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FAFSA: New Regulations Recognize Same Sex Parents

FAFSA_iconThe U.S. Department of Education has recently announced new regulations for the 2014-15 academic year that impact how students filing for federal financial aid will complete their Free Application for Federal Student Aid (FAFSA) from this year forward. Furthermore, these changes play a strong role in how a dependant student’s family income will be used to determine eligibility.

Although the U.S. government’s decision to recognize same-sex and unmarried parents on the FAFSA marks an achievement for many, some families may be concerned about how it could affect a student’s financial aid. Here is an overview of the new regulations to keep everyone informed of what to expect when completing their FAFSA this year.

Impetus Behind the New Regulations

According to Inside Higher Ed, the new regulations are the result of a Supreme Court decision made in June of 2013. This decision declared invalid the portion of the Defense of Marriage Act that prohibited federal agencies from providing legal recognition to same-sex marriages. Now that this policy change has been made, the federal government is free to apply the same treatment to same-sex marriages as they have been to heterosexual marriages in past years. It is also important to note, however, that prior to this decision, the U.S. Department of Education already had changes put into motion to make the switch to gender-neutral language on future FAFSA forms so that both parents from unmarried couples who live together could be used to determine household income.

New Requirements for Dependent Students

There are several factors that determine a student’s status as either dependent or independent. While individual circumstances can play a role in this determination, most undergraduate students under the age of 24 are declared as dependent if they are unmarried and not raising children of their own. In the past, dependent students who lived with same-sex or unmarried parents only had to claim the income of one of their parents. On the new form, students will be instructed to include household income using gender-neutral language that also takes into account recognized same-sex marriages and unmarried couples so that all of a household’s income can be used to calculate a student’s estimated family contribution.

How Do the FAFSA Changes Impact Students and Families?

According to a letter released by the U.S. Department of Education, the new regulations are expected to affect only a small percentage of students due to the fact that over 60 percent of FAFSA filers are classified as independent. Out of the remaining filers, an estimated 20 percent will not notice the changes because their parents are classified as heterosexual married couples and have already been recognized on the application in past academic years. The remaining students will find that their family dynamics will affect the determination of their estimated family contribution. For some of these students, the additional income could reduce the amount of aid they receive through federal, state and privately-funded financial aid programs. Other students may find that the addition of an extra family member generates an increase in the amount of aid they can receive. While this does represent a shift in how financial aid is distributed, the federal government maintains that this will ensure fairness among all families who apply for aid.

Changes in the Application Process

When students and their families complete the FAFSA for this academic year, the most obvious change will be the use of gender-neutral language. Instead of using the terms “mother” and “father,” students will be instructed to list the income of each “parent.” For the purposes of the application, both biological and adoptive parents who live in the same home as the student must be included. Students who live with heterosexual married parents will continue to complete their application as it has been done in the past; however, those who live with same-sex parents who are in a marriage legally recognized by their home state or foreign country will list their parents’ marital status as “unmarried and living together”. Follow-up questions to this response will then include the new gender-neutral language.

Completing the New FAFSA

Now that same-sex married and unmarried parents are to be included on the FAFSA, some questions will arise when it is time to submit tax return information. The current IRS Data Retrieval Tool is unable to provide separate financial information for parents who file separately regardless of their sex or marital status. Therefore, special instructions will be provided during the application process for students who have separate tax forms filed for their parents that pertain to how they should answer questions regarding tax filing status and adjusted gross income for the family.

Every student and their family applying for financial aid using the FAFSA this academic year should be aware of the changes that will affect how they should respond appropriately to questions regarding their current living arrangements and dependent status. While the recognition of same-sex married and unmarried parents on the FAFSA will impact the amount of financial aid that students receive, these new changes are meant to provide a more accurate report that will ensure fairness for all students who can benefit from having financial aid to fund their education.

About the Author:

Today’s guest article comes from Greg Mitchell. He is a freelance financial blogger and proud resident of Houston, Texas. He encourages all local families to carefully look at how recent developments in their lives, such as new marriages or divorces in Houston, could impact their FAFSA applications.

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FAFSA Overview (video)

The FAFSA (Free Application For Federal Student Aid) is the gateway to all things good when it comes to making college affordable. The downside is that the FAFSA is feared by many, especially those that have never completed the process. This uncomfortable unknown factor is what keeps people from giving it a try and finding out what treasures it will unlock to enable them to obtain their educational goals. On a side note… check out this humorous article comparing the FAFSA to a colonoscopy.

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Get A Sneak Peek At The 2014-2015 FAFSA Form!

The FAFSA is the single most important instrument that a student/family should utilize to access funds for college. The FAFSA (Free Application for Federal Student Aid) is responsible for gathering information related to the assets and income of families and their students, churning it through a lengthy calculation (you can download a copy of the 36 page formula here), and spitting out an EFC (Estimated Family Contribution).

That EFC figure is then sent to all the colleges and universities designated by the student during the FAFSA application process. This is where the magic happens! 😉 Those colleges and universities will take that information and start going to work on putting together a comprehensive financial aid package for you that includes need-based and merit-based awards, a work-study component, and usually a federal direct student loan option.

Officially, you can not file your FAFSA until January 1st of 2014. You can submit the paper option (access a draft of 2014-2015 FAFSA here) but I recommend that everyone complete their FAFSA online at You may be tempted to go to, however, even though they will gladly file your FAFSA, they will also charge you about $80 for their services. Remember, the first “F” in FAFSA stands for FREE.

Submitting your FAFSA online provides you the ability to save any work that you completed and return to it later. In addition, the Department of Education has implemented skip-logic technology to make sure that you only answer the questions that are applicable to your situation. Lastly, the online FAFSA has a new IRS Data Retrieval Tool (DRT) that gives families the option of importing their IRS tax information directly into their FAFSA. This has been a great resource for FAFSA filers but it has not come without its glitches (see articles below):

As you are starting to gather your information together to prepare for filing your FAFSA, please don’t hesitate to utilize the resources here on to help you along the way. Here are a few articles that may prove to be helpful (and one that is a little humorous):

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5 Best Practices For Completing The FAFSA

FAFSA-formStudent loan debt is now the second highest ranked consumer loan debt, next to mortgages, according to the New York Federal Reserve, with the amount of outstanding student loan debt exceeding $1 trillion in March of 2012.

Given this shocking number, it has become increasingly important to seek alternative or additional means of financing for a college education. Fortunately, financial aid is also available to students in the form of scholarships and grants. This is where the Free Application for Federal Student Aid (FAFSA) comes in. You need to complete and submit the FAFSA in order to be considered for financial aid such as the Pell Grant and various other scholarship programs. If any questions arise along the way, make sure to turn to a resource that can answer your important FAFSA questions.

While the FAFSA can be the key to receiving the financial aid you need, it is a lengthy form that requires a lot of detailed information, which makes it more likely you might fill something out incorrectly along the way. Unfortunately, one mistake could spell the difference between aid and no aid. Don’t allow your child to miss out on a valuable scholarship or grant because of a preventable error. Make sure to follow step-by-step instructions when filling out the FAFSA to avoid making a mistake.

Here are five important tips in completing the FAFSA:

  1. Plan your assets. A good type of asset to own when applying for financial aid is a retirement account such as an IRA or 401(k). These qualified retirement accounts, whether owned by you or by your child, are not counted at all in determining federal financial aid. Use caution, however, when withdrawing money from your IRA (or any retirement account) to pay for college. Though the tax law now allows penalty-free withdrawals from a traditional or Roth IRA to pay for qualified college costs, doing so could jeopardize financial aid in the following year. The entire withdrawal, principal and earnings, counts as income on the following year’s aid application.
  2. Move savings out of your child’s account. The idea here is that you really have to understand how the FAFSA formula works. The formula counts 2.6%-5.6% of a parent’s assets as being available to pay for college expenses and 20% of a student’s assets as an available financial resource. Basically, this means that assets belonging to the student result in a greater reduction in financial aid. By moving a child’s assets into an account that is not in their name, it will reduce the amount you have to report on the FAFSA.
  3. Submit your form early. Filling up the forms can be tedious but you shouldn’t put it off.  There are a lot of applicants seeking the same financial assistance as you. Therefore, it’s a good idea to submit your application as early as you can. If possible, submit before the deadline. This is not a good time to dally, because you might just lose out to the students who submitted ahead of you.
  4. Write a letter. Since the form itself is quite rigid, some families who experienced special circumstances can add a letter to talk about their situation (like the death of a parent or sudden job loss, for example). Back up the letter with proof and other documents to support it. A lot of colleges will consider what you have to say when deciding on your child’s financial aid package.
  5. Check and double check before submitting the form. It’s very easy to make a mistake when you’re filling out a complicated form. Have someone else check your form, too, in case you missed anything. It’s the easiest way to ensure that you got all the important details—and even the minor ones—correct.

Today’s guest article comes from the Student Financial Literacy team at



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Are You Eligible For The Federal Pell Grant?

The Federal Pell Grant serves as a great resource for students to obtain funding to help offset college costs. The maximum amount of Pell Grant currently available to a student on a yearly basis is $5,645 (which is an increase of $95 from last year – woot!?). In many cases, the Federal Pell Grant in conjunction with the Federal Direct Student Loan Program can easily cover all the tuition costs incurred by a student depending on the college or university they choose to attend.

Even though the Pell Grant is a very common term in the higher education community – that was not always the case. The following is a quick timeline of the how the Federal Pell Grant program came to be known:

  • 1965 – President Lyndon B. Johnson implements the Higher Education Act which includes federal grant and loan support for college bound students
  • 1972 – Senator Claiborne Pell (Rhode Island) initiates a reformation of how federal aid is distributed
  • 1978 – President Jimmy Carter signs the Middle Income Student Assistance Act and provides additional support for more educational grant monies to be made available
  • 1978 – In honor of Senator Pell’s work on this education funding initiative the Basic Educational Opportunity Grant is now referred to as the Pell Grant.
  • 1978-1979 – The average Pell Grant was $814 and it was awarded to 1,893,000 students
  • 2010-2011 – The average Pell Grant was $4,115 and it was awarded to 8,873,000 students

Now that you know the history of the Pell Grant, what is in it for you utilizing today’s figures? The calculation that decides how much Pell monies you are eligible to receive comes from doing your FAFSA each and every year. The Estimated Family Contribution (EFC) number that is generated dictates the amount of Pell Grant funding you will receive. So, once you know your EFC number, you can utilize the following chart to determine how much Pell Grant you will qualify to receive. The most you can get is $5,645 and the least you can get is.. well… ummm.. zero..  And yes, it is probably important to mention that if you are reading this article from the confines of a jail cell, you are not eligible for the Pell Grant. However, you may have other options at your disposal.

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The FAFSA in 3 Minutes! (video)

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When it comes to paying for college, the word FAFSA is synonymous with financial aid. Over the years, I have received a number of inquiries from families regarding the use of versus the website. I certainly have my opinions but in an effort to be fair and balanced on the subject matter, I recently asked Mary Fallon from Student Financial Aid Services, Inc. (the company behind to provide an objective comparison of the two resources. The following is an informative article that Mary put together to help provide some guidance. Feel free to comment below if you think she missed anything…

College planning is in full swing by high school seniors. After using colleges’ net price calculators to compare their financial aid and costs estimates, students can request aid by preparing the lengthy, and sometimes daunting, federal student aid application (FAFSA).  Nearly everyone – regardless of income – qualifies for student aid.

Two Options.

To encourage students to prepare a FAFSA each year, the federal government offers two options: either answer FAFSA questions on the U.S. Department of Education’s (DOE) website for free, or, much like income tax preparation, get help from a service that charges a fee for FAFSA preparation and financial aid advice.

By law, FAFSA services must inform students of preparation options. No legitimate service charges for only submitting a FAFSA. Fees pay for application preparation. But avoid paying huge fees. Top FAFSA preparation services cost only about $100 and have refund policies.

Where to Get Help.

Most high school counselors don’t have the time or aid expertise to prepare students’ FAFSAs. Colleges’ financial aid professionals often advise admitted students about how to answer FAFSA questions. But extremely few colleges actually prepare students’ FAFSAs. However, most states do offer a one-day College Goal Sunday or other events where financial aid experts answer FAFSA questions without charge. Recommended by Terry Savage, a nationally-known personal finance expert, fee-based service Student Financial Aid Services, Inc. ( offers free and discounted help to thousands of low-income students each year. It provides assistance in multiple languages.

Why Get Help?

Time and possibility of mistakes are the top two reasons students choose getting help from a fee-based FAFSA service rather than to tackle it themselves. Novices spend about 78 minutes to complete a FAFSA, according to the DOE’s latest statistics.  Repeat FAFSA applicants shave only 11 minutes off that time. However, a professional student aid advisor can walk a student (or parent) through FAFSA preparation in about 30 minutes.

Mistakes Reduce Aid.

The FAFSA’s more than 130 asset, income and dependency questions can appear simple. Yet correct answers aren’t always obvious. FAFSA mistakes, such as miscalculating adjusted gross income or counting a primary residence as an asset, will reduce an aid award.  When caught by the DOE, mistakes temporarily bump a student out of the virtual, first-come, first-served line for aid. But unfortunately some mistakes that can lower aid don’t get flagged by the DOE for correction. A lot is at stake. During the 2012-13 academic year, $227 billion in federal, state and institutional aid was available to more than 17 million U.S. college students. Last year, undergraduates on average received about $11,000 in aid.

Self Help vs. Pro Help.

The FAFSA on the DOE’s website includes a ‘help’ feature to guide students. In contrast, a high quality, fee-based FAFSA preparation services offer one-on-one counseling, track and inform students about deadlines, answer difficult or confusing questions, provide estimates of the amount of federal and state aid a student can expect to receive, and  most importantly, double check for errors by reviewing every FAFSA answer twice. The best FAFSA services not only use a computer review of a FAFSA, but rely on professional student aid advisors to carefully read each answer. Avoid any service that suggests gaming the system by inaccurately answering FAFSA questions. Also, top services earn an A+ Better Business Bureau rating and are recommended by their clients.

For help, the DOE also offers an online chat in English or Spanish –available Monday through Friday mornings and on Saturdays. Some preparers provide experts who speak multiple languages, a service that many parents of first-generation college students find helpful. Fee-based services usually are open for extended hours during the week and on weekends.

Apply in January.

To be eligible for the most aid possible, apply for aid in January. Students applying in January are more likely to receive more free grant aid than those who delay beyond state or college deadlines. There’s no need to wait until income taxes are filed to prepare a FAFSA. Income can be estimated and a FAFSA submitted early to save a place in the virtual aid line. Income figures can be corrected later. An advantage of FAFSA preparers is that some have access to the FAFSA months before the January 1st start of the aid season. They prepare aid applications with income estimates early and submit them January 1st so their clients are among the first in the virtual line for aid.

Whether preparing the FAFSA at no cost on the DOE’s website, or getting help from a professional FAFSA preparation service, be sure to accurately answer questions, sign the application, and submit it in January to be eligible for the most aid possible.

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The FAFSA Song (video)

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