How is retirement income and past due child support reported on the FAFSA?
January 11, 2010
I am trying to fill out my FAFSA. My father retired last year and I am confused as to what to put for his financial answers, for example, gross income, taxes, etc. Do I fill out a separate form because he is retired? Will they know that he is retired? I am so lost and getting frustrated. Please help! — Alexa H.
You complete the FAFSA with your father’s actual income, as it will be reported on his federal income tax return. Untaxed Social Security benefits are not reported. Even though he is retired, he may still have some taxable income, such as from retirement plan distributions, interest and dividends. The FAFSA does not provide any special treatment for parents who are retired, other than a higher asset protection allowance for older parents. There are no separate forms for retired people.
Note that while retirement funds are not reported as an asset on the FAFSA, this exclusion is restricted to funds that are in qualified retirement accounts like a pension fund, IRA, 401(k) or 403(b). Money that is not in a qualified retirement account is still reported as an asset, even if the parent is retired.
Colleges will generally not make an adjustment for a change in income when someone retires because retirement is not considered an unusual circumstance.
If your parents’ income is below $50,000 and certain other conditions are met, assets will be disregarded entirely by the federal need analysis methodology. If your parents’ income is below $30,000 and certain other conditions are met, your expected family contribution (EFC) will be automatically set to zero, entitling you to a full Pell Grant.
I am a senior in high school and my parents have been divorced since I was about 5 years old. My father was ordered to pay child support, but he only paid every now and then. We are now going through a child support service that retrieves past due child support. We have not yet received any money but I was wondering whether it would affect my student aid. — Samantha W.
Only child support payments that were received, not owed, are reported on the Free Application for Federal Student Aid (FAFSA). If your FAFSA is selected for verification, the college will verify child support received if the amount differs from the amount reported on the previous year’s FAFSA. They may verify it by asking for a copy of the separation agreement or divorce decree.
If you receive a lump sum payment for past due child support from previous years, ask the college to use its professional judgment to reduce the reported figure to the annual obligation. After all, such a lump sum payment is not reflective of your ability to pay during the award year, since it is a one time event.
Is it correct that before my son can apply for any scholarships we have to fill out and submit the FAFSA first? — Rachel C.
This is not correct. The FAFSA is used to apply for federal and state student aid, as well as aid from all public colleges and most private colleges. It is not used to apply for scholarships.
You should submit the FAFSA as soon as possible on or after January 1 because some states have very early deadlines for state grants, as early as February or March. (This year Connecticut has a February 15 deadline.) You should not wait until you’ve filed your income tax returns or been admitted to a college. It is ok to base the FAFSA information on your W-2 statements and 1099 forms (or the last pay stub of the year). You will have an opportunity to correct any errors later. (It’s generally a good idea to compare your estimated income with the income as reported on the previous year’s income tax return to help avoid any errors, such as overlooking a source of income or an exclusion to income.)
Start searching for scholarships as soon as possible. Scholarships have deadlines throughout the year. If you wait until you submit the FAFSA, you’ll miss about half the scholarship deadlines. Also, you don’t need to be a high school senior to apply for scholarships. There are many scholarships that are open to high school students in grades 9-11 in addition to grade 12. There are even scholarships for children in grades K-8. There are also scholarships for current college students.
One of the benefits of the free Fastweb scholarship matching service is that it automatically notifies you of new awards that match your personal profile. New and updated scholarships are added to the scholarship database every day. (It’s a good idea to review and update your personal profile at least once a year to ensure that you match as many scholarships as possible.)
Only a handful of scholarship programs ask for your EFC or a copy of your financial aid award letter. In most cases these scholarship programs will allow you to submit this information later.