Does Adoption Affect an Orphan's Eligibility for Financial Aid?
April 22, 2013
I am trying to advise two students whose mother died four years ago and their father died last week, unfortunately. The girls’ grandmother is now taking care of them (a 9th and 10th grader) and we are concerned about the possible college financial ramifications. They are in the process of determining the Social Security benefits from their father’s contributions. Once that amount is established (depends on claims), it may be advantageous financially for the grandmom to adopt them. However, will it be an advantage on college financial award/need-based aid to be an orphan or the adopted “child” of a “mother” who will be 70+ at the time they apply for college. — D.P.
An orphan is a child both of whose parents are dead. But is a child who is adopted after the death of both biological parents still considered an orphan? How does a student’s status as an orphan affect eligibility for need-based financial aid?
The Higher Education Act of 1965 specifies that a student who was an orphan at any time since reaching age 13 or older is considered an independent student even if the student is subsequently adopted. This definition was enacted by the College Cost Reduction and Access Act of 2007 (P.L. 110-84), effective July 1, 2009.
The current statutory language appears in 20 USC 1087vv(d)(1)(B):
The term “independent”, when used with respect to a student, means any individual who —
is an orphan, in foster care, or a ward of the court, or was an orphan, in foster care, or a ward of the court at any time when the individual was 13 years of age or older;
The previous language appeared in 20 USC 1087vv(d)(2) and read “is an orphan or ward of the court or was a ward of the court until the individual reached the age of 18.”
The dependency status of each girl is determined separately from the other.
(A student can also qualify as an independent student if the student is in a court-ordered legal guardianship, or was in a court-ordered legal guardianship prior to reaching the age of majority. The legal guardianship must have been determined by a court of competent jurisdiction in the student’s state of legal residence.)
So if the orphaned girls are age 13 or older at the time of their adoption, their adoption by the grandmother will not affect their status as independent students. (Placing the girls into a court-ordered legal guardianship before they reach the age of majority will also cause them to be considered independent students.) An independent student does not report the income and assets of the student’s biological or adoptive parents on the Free Application for Federal Student Aid (FAFSA).
But if a student is an independent student, any financial support provided by the grandparents to the student will be counted as untaxed income to the student on her financial aid application forms.