If a student lives with a grandparent, is there any way the student
can use the grandparent's income tax information on her FAFSA?
I have lived with my grandmother for all 17 years of my life. My
parents currently pay a small amount of child support to her, but that
is the only financial support that I receive from them. My grandmother
has claimed me on her income tax for all 17 years. I was never legally
adopted, but my grandmother is listed on all school records, doctor
records, and so on. Is there any way that I may use her information, so
that I can receive financial aid? My parents will not pay for my
education, so it is vital that I receive aid. If my parents provide a
notorized letter stating my grandmother is my legal guardian, will I then
be able to use her?
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Grandparents cannot substitute for the parents on the Free Application
for Federal Student Aid (FAFSA) unless the grandparents have adopted
the student. Even if the grandparents are legal guardians for the
student, they do not count as parents for federal student aid
The Higher Education Opportunity Act of 2008 (P.L. 110-315) changed
the requirements for a student to be considered an independent student
effective August 14, 2008. If the student is currently in a legal
guardianship, or was in a legal guardianship immediately prior to
attaining the age of majority, the student will be considered to be an
independent student. An independent student is not required to report
parent financial information on the FAFSA. Note, however, that the
legal guardianship must have been determined by a court of competent
jurisdiction in the student's state of legal residence at the time the
legal guarandianship was adjudicated. A notarized letter from the
student's parents is not sufficient.
Alternately, the student can ask his or her college for a dependency
override. The college financial aid administrator will not grant a
dependency override merely because the parents refuse to contribute to
the student's education, refuse to complete the FAFSA or verification
and/or do not claim the student as a dependent on their income tax
returns, even if the student is financially self-sufficient. However,
such circumstances are not necessary for a dependency
override. Instead, the college financial aid administrator may grant a
dependency override in unusual circumstances, such as an abusive
family environment, institutionalization/incarceration of both parents
or abandonment by both parents. Most financial aid
administrators consider abandonment to have occurred when the student
does not receive financial support or significant communication from
his or her parents for a long time, generally for at least a year. (A
birthday card is not considered to be significant communication.)
Any financial support a student receives from his or her grandparents
is considered untaxed income to the student and should be reported as
such on the FAFSA.
Due to a layoff and subsequent underemployment, our current credit
profile includes an account that is more than 90 days delinquent. We are
currently working with the lender on a loan modification. What options
are available for the student's grandparents to substitute for the
parents for signing or co-signing for financial aid?
An undergraduate student's parents will be ineligible for the Parent
PLUS loan if they have an adverse credit history. An adverse credit
history includes a current delinquency of 90 or more days on any debt
or a 5-year look-back for derogatory elements of the credit history,
such as bankruptcy or foreclosure. An adverse credit history does not
otherwise affect eligibility for federal student aid.
If the student's parents have been denied a Parent PLUS loan, the
student will become eligible for the same unsubsidized Stafford loan
limits available to independent students. These loan limits are $4,000
per year higher than the normal limits for dependent students during
the freshman and sophomore years and $5,000 per year higher during the
junior and senior years.
Alternately, there are two main methods for regaining eligibility for
the Parent PLUS loan. If the only reason the parents are ineligible is
due to a 90-day delinquency, the parents can regain eligibility by
bringing the delinquent account current. They can also regain
eligibility by getting a creditworthy endorser to cosign the
loans. This cosigner cannot be the student, but it can be the
(Grandparents are not considered to be parents for federal student aid
purposes unless they have adopted the student. Thus, while the
grandparents can cosign the parent's Parent PLUS loan, they
cannot borrow from the Parent PLUS loan program on their own.)
Similarly, grandparents can cosign a private student loan, provided
that they satisfy the credit underwriting criteria. Note that lenders
of private student loans are increasingly considering debt-to-income
ratios when evaluating creditworthiness of a cosigner. If the
grandparents are retired, on limited income and do not have financial
resources sufficient to repay the debt, they might not qualify as
creditworthy cosigners on the private student loan.
Note that a cosigner is a co-borrower, equally obligated to repay the
debt. If the student is delinquent or defaults, it will show up on the
cosigner's credit history in addition to the student's credit history,
ruining the credit scores of both borrowers.
Some lenders are now offering private education loans that can be
borrowed by a parent or grandparent without involving the student as a
borrower. The parent or grandparent is solely responsible for repaying
the loan. Eligibility is based on the borrower's credit history and
See also FinAid's
Tips for Grandparents on Helping Grandchildren Pay for College