such as citizenship, educational level, and Selective Service registration (see also Volume 1: Student Eligibility). Questions in Step One are included to help the school package awards and to eliminate the need for students to fill out a separate state or school financial aid form.

Please note: As described in Dear Colleague Letter GEN-21-04, the FAFSA Simplification Act eliminated the prohibition on receiving Title IV aid for students with drug-related convictions and the requirement, for Title IV eligibility purposes, that male students register with the Selective Service system before the age of 26. The Department is implementing these changes starting with the 2021-2022 award year. Therefore, for the 2021-2022 award year, though institutions will still see Comment Codes 30, 33, or 57 for Selective Service issues and Codes 53, 54, 56, or 58 for drug convictions, failing to register with the Selective Service or having a drug conviction will no longer impact a student’s Title IV aid eligibility. For more information about this student eligibility modification, please see Volume 1, Chapters 1 and 5.

• Student’s name (1–3). The name, with other identifying information, is used for several data matches. Because the U.S. Department of Education (ED) matches the student’s name and Social Security number (SSN) with the Social Security Administration (SSA), the name here should match the one in the SSA’s records, i.e., as it appears on the student’s Social Security card.

• Permanent mailing address (4–7). This is the student’s permanent home address, with two exceptions: incarcerated students should use the address of the facility they are in, and homeless youth should use a mailing address where they can reliably receive mail. That can be the address of a relative or friend who has given them permission to use it, or it can be their school’s address as long as they have contacted the school for permission and instructions on how mail they receive at the school will reach them. As soon as incarcerated and homeless students have more permanent housing, they should update their address on the FAFSA form.

• Student’s SSN (8). Students must have an SSN to apply for federal student aid except as noted below. If they submit FAFSA information without an SSN, the FAFSA form will be returned unprocessed. To get an SSN or to find out what the number is if they lost their Social Security card, they must contact the local SSA office. Call the SSA at 1-800-772-1213 for more information.

  Students who enter the wrong SSN on their FAFSA form can correct it in a few ways: through the school, by submitting a corrected paper SAR, or by filing a new FAFSA form. If they don’t have a copy of their SAR, they can call the Federal Student Aid Information Center (1-800-433-3243) and have one sent to them, which they can correct and mail to the address on the SAR. However, correcting the SSN through the school or with the SAR will not change the number in the student’s identifier; that will remain the original SSN and may later cause confusion. Completing and submitting a new FAFSA form solves this problem. Note that there are other rare instances where a student must submit a special “correction application.” See the June 22, 2017, announcement.

  Persons from the Freely Associated States (FAS)—the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau—typically do not have SSNs. Students who are completing a FAFSA form for the first time and who indicate that their state of legal residence is one of the above Pacific island groups should enter “666” as the first three digits of their SSN field and leave the remaining six digits blank. CPS will then assign them an identification number. Students from the FAS who have submitted a FAFSA form before and were issued such a pseudo-SSN will enter it in the SSN field. It is important that they use the same number on all subsequent FAFSAs because it allows for more accurate information on Pell Grant Lifetime Eligibility Used (LEU). See the relevant electronic announcement November 20, 2013.

  If a student does not use the same pseudo-SSN across award years—if on a subsequent FAFSA form he or she either gets a new pseudo-SSN and uses that or if he or she uses a real SSN that he or she obtained from the SSA—the school must contact the COD School Relations Center so the multiple student records can be merged into one and the correct LEU can be calculated. Also, if Pacific island students file with a real SSN, schools will need to have an alternate way, other than the pseudo-SSN, of identifying that population to ensure that the correct award limitations described in Volume 1, Chapter 2 of the Handbook are in place for those students.

• Student’s email address (13). If the student provides this address, he or she should get an email with a link to his or her online SAR data within one to three days after the CPS receives his or her application. The Department will also use this email address to correspond with the student regarding his or her application.

• Citizenship status (14). Examples of eligible noncitizen categories are given in the FAFSA instructions, and a detailed discussion of citizenship issues can be found in Volume 1: Student Eligibility. Only U.S. citizens or certain classes of noncitizens are eligible for Title IV aid; however, other students can still submit the FAFSA because they might be eligible for aid from institutional, state, or private sources that do not have the same requirements but use FAFSA information.

• Student’s marital status (16 and 17). This is marital status “as of today”—the day the application is signed. Marital status cannot be projected. It can be updated in limited circumstances; see Chapter 4.

  Same-sex marriage and the FAFSA form—In 2013, in United States v. Windsor, the Supreme Court ruled that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional because it violates the principles of due process and equal protection. As a result, same-sex couples who have married in a domestic or foreign jurisdiction that recognizes the marriage should complete the FAFSA as a married couple regardless of whether the jurisdiction in which they reside or the student attends school recognizes the marriage. This applies to independent students and to the parents of dependent students. See DCL GEN-13-25 for more information.

• Student’s state and date of legal residence (18–20). This is used to figure the allowance for state and other taxes for the EFC calculation.

  It also indicates which state agency should receive the student’s FAFSA information. States have varying criteria for determining whether the student is a resident for purposes of their financial aid. However, residing in one state for five years will meet any state’s criteria. Therefore, a person answering “Yes” to Question 19 will likely meet the residency requirements of the state reported in Question 18, while the state eligibility for a person answering “No” will depend on the date reported in Question 20 and the state’s requirements.

• Student’s gender and Selective Service registration (21–22). In general, male students (i.e., those who were assigned the sex of male at birth) need to have registered with the Selective Service System (SSS) to be eligible for federal student aid. The Department conducts a match with the SSS to verify this requirement.

  For students who have transitioned from one sex to another, the easier response is to indicate in Question 21 their sex assigned at birth. Thus students who were male at birth will properly go through the SSS data match and those who were female will not.

  When students instead indicate their current gender, more must be done to resolve the issue. Students who were male and indicate they are now female still must have registered with the SSS (except as noted under “Exemptions” in Volume 1), but their FAFSA form will not be sent for matching. You can check their registration status yourself by using SSS’s online verification form. You will need to supply the student’s SSN, date of birth, and the last name that was used to register with the SSS (which might not be what appears on the FAFSA). For students who are registered, document confirmation of that; those who aren’t will need to register if they still can. Students who were female and indicate they are now male will fail the match. They can call SSS’s Registration Information Office at 1-888-655-1825. They will be asked to complete a request for a status information letter and to provide a copy of their birth certificate. The letter will state they are exempt from registering and serve as documentation that the issue is resolved.

• Conviction for possessing or selling illegal drugs (23). Students convicted of a federal or state offense of selling or possessing illegal drugs that occurred during a period of enrollment while they were receiving federal student aid should still complete and submit the FAFSA form because they may be eligible for federal aid, and even if they are not, they may be eligible for state or institutional aid.

  Students who answer “Yes” to Question 23 in the online FAFSA form will immediately receive a series of questions to determine their eligibility.

  Students who complete a paper FAFSA form and answer “Yes” to this question will receive a worksheet with their SAR to determine whether the conviction affects their eligibility for federal student aid. If the date they regain eligibility falls before July 1, 2021, the worksheet will instruct them to change the response to a “1,” indicating full eligibility for the award year. If the date falls between July 1, 2021, and June 30, 2022, they will not be eligible for part of the award year and will need to change the response to a “2.”

  If the date falls after June 30, 2022, the students’ response will remain a “3.” They will not be eligible for federal aid during the entire award year unless they complete a qualified drug rehabilitation program or pass two unannounced drug tests given by such a program. For more information, see Volume 1, Chapter 1.

  Students who leave Question 23 blank cannot be paid Title IV aid until they respond by submitting a corrected SAR or ISIR.

• Highest level of school completed by student’s parents (24 and 25). Some state agencies use this information to award grants and scholarships. Father and mother are defined here as the student’s birth or adoptive parents but not stepparents, guardians, or foster parents. This definition is unique to these questions—all others use the definition found under the “Who does and does not count as a parent on the FAFSA form” section described later in this chapter.

• High school completion status (26). The student indicates one of the following: high school diploma, General Educational Development (GED) certificate or state certificate, homeschooled, or none of the above. None of the above includes those who have the recognized equivalent of a high school diploma (as defined in 34 CFR 600.2) other than a GED certificate or a state certificate or who may qualify under the Ability-to-Benefit (ATB) alternatives; see Volume 1, Chapter 1, of the FSA Handbook for an explanation of those options. Typically a foreign secondary education credential counts as a high school diploma; see FHD-Q1 on the program integrity website.

  A state certificate is what students receive after passing a “state authorized examination,” as referred to in 34 CFR 600.2. This includes tests comparable to the GED—i.e., those created and distributed by a test publisher—such as the High School Equivalency Test (HiSET) or the Test Assessing Secondary Completion (TASC), as well as those established by states, for example, the California High School Proficiency Exam (CHSPE). California considers a passing grade on the CHSPE to be equivalent to a diploma.

• High school (27). This question asks for the name of the high school where the student received or will receive his or her diploma, as well as the city and state (or FC for foreign country) where it is located. On the FAFSA website, the student can choose the name from the dropdown list, or, if it is not on the list, the student should enter the school name, city, and state. See Volume 1, Chapter 1, of the Handbook about checking the validity of a high school education.

• First bachelor’s degree (28). The student indicates whether he or she will have a first bachelor’s degree before beginning the 2021–2022 year because eligibility for Pell and Federal Supplemental Educational Opportunity grants (FSEOGs) is almost exclusively restricted to students who have not received a bachelor’s degree or completed the requirements for one. See “Pell Grants” in Chapter 6 of Volume 1 regarding degrees from unaccredited and foreign schools, which can count as bachelor’s degrees for Pell and FSEOG eligibility.

• Student’s grade level at the start of the school year (29). This is not based on the number of years the student has attended college but on work completed toward the degree/certificate. For instance, a full-time student might attain second-year grade level after one year of study, while a half-time student would take two years to reach that level.

• Interest in work-study (31). The student indicates whether he or she is interested in receiving Federal Work-Study (FWS). This helps the school in packaging the student's award. If the student is unsure about wanting FWS, he or she should answer “don’t know” to still be considered for it; later he or she can decline any aid he or she does not want.

Questions 32–44 ask for the student’s and spouse’s income and assets [HEA Sec. 480(a), (b), (f), (g)]. Step Four collects similar information about parent income and assets, so the following discussion also applies to parents.

If the student or his or her parent wasn’t married in 2019 but is married when the application is signed, the student also needs to provide income and asset information for the new spouse. If the student or their parent was married in 2019 but is separated, divorced, or widowed when the application is signed, the student or parent excludes the income and assets for that spouse even though the information may be on the 2019 tax forms.

The FAFSA form asks for income and taxes paid according to lines on the IRS tax forms for 2019, the “base year” for 2021–2022. Data from the completed tax year is used as a predictor of the family’s financial situation for the current year. In the rare instance that 2019 tax data is not available yet, best estimates can be used on the application. However, the student is asked to correct this information later when the tax return is filed.

Information from the income tax returns required by the tax codes of the Commonwealth of Puerto Rico, Guam, American Samoa, and the U.S. Virgin Islands is reported on the FAFSA form in the same manner as U.S. tax information, and copies of these forms can be used for verification in the same way as U.S. tax forms are. Amounts are already reported in U.S. dollars, and the school should look at tax return line items that are comparable to the IRS line items for verification.

When a student or parent has returns from both a foreign nation and the United States for the same tax year, they should use the data from the U.S. return when filling out the FAFSA form.

The FAFSA application also collects information for certain investments and other assets. Applicants only report the net worth of assets instead of reporting the value and debt. They should report asset amounts as of the date the application is signed.

• Tax return filed and tax filing status (32–35, 79–82 for parents). These questions ask if a 2019 tax return was completed, which return was or will be filed, what the filing status was or will be, and whether the student or parents filed a Schedule 1 or did so only to claim one or more of the following: unemployment compensation, an Alaska Permanent Fund dividend, educator expenses, an IRA deduction, virtual currency or the student loan interest deduction. The answers are used in part to identify if the student is eligible for the simplified needs test or the auto zero EFC and to find inconsistencies between the FAFSA form and the tax return.

• Adjusted gross income (AGI), income tax, and income earned from work (36–39, 84–87 for parents). These items are reported for dependent students, their parents, and independent students. Each question gives the line reference to the 2019 IRS tax forms.

  Though students and parents may manually enter their IRS data in the FAFSA, they are strongly encouraged to transfer it with the DRT because that method is accurate, efficient, and useful for verification.

  Those who file a joint return and then are divorced, separated, or widowed before the application is signed won’t be able to simply copy the information from the tax forms or transfer data with the DRT. Instead, they must figure out how much of the income and taxes paid is attributable to them and not their spouse. For more on this calculation, see “Using a joint return to figure individual AGI and taxes paid” in Chapter 4.

  If the student, spouse, or parents were not required to file a tax return, the student should still report any income earned from work in lines 38–39 (student and spouse) and lines 86–87 (parents). The W-2 form and other records of work earnings should be used to determine these amounts. Do not include combat pay; because it is not counted as untaxed income and is removed from the AGI when it is taxable, it should not be included in the income earned from work.

  The FAFSA instructs the applicant to add line 1 of the 1040 form to lines 3 and 6 of Schedule 1 and box 14 (code A) of Schedule K-1 (Form 1065) as an option for determining the income earned from work. But when the values of lines 3 or 6 or box 14 are negative, this will reduce the total and can wrongly affect the Social Security allowance. If values from lines 3 or 6 or box 14 are negative, treat them as zero when determining the income earned from work.

  Income earned from work is used to calculate allowances for the Social Security and Medicare tax (aka the Federal Insurance Contributions Act or FICA tax) and for the added costs incurred by two working spouses. For non-tax filers it will also be used in place of AGI and will cause the application to be rejected if it is above the tax filing threshold.

  For a fiscal year (rather than calendar year) tax return, information should be used from the return that includes the greater number of months in 2019.

  Example: Owen’s parents file a fiscal year tax return. Their fiscal year begins in September. The return they filed for the fiscal year starting in September 2018 includes eight months in 2019. The return they filed for the fiscal year starting in September 2019 only includes four months of 2019. Therefore, they should use the information from the return for the fiscal year that began in September 2018.

  If the student or parents filed a tax return using something other than an IRS form, such as a foreign or Puerto Rican tax form, the student should report on the FAFSA form the amounts (converted to U.S. dollars) from the lines of the form that correspond most closely to those on the common IRS forms.

  Non-tax filers, foreign countries, and international organizations In some countries the tax system does not operate as it does in the U.S., and people in those countries can earn a substantial amount of income and pay taxes without having to file a return. In such a case the person would correctly indicate that he or she did not file a tax return, and nothing will be reported for AGI or income tax paid. When that happens, he or she should report any net income that is earned from work in Question 38, 39, 86, or 87, as appropriate, of the FAFSA form and not as untaxed income in Question 44h or 92h, which is where untaxed foreign income not earned from work should be reported. This ensures that the income is properly included in the EFC calculation; for non-tax filers, income earned from work is used in place of the AGI and to determine eligibility for the simplified needs test (SNT) and automatic zero EFC.

  As noted earlier, when income earned from work exceeds the U.S. tax filing threshold and the person indicates he or she is not going to file a return, the FAFSA will be rejected. The aid office must override the reject in FAA Access to CPS Online so that an EFC will be generated.

  What happens when one spouse does file a return and the other does not file but has foreign earned income as described above? Because one spouse filed a return, the FAFSA should indicate in Question 33 or 80 what return was or will be filed, and the CPS will use the AGI for income and to determine eligibility for the SNT and auto-zero EFC. As above, the foreign income is still reported as income earned from work, but it is also added to the AGI of the tax filing spouse, as as our guidance instructs under the “married filing separately” section described earlier in this chapter.

  In some instances employees of certain international organizations, such as the United Nations, the International Monetary Fund, the World Bank, and others, might not be required to file a return, which results in situations similar to those described above. Follow the same guidance—a non-tax filer will report income from that employment as income earned from work only, while a person who is married to a tax filer will report it as income earned from work and add it to the AGI of the tax-filing spouse.

  Note that the guidance in this section does not pertain to the Foreign Earned Income Exclusion, which is reported on the U.S. tax return and is excluded from the EFC calculation by the HEA.

• Assets (40–42, 88–90 for parents). An asset is property that the family owns and has an exchange value. The FAFSA form collects current data (as of the day of signing the FAFSA form) about cash, savings and checking accounts, investments, businesses, and investment farms. Most assets are investments such as college savings plans, Coverdell education savings accounts, real estate, installment and land sale contracts (including mortgages held), trust funds, mutual funds, money market funds, Uniform Gifts and Uniform Transfers to Minors (UGMA and UTMA) accounts, certificates of deposit, stocks, stock options, bonds, commodities, and precious metals. If the asset isn’t a business or investment farm, it is reported as an investment.

  The FAFSA form asks for the net worth of investments, which is their total current market value minus their associated debts. If their net worth is negative, zero should be reported.

  Similarly for a business or investment farm, the current net worth (the current market value minus the debt owed on it) is reported for land, buildings, machinery, equipment, livestock, and inventories. Business or farm debt means only those debts for which the business or farm was used as collateral.

  Rental properties are an asset. A unit within a family home that has its own entrance, kitchen, and bath (therefore a rented bedroom would not count) and that is rented to someone other than a family member counts as an asset. To calculate its net value, multiply the net value of the entire structure by the fraction the rented space represents. Similarly, if a family owned a 10-unit apartment building and lived in one of the apartments, 9/10 or 90% of the net value of the building would be an asset.

  At times a student or parent will claim rental property as a business. Generally, it must be reported as real estate instead. A rental property would have to be part of a formally recognized business to be reported as such, and it usually would provide additional services like regular cleaning, linen, or maid service.

  UGMA and UTMA accounts: The Uniform Gifts and Uniform Transfers to Minors Acts (UGMA and UTMA) allow the establishment of an account for gifts of cash and financial assets for a minor without the expense of creating a trust. Because the minor is the owner of the account, it counts as his or her asset on the FAFSA form, not the asset of the custodian, who is often the parent.

  Excluded assets—the following are NOT reported on the FAFSA:

  • Possessions such as a car, a stereo, clothes, or furniture

  • A family’s principal place of residence, even if it is part of a business

  • A family farm (including equipment, livestock, etc.) if

    • it is the principal place of residence for the applicant and his or her family (spouse or, for dependent students, parents), and

    • the applicant (or parents of a dependent student) materially participated in the farming operation

  • Family-owned and controlled small businesses (which can include farms) that have 100 or fewer full-time or full-time equivalent employees. “Family-owned and controlled” means that more than 50% of the business is owned by persons who are directly related or are (or were) related by marriage. (Family members do not have to be counted in the household size for this question.)

  • Retirement and life insurance plans and ABLE accounts. An ABLE account is a tax-advantaged savings account for a disabled person and his or her family; its value does not count as an asset on the FAFSA form. The value of retirement plans—401(k) plans, pension funds, annuities, noneducation IRAs, Keogh plans, etc.—also is not counted as an asset, but distributions do count as income; they appear in the AGI if taxable and in Questions 44 and 92 if untaxed. Similarly, the cash value or equity of a whole life insurance policy isn’t reported as an asset, but an insurance settlement does count as income.

    The full amount of the distribution is reported, whether it was a lump sum or annual distribution, and it will count as taxable or untaxed income, as appropriate. An exception to reporting pension distributions is when they are rolled over into another retirement plan in the same tax year.

  • Excluded assets for Native American students. The law (see HEA Sec. 479C) excludes reporting any income and asset of $2,000 or less per individual payment (any amount over $2,000 is reported as untaxed income) received under the Per Capita Act or the Indian Tribal Judgment Funds Use or Distribution Act. It also excludes any income received under the Alaska Native Claims Settlement Act or the Maine Indian Claims Settlement Act. Per capita distributions or the proceeds received from the Land Buy-Back Program for Tribal Nations—a tribal purchase of fractionated lands as a result of the Cobell settlement under the Claims Resolution Act of 2010 (42 U.S.C. 1305)—should also be excluded.

• Taxable income offsets (43 and 91). These questions total certain types of income and other monies that are excluded from income in the need analysis. The CPS subtracts these excluded amounts from the AGI when calculating the EFC.

  • a. Education tax credits. These are the American Opportunity and Lifetime Learning tax credits (AOTC and LLC); the FAFSA refers to Schedule 3 line 3 on the 1040 form. Part of the AOTC can be refundable, that is, payable to tax filers even if they do not owe any federal income tax. The nonrefundable part appears on the same lines of the tax return and the FAFSA as the LLC. The refundable portion appears on line 18c of the 1040 form. It does not appear on the lines of the FAFSA form for the education tax credits, nor does it count as untaxed income.

  • b. Child support payments. Count payments made during 2019 because of divorce, separation, or legal requirement by the student, spouse, or parent whose income is reported on the FAFSA. Don’t include support for children in the household. Also, don’t count child support received for a child in the household size; that appears as untaxed income on line 44c or 92c.

    Example: Steven and his wife each have a child from a previous relationship who does not live with them and for whom they pay child support. Because Steven provides over half of his daughter’s support through his payments, he counts her in his household size. Therefore, he doesn’t report the amount of child support he pays on his FAFSA form. Steven’s wife isn’t providing over half of her son’s support, so he isn’t included in Steven’s household size. Therefore, Steven can report the amount of child support his wife pays.

  • c. Taxable earnings from need-based work programs. This includes earnings from Federal Work-Study and need-based employment portions of fellowships or assistantships. The student uses the W-2s or other records he or she received for this income.

  • d. Student grant and scholarship aid. A student reports only the amount of grants and scholarships received that was reported as taxable income on the return. This includes grant and scholarship (not employment) portions of fellowships and assistantships, as well as taxable stipends and employer tuition reimbursements. Include also AmeriCorps benefits (awards, living allowances, and interest accrual payments) except those for health care or child care. The filer usually writes the taxable amount of the grant or scholarship separately on the tax form next to the line where wages and other earnings are reported. If the amount was reported this way, the student can copy it from the tax form.

    Reimbursements and stipends—Employers often help with education costs by paying stipends or reimbursing employees for classes taken. These benefits count as estimated financial assistance (or reduce the cost of attendance) even if they aren’t received until the end of the class(es) and are contingent on earning a minimum grade. Any taxable portion received in the prior year and appearing in the AGI is entered in Question 43 or 91.

  • e. Combat pay or special combat pay. Enter only the portion that was included in AGI. This should be zero for enlisted persons and warrant officers (including commissioned warrant officers) because their combat pay is entirely nontaxable. For commissioned officers generally, combat pay in excess of the highest enlisted person’s pay (plus imminent danger/hostile fire pay) is taxable. To determine the taxable amount, find the total combat pay from the serviceperson’s leave and earnings statements and subtract the untaxed portion, which is reported in box 12 of the W-2 form with code Q. See IRS Publication 3, Armed Forces’ Tax Guide, for more information.

  • f. College cooperative education program earnings from work. The student uses the W-2s or other records he or she received for these earnings.

• Untaxed income (44 and 92). These questions total the untaxed income, some of which is reported on the tax form even though it isn’t taxed. A student who hasn’t filed a return will have to estimate these amounts, and students or parents may need to separate information from a joint return.

  • a. Payments to tax-deferred or sheltered pension and savings plans (paid directly or withheld from earnings). This includes untaxed portions of 401(k) and 403(b) plans. These types of payments are listed in boxes 12a through 12d of the W-2 and will have one of the following codes: D, E, F, G, H, or S. Note that employer contributions to these plans shouldn’t be reported as an untaxed benefit.

  • b. Deductible IRA or Keogh payments. Payments to an IRA or Keogh plan that are excluded from taxation are reported as untaxed income. These amounts appear on the 1040 form schedule 1 lines 15 and 19.

  • c. Child support received for all children.

  • d. Tax-exempt interest income. Certain types of interest, such as interest on municipal bonds, are tax-exempt. This amount is on line 2a on the 1040 form.

  • e. Untaxed IRA distributions and pension or annuity payments. A tax filer determines how much of his or her IRA distribution or pension or annuity payment is taxable when he or she completes his or her tax return. The applicant reports the untaxed portion, which is determined from the tax return, but should not include rollovers (transfers of funds from one IRA to another). These amounts can be found on the 1040 form—(lines 4a + 4c) minus (lines 4b + 4d).

  • f. Housing, food, and other living allowances. Some people, such as clergy, receive these allowances as compensation for their jobs. Money received to pay for rent should also be reported, as should the free use of a house or apartment (the rent or market value of a comparable house or apartment can be used). Similarly, if the student received free room or board in 2019 for a job that was not awarded as student financial aid (including resident advisor positions that provide free room and board as part of the student’s non-need-based employment compensation), he or she must report the value of the room and board as untaxed income. Members of the U.S. military report their basic allowance for subsistence (BAS) but not their basic allowance for housing (BAH).

  • g. Veterans’ noneducation benefits. This includes disability, the death pension, Dependency and Indemnity Compensation (DIC), and Veterans Affairs (VA) educational work-study allowances.

  • h. Any other untaxed income not reported elsewhere. This includes disability benefits (but not Social Security disability), worker’s compensation, tax-free contributions to HSAs (see below), interest income on education IRAs, untaxed portions of Railroad Retirement benefits, black lung benefits, refugee assistance, the untaxed portion of capital gains, and foreign income that wasn’t taxed by any government, wasn’t earned, and wasn’t part of the Foreign Earned Income Exclusion.

    Health savings accounts (HSAs) resemble tax-deferred pension and savings plans more than flexible spending arrangements. For example, the balance in an HSA persists from year to year, while that in a flexible spending arrangement must be spent on qualified expenses by the end of the year. Therefore, treat tax-free contributions to an HSA as untaxed income; these will appear on line 12 of Schedule 1 of Form 1040. The balance in the account does not count as an asset, nor would distributions from it count as untaxed income when they are used for qualified medical expenses. Distributions not used for qualified expenses are subject to income tax (and a possible penalty) and will be counted in the adjusted gross income.

    Extended foster care payments: Foster children who meet certain criteria can receive benefits until age 21. If these extended payments are under the authority of Title IV, Part E, of the Social Security Act, they are not reported on the FAFSA. If they are paid under some other authority, e.g., a state foster youth support program, they are reported as untaxed income to the student in Question 44h of the 2021–2022 FAFSA. See DCL GEN-13-18.

  • i. Money received (44 only). The student reports any cash support he or she received, but if dependent he or she does not count support received from his or her parents, with one exception: money from a noncustodial parent that is not part of a legal child support agreement is untaxed income to the student. Cash support includes money, gifts, housing, food, clothing, car payments or expenses, medical and dental care, college costs, and money paid to someone else or paid for on his or her behalf. For example, if a friend or relative pays a student’s electric bill or part of his or her rent, the student must report the amount as untaxed income. If he or she is living with a friend who pays the rent and the student’s name is on the lease, the rent paid on his or her behalf counts as cash support because the student is responsible for payments that his or her friend is making. Note that only the student reports this item—it does not appear in the parents’ untaxed income section.

  Tips on reporting benefits: The student reports the actual amount of benefits received during the year, even if it is an underpayment or an overpayment that will be corrected in the next year. However, if the underpayment or overpayment was adjusted in the same year, only the net amount received during that year would be reported.

  Benefits the student or parents receive on behalf of anyone included in their FAFSA household size count as income to them unless the person is an adult (not a child), e.g., a grandmother, who receives the benefits in her name. Such a person is not included in the household size if benefits in her name total more than half of her support.

  Box 14 items on the W-2: Schools are not required to review income listed in box 14 of the IRS’s W-2 form. There are a few reasons for this. Several of the items the IRS suggests could be reported in box 14 are captured already on the FAFSA form (in adjusted gross income for instance); also, employers could include in box 14 certain nonelective pension plan contributions, and nonelective contributions should not be counted in the need analysis. Finally, because no employer is required to provide information in box 14, it is unlikely that employers will be consistent in what they report there. But if you are aware that a box 14 item should be reported—i.e., if it represents discretionary income—you should count it on the pertinent line. For example, clergy parsonage allowances often appear in box 14, and you would count that on line f of Question 44 or 92.

  Puerto Rico tax exemption: Act 135-2014 amended the Puerto Rico tax code to exempt up to $40,000 from income taxation (but not from Social Security and Medicare taxation) for employees 16 to 26 years old. The exemption ended December 31, 2019.

  For student tax filers who receive the exemption, the exempt amount should be included in the income earned from work and in other untaxed income because the EFC formula uses AGI for tax filers.

  For students who do not file a return and are not required to file, the exempt amount should be included in the income earned from work only and not in untaxed income. This is to avoid double-counting the amount because income earned from work is used in place of the AGI for non-filers.

  Income and benefits NOT to be included:

  • ** Student aid** is accounted for in packaging (see Volume 3: Calculating Awards and Packaging); it does not count as income in the calculation of the EFC. Student aid includes tuition benefits a parent receives for a dependent, such as those from the parent’s employer. Student aid that was included in the AGI is reported separately on the FAFSA form as an exclusion so that it can be subtracted from income (43d and 91d).

  • The value of on-base housing or the BAH for students or parents in the U.S. military. However, the BAS does count as untaxed income.

  • Rent subsidies for low-income housing.

  • Payments and services received from states for foster care or adoption assistance, under Part A or Part E of Title IV of the Social Security Act (e.g., Wisconsin’s Adoption Assistance Program, which facilitates the adoption of children with special needs).

  • Per capita payments to Native Americans. See “Assets” section earlier in this chapter.

  • Heating/fuel assistance. This includes payments or allowances received under the Low-Income Home Energy Assistance Act (LIHEA). Payments under the LIHEA are made through state programs that may have different names.

  • Flexible spending arrangements. These are employee benefit programs, sometimes called “cafeteria plans.” Neither contributions to nor payments from these programs should count as untaxed income.

  • Welfare benefits, untaxed Social Security benefits, and the earned income and additional child tax credits. Welfare benefits are meanstested state or federal supplementary assistance. Examples are benefits from Medicaid (including the Children’s Health Insurance Program), the Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF).

  • Combat pay, Foreign Earned Income Exclusion, and credit for federal tax on special fuels.

  • In-kind support is support other than money, for example, friends or relatives giving the student food or allowing him or her to live with them rent-free. That support isn’t included as untaxed income, though you may use professional judgment (e.g., by reducing the cost of attendance or increasing income) with students who receive such in-kind support. This is not the same as housing and other allowances received as compensation for a job, which, as stated earlier, must be reported. If the student is living with someone who is paying living expenses, it can be difficult to determine whether the support is cash support or in-kind support. The basic rule is: if someone pays a cost the student is obligated to pay, the amount counts as cash support.

    Example: Independent student with parental support

    Doug is a graduate student, so he’s independent even though he still lives with his parents and has no income of his own. Although the FAA at his school can’t make him a dependent student, she can decide to use professional judgment to add an amount to his untaxed income to account for the in-kind support his parents provide.

Purpose: The law governing the FSA programs is based on the premise that the family is the first source of the student’s support, and the law provides several criteria that decide if the student is considered independent of his or her parents for aid eligibility. Note that a student reaching the age of 18 or 21 or living apart from his or her parents does not affect his dependency status. For the 2021–2022 year, a student who meets any of the following criteria from HEA Sec. 480(d) is independent—if he or she:

• was born before January 1, 1998;

• is married as of the date he or she applies;

• will be a graduate or professional student when the award year starts;

• is currently serving on active duty for purposes other than training;

• is a veteran of the U.S. Armed Forces;

• has dependents other than a spouse;

• was an orphan, foster child, or ward/dependent of the court at any time since the age of 13;

• is an emancipated minor or in legal guardianship or was when the student reached the age of majority in his or her state; or

• was determined at any time since July 1, 2020, to be an unaccompanied youth who was homeless or self-supporting and at risk of being homeless.

If a student is considered a dependent of his or her parents, the parents' income and assets must be included on the FAFSA form. The CPS will calculate a parent contribution and add it to the student’s contribution to derive an EFC.

In unusual cases an aid administrator can determine that a student who doesn’t meet any of the independence criteria should still be treated as an independent student. (See “Dependency Overrides” in Chapter 5.)

Example: Surviving parent and stepparent

Al’s parents divorced when he was five. His mother remarried, and Al lived with her and his stepfather, who did not adopt him. His mother died last year, but his father is still living. Al doesn’t meet any of the independence criteria, so he’s a dependent student. Because his father is his only parent, Al needs to report his father’s information on the FAFSA form, even though he’s still living with and being supported by his stepfather.

Example: Student living with relatives

Millie’s father is dead, and her mother can’t support her, so she is living with her grandmother. Her mother doesn’t pay any money for her support. Millie doesn’t meet any of the independence criteria, so she has to provide parental information. Because her grandmother hasn’t adopted her, her grandmother isn’t her parent. Millie will have to provide information about her mother on the form unless there are unusual circumstances that would warrant a dependency override or her receiving only unsubsidized loans. In any case, the school might use PJ to account for the grandmother’s support.

• Married (46). The student must answer this question according to his or her marital status at the time the FAFSA form is signed; after that, the student cannot update FAFSA information for changes in his or her marital status except in limited instances; see Chapter 4.

  A student who is only engaged answers as unmarried unless he or she waits until after the wedding to complete the FAFSA form. For this question a student is considered married if he or she is separated or planning to divorce or if he or she has a relationship that meets the criteria for common-law marriage in their state. A student who was independent only because he or she was married becomes dependent for the next award year if he or she divorces and cannot answer “Yes” to any of the dependency questions.

• Graduate or professional study (47). The FAFSA asks if the student will be working on a master’s, doctorate, or graduate certificate program at the beginning of the school year. A student who is a graduate or professional student is independent for purposes of Title IV aid.

  Graduate and professional students are not eligible for Pell grants, so a student who incorrectly answers “Yes” to this question must submit a correction before he or she can get a Pell grant, even if he or she is independent for another reason.

  Students should fill out the FAFSA form based on their expected grade level at the beginning of the award year. If a dependent student completes his or her undergraduate program during the year and begins graduate school, he or she can update the answer to the dependency question so that the CPS can reprocess the student’s application, or the aid administrator at the graduate school can recalculate his or her EFC and use it to package the student graduate aid.

• Member or veteran of the U.S. Armed Forces (48 and 49).

  Veterans and persons on active duty in the U.S. Armed Forces (the Army, Navy, Air Force, Marines, or Coast Guard) for purposes other than training are independent.

  Veterans are those who were in active service and were released under a condition other than “dishonorable.” This includes those who fraudulently entered the service, as long as their entire period of service was not voided. There is no minimum amount of time the student has to have served to be a veteran—even one day counts and even basic training (boot camp) counts—but it does have to be active service. (See the following rules for reservists.) This is less stringent than the VA’s definition of a veteran for receiving certain VA benefits.

  The FAFSA form also tells students to answer “Yes” to the question about veteran status if they aren’t yet a veteran but will be by June 30, 2022.

  Members of the National Guard or Reserves are only considered veterans if they were called up to active federal duty [as defined in 10 U.S.C. 101(d)(1)] by presidential order for a purpose other than training. It does not matter how long the active duty lasted or if the student returned to reserve status afterward, but, as with the other qualifying veterans, the student must have had a character of service that was not “dishonorable.”

  Students who attended a U.S. military academy or military academy preparatory school for at least one day and were released under conditions other than “dishonorable” count as veterans for Title IV purposes. If they are discharged prior to commission (known as “early exit cadets”), they might not be veterans for VA purposes, and their match result will likely show that they aren’t veterans. As with other students who receive this result, if an early exit cadet meets one of the other criteria for independence, no resolution is required. But if he or she meets no other independence criteria, the student must provide the school with documentation that shows he or she was a cadet of a military academy or its preparatory school and was released under a condition other than dishonorable. Students serving in ROTC or currently attending a U.S. military academy are not veterans.

  Military service academies and preparatory schools:

  Military service academies and preparatory schoolsU.S. Military Academy (West Point) U.S. Naval Academy (Annapolis) U.S. Air Force Academy U.S. Coast Guard Academy U.S. Merchant Marine Academy U.S. Military Academy Preparatory School Naval Academy Preparatory School U.S. Air Force Academy Preparatory School

• Children and legal dependents (50 and 51). Students who have legal dependents are independent. Legal dependents comprise children (including those who will be born before the end of the award year) of the student who receive more than half their support from the student, and other persons (except a spouse) who live with and receive more than half their support from the student as of the FAFSA signing date and will continue to do so for the award year. The same criteria apply to household size.

  When a student applies after the award year has begun, in order to count a person not his or her child as a dependent, the support already given that year plus the future support must total more than 50 percent for the whole year. See Example 4 below.

  Legal dependent examples

  Example 1: Stanislaw’s uncle Yvor lives with him and receives a small disability payment each month. This amount is paid directly to Yvor, so Stanislaw doesn’t report it as income on the FAFSA. The payment is small enough that Stanislaw is still providing more than half of Yvor’s support, and because he expects to continue to provide more than half support during the award year, he includes Yvor as a dependent in his household size. However, Yvor expects to also start receiving a pension late next year. The combination of the pension and the disability payment will be enough that Stanislaw won’t be providing more than half of his uncle’s support and therefore won’t be able to include Yvor in his household size after this award year.

  Example 2: Laurel is going to college and is her cousin Paul’s legal guardian. Paul receives Social Security benefits, but because he’s a minor, the benefits are paid to Laurel on his behalf. These benefits provide more than half of Paul’s support. Because Paul lives with Laurel and will be supported by her (through the Social Security benefits) throughout the award year, Laurel answers “Yes” to the legal dependent question. If Paul didn’t live with Laurel, she would have to answer “No” to the question.

  Example 3: Alan pays $4,000 to support his girlfriend, Cathy, who lives with him. She has earned income of $3,000, and she receives $200 a month ($2,400 a year) from her parents. She uses all of this for her support. Alan cannot consider Cathy a dependent since the $4,000 he provides is not more than half of her total support of $9,400.

  Example 4: In April 2021 Anika applies for aid for both 2020–2021 and 2021–2022 award years. One month prior to that, her cousin Bettina came to live with her. Even though Anika provides all of her cousin’s support, the month of support she has given plus the two months left in the award year would not amount to more than 50% for 2020–2021, so she can’t consider Bettina her dependent for that year. If Bettina had moved in before the midpoint of the year, Anika would have been able to count her as a dependent for 2020–2021. However, because the two plan to live together at least through June 2022, Anika can count Bettina as a dependent for 2021–2022.

• Orphan, foster child, or ward of the court (52). A student who was an orphan—both his or her parents were dead—when 13 or older is independent even if the student was subsequently adopted. Likewise, a student who was at any time since the age of 13 a foster child or a ward of the court is independent even if his or her status changed later.

  A student is a ward of the court if it has assumed legal custody of the student. In some states the court may impose its authority over a juvenile who remains in the legal custody of his or her parents; such a student is not a ward of the court. Also, incarceration of a student does not qualify the student as a ward of the court. In some states the phrase “ward of the state” is used; as long as it is not due to incarceration, this is considered the same as a ward of the court for dependency status.

• Emancipation and legal guardianship (53 and 54). Students are independent if they are, or were upon reaching the age of majority, emancipated minors (released from control of their parent or guardian) or in legal guardianship, both as adjudicated by a court of competent jurisdiction in their state of legal residence at the time of the adjudication. The emancipation must be determined by a court, not by an attorney, though the basis for it can vary by state.

  Students placed in legal guardianship to their parents—e.g., if they are disabled adults and under their parents’ care—are not independent for Title IV program purposes by this criterion and would answer “No” to Question 54. Similarly, guardianship of a person’s estate does not qualify as a legal guardianship for this purpose; the FAFSA form asks, “Does someone other than your parent or stepparent have legal guardianship of you”—i.e., the student, not his or her estate. So students would answer “No” to the question if another person has only been appointed guardian of their estate. They should also answer “No” and contact your school if custody was awarded by a court and the court papers say “custody” instead of “guardianship.” Most states have a clear definition of legal guardianship that is distinct from custody, but if a given state does not, ask your school’s legal counsel for help with this question.

• Unaccompanied homeless youth (55–57). A student is independent if at any time on or after July 1, 2020 (irrespective of whether he or she is currently homeless or at risk thereof), the student is determined to be an unaccompanied youth who is homeless or is self-supporting and at risk of being homeless. This determination can be made by: a school district homeless liaison, the director (or designee) of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development, or the director (or designee) of a runaway or homeless youth basic center or transitional living program. Depending on the district, these authorities may choose to make this determination only if the student is receiving their programs’ services or if, in the case of a school district homeless liaison, the student is in high school. An FAA may also determine this; see Chapter 5. Students who are 22 or 23 years old, though not defined as youth in the McKinney-Vento Act, may also answer “Yes” to these questions.

Purpose: Questions 58–78 collect information about the student’s parents and their household. Questions 79–92 collect tax and financial data for the parents, and because these questions are answered in the same way as for the student, they were discussed earlier.

• Parents’ personal information (58–68). The FAFSA asks for parents’ marital status; the month and year they were married, remarried, separated, divorced, or widowed; SSN; last name; first initial; and date of birth. This data is used for the IRS DRT and helps the government estimate erroneous Pell payments. If the SSN, last name, and birth date for at least one parent are not given, or if neither parent’s SSN matches with the SSA, the application will be rejected. When the SSN doesn’t match, the wrong number must be corrected so that the application and SSA agree. For a name or birth date that doesn’t match, correct the application if it’s wrong or re-enter the information if it’s correct. If the parent doesn’t have an SSN, enter all zeros (000-00-0000) to prevent or remove a reject code. Do not use an individual taxpayer identification number as an SSN.

• Parents’ state of residence (69–71). Parents who do not live in the United States should enter “FC” for Question 69.

• Household size (72). This determines the standard living allowance that offsets family income in the EFC calculation. The following persons count in the household size of a dependent student’s parents:

  • The student and parents, even if the student is not living with them. Exclude a parent who has died or is not living in the household because of separation or divorce, but include a parent who is on active duty in the U.S. Armed Forces apart from the family.

  • The student’s siblings and children, if they will receive more than half their support from the student’s parent(s) from July 1, 2021, through June 30, 2022. Siblings need not live in the home. This includes unborn children and siblings of the student who will receive more than half support from the student’s parent(s) from birth to the end of the award year. It also includes siblings who would be considered dependent based on the FAFSA dependency questions (i.e., they need not be students nor apply for aid).

    For children in the household size, the “support test” is used rather than residency because there may be situations in which a parent supports a child who does not live with him or her, such as when the parent is divorced or separated. If the parent receives benefits (such as Social Security payments) in the child’s name, these benefits must be counted as parental support to the child.

  • Other persons who live with and receive more than half their support from the student’s parent(s) and will receive more than half support for the entire award year. When the application is submitted after the start of the year, see the relevant paragraph and example about legal dependents provided earlier in this chapter under the “Children and legal dependents” section.

  Example: Lydia is a dependent student, and her parents are married. Her brother Ron is 26, but his parents still provide more than 50% of his support, so he is included in the household size. Her sister Elizabeth is attending college but is an independent student and isn’t supported by their parents, so she isn’t included in the household size. Her sister Susan is not attending college but is working and supporting herself. However, if Susan were to apply for student aid, she would be considered a dependent student, so she is included. Therefore, the household size that Lydia reports for her parents is five.

  Foster children in household size: Typically foster children do not count in the household size as their costs are covered by foster care payments. However, children in “kinship foster care” for whom no benefits are provided can count in the household size if they meet the tests for other persons, i.e., if they live with and receive more than half their support from their foster parents for the award year.

  Note that the rules that decide whether someone is counted in the household for FSA purposes aren’t identical to the IRS rules for determining dependents or household members.

• Number in college (73). The applicant always counts in the number in college, but parents do not. Others included in the household size are also included in the number in college if they are or will be enrolled at least half time during the award year in any eligible degree or certificate program at a school eligible for any of the FSA programs. The definition of half-time enrollment for this question must meet the federal requirements even if the school defines half time differently. (See Volume 1: Student Eligibility for enrollment status requirements.)

  Service academies, household size, and number in college

  Students at U.S. service academies have most of their educational expenses paid for by the federal government. Because of this, their families cannot “reasonably be expected to contribute to their postsecondary education” and they are not counted in the number in college in the families of either dependent or independent students. Since they will not receive more than one-half of their support from any person, they also do not count in the household size of any independent students and some dependent students. However, if a service academy attendee is a sibling of a dependent student and can answer “No” to all the dependency status questions, he or she would count in the household size of that dependent student. [HEA Sec. 474(b)(3); 480(k),(l)]

• Receipt of means-tested federal benefits by anyone in the household (74–78). This as an alternative for the tax return requirement of the simplified needs and automatic zero EFC tests.

• Tax forms filed by parents, filing status, income, and assets (79–82, 84–92). Refer to the earlier discussion for these questions.

• Dislocated worker (83). This status, as defined in the Workforce In- novation and Opportunity Act or WIOA, is an alternative to the tax return and means-tested federal benefits criteria for determining if a person qualifies for the simplified needs test or automatic zero EFC. A person would answer “Yes” to this question if he or she meets the statutory definition of dislocated worker but does not appear to because of the general nature of the FAFSA instructions. Under the WIOA, a dislo- cated worker is someone who falls into at least one of these categories:

  • A person who meets all of the following requirements:

    • He or she was terminated or laid off from employment or received a notice of termination or layoff.

    • He or she is eligible for or has exhausted his or her unemployment compensation, or he or she is not eligible for it because, even though they have been employed long enough to demonstrate attachment to the workforce, he or she had insufficient earnings or performed services for an employer that weren’t covered under a state’s unemployment compensation law.

    • He or she is unlikely to return to a previous industry or occupation.

  • A person who was terminated or laid off from employment or received a notice of termination or layoff as a result of any permanent closure of, or any substantial layoff at, a plant, facility, or enterprise

  • A person who is employed at a facility at which the employer made a general announcement that it will close within 180 days

  • A person who is employed at a facility at which the employer made a general announcement that it will close

  • A self-employed person (including farmers, ranchers, or fishermen) who is unemployed because of natural disasters or because of general economic conditions in his or her community

  • A spouse of an active duty member of the Armed Forces who has experienced a loss of employment because of relocating due to permanent change in duty station

  • A spouse of an active duty member of the Armed Forces who is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment

  • Displaced homemakers who meet all of the following criteria:

    • They have been providing unpaid services to family members in the home.

    • They have been dependent on the income of another family member but are no longer supported by that income.

    • They are unemployed or underemployed and having trouble getting or upgrading employment. An underemployed person is one working part time but who wants to work full time or is working below the demonstrated level of his or her education or job skills.

  Not everyone who receives unemployment benefits will meet the definition of dislocated worker. For example, in general those who quit their jobs are not considered dislocated workers, even if they are receiving unemployment benefits.

  You are not required to verify the answer to this question. If you choose to verify it, documentation can include, as appropriate to the category, a letter or a layoff or termination notice from the employer, unemployment insurance (UI) system verification, tax returns, a business license, or newspaper articles. You may also use documents from the state workforce agency or a “one-stop career center,” though they are not required to provide you such documentation and a person may meet the dislocated worker definition without going to the workforce investment system for services. Absent all other evidence, self-certification will suffice, such as a statement signed by the person affirming that he or she meets the definition of dislocated worker.

  Information from the workforce investment system. The local workforce investment system and state UI agency may support financial aid administrators by

  • providing general information to dislocated workers;

  • providing general information to financial aid administrators, such as the WIOA definition of dislocated workers and appropriate samples of documentation that financial aid offices can request from an individual to verify dislocated worker status;

  • providing specific information to dislocated workers. A person can request documentation from the career center or other appropriate office that he or she is receiving dislocated worker services through the workforce investment system. That office can give the documentation to the student, or at his or her request it may (but is not obligated to) give the documentation directly to the college.

  If you must determine if someone is a dislocated worker, you have sole responsibility and must make the determination regardless of whether the person has proof of dislocated worker status—or is receiving dislocated worker services—from the workforce investment system.

  Note that a response of “Don’t know” on the FAFSA form is treated as “No” by the CPS. If a person gives this response to Question 83 or 100, you are not required to verify it, but you may want to determine if he or she is a dislocated worker and if that would affect the student’s eligibility for federal aid.

Purpose: Questions 93–100 collect information about independent students. Only students who answered “Yes” to one or more questions in Step Three complete this step.

• Student’s household size (93). The following persons are included in the household size of an independent student:

  • The student and his or her spouse, unless the spouse has died or is not living in the household due to separation or divorce.

  • The student’s children, regardless of where they live, if they will receive more than half of their support from the student (and spouse) from July 1, 2021, through June 30, 2022. This includes the student’s unborn children who will be born during the award year and will receive more than half their support from the student from birth to the end of the award year.

  • Other persons who live with and receive more than half their support from the student and will receive more than half support for the entire award year. For FAFSA forms submitted after the start of the year, see the relevant paragraph and example about legal dependents provided earlier in this chapter under the “Children and legal dependents” section.

    Example: Eddy is an independent student. He was married, but now he and his wife have separated. He’s paying child support, but it isn’t enough to provide more than half his children’s support, so he can’t include his children in his household size. Eddy’s nephew Chavo lives with him and gets more than half of his support from Eddy (and will do so for the award year), so he can be counted in Eddy’s household size, which is two. Having just turned 24, Chavo is also considered independent on his own FAFSA, and his household size is one.

• Number in college (94). The student is always included in the number in college. Also included are those in the household size who are or will be enrolled at least half time during the award year in a degree or certificate program at a Title IV-eligible school and who can reasonably be expected to receive aid from the family for their education. The definition of half-time enrollment for this question must meet the federal requirements even if the school defines half time differently.

  Example: Under the previous example, Eddy would report two in the household and two in college, while Chavo would report one in his household and one in college.

• Receipt of means-tested federal benefits by anyone in the household (95–99). This is an alternative for the tax return requirement of the simplified needs and automatic zero EFC tests.

• Dislocated worker (100). See the explanation of Question 83 earlier.

Purpose(101): These items collect information about which colleges the student wants to receive his or her FAFSA information. For a college to be able to receive the student's data, the student must list the college’s federal school code (not the OPE ID) or enter its complete name, address, city, and state. There is a federal school code search in the online FAFSA form, and the entire list of school codes is available in Excel on the Knowledge Center website under the "Publications" section.

For each school the student indicates whether he or she expects to live on or off campus or with his or her parents. This information is not used to calculate the EFC, but it is useful to schools for determining the cost of attendance.

The student can list up to four schools on the PDF FAFSA form and 10 on the web (at least one is required). If he or she wants their information to be available to more schools, he or she can change the schools listed online or use their SAR. The CPS will send data to no more than 10 (four with the PDF FAFSA form) schools at a time. Chapter 4 explains how students can add or change schools.

The ISIR will only display the federal school code and corresponding housing code of the receiving school. The information of other schools the student included on the FAFSA form will not appear except on the SAR and on ISIRs sent to state grant agencies. See The ISIR Guide 2021–2022.

Purpose: By signing the FAFSA, the applicant is assuming responsibility for the accuracy of the information reported.

• Date and signature(s) (102–103). In addition to certifying that the data on the FAFSA form is correct, the student is also signing a statement of educational purpose, which is required to receive FSA funds. Among other things, the student agrees to spend FSA funds only on educational expenses and affirms that he or she is not in default on a federal loan or does not owe a grant overpayment. If the student is dependent, one parent whose information is reported on the FAFSA form must also sign.

  Substitutes for a parent’s signature. While parent information must be provided for a dependent student, a high school counselor or a college aid administrator may sign the application in place of a parent if

  • the parents are not currently in the United States and cannot be con- tacted by normal means,

  • the current address of the parents is not known, or

  • the parents have been determined physically or mentally incapable of providing a signature.

  The signer must provide his or her title in parentheses next to his or her signature and briefly state the reason (only one is needed) why he or she is signing for the parents; if this is not done, the FAFSA form will not be processed. The signer assures a minimum level of credibility in the data submitted; however, he or she does not assume any responsibility or liability in this process. If the counselor or FAA finds any inaccuracies in the information reported, they should direct the student to send the SAR through the normal correction process or, if he or she is an FAA, they can submit corrections through FAA Access to CPS Online. Because this proxy signing isn’t possible electronically, it must be done on a paper FAFSA or on the signature page/FAFSA summary used with FAA Access.

• Preparer’s ID and signature (104–106). Only persons who are paid a fee to help the student complete the application are considered FAFSA preparers. Those who advise students without charging a fee, such as high school counselors and FAAs, are not preparers. A preparer must include his or her name, his or her company’s name (if applicable), his or her address or the company address, and either his or her SSN or the company employer identification number (EIN, as assigned by the IRS). With the paper FAFSA form, the preparer must also sign and date the form.

  Preparers have other obligations. In their advertising and initial contact with a consumer, including via the Internet or phone, they must clearly inform him or her that the FAFSA form is free and can be completed electronically or on paper without professional help. If they have a website for their service, it must link to FAFSA on the Web. They may not use any form other than the FAFSA form to apply for Title IV aid.

  A preparer who knowingly falsifies information on the application is subject to the same penalties as an applicant.

  Copies of signed documents

  While you will often receive documents with original or “wet” sig- natures from the student (e.g., a paper FAFSA that the student has worked on and signed while in your office), there might be an occasion where the student gives you a copy or sends you a fax of a signed document. Except for a copied FAFSA form, other imaged versions of the original signed document are valid and may be retained.

*These requirements apply to any submission of changes to the CPS, whether required by regulation (for Pell Grant recipients or corrections to data match items) or at the discretion of the financial aid administrator (for Campus-Based aid and Direct Loans). See “Submitting changes via FAA Access to CPS Online or EDE” in Chapter 4 for a fuller explanation of what is required when submitting changes to the CPS.