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Professional Judgment
 
Cash Support from the Student's Parents

Cash support from a dependent student's parents is not reported on Worksheet B. See, for example, the Verification Guide and Section 480(b)(7) of the Higher Education Act. Cash support from an independent student's parents is reported on Worksheet B. Cash support from the non-custodial parent of a dependent student is reported as child support received on Worksheet B, even if it isn't mandated by a child support or college support agreement. (Technically, a non-custodial parent is not considered a parent for Federal need analysis purposes.) A financial aid administrator may use professional judgment to include in-kind support from an independent student's parents as untaxed income on Worksheet B.

Financial aid administrators should use professional judgment to exclude from Worksheet B amounts representing payments of child support owed from previous years, as it is not reflective of child support likely to be received during the award year. Financial aid administrators may also want to make an adjustment for any child support and college support payments that go beyond the non-custodial parent's obligations. (Otherwise, the non-custodial parent should delay his non-required support until after the child graduates from college, and then provide it directly to the child to help her pay back her student loans.)

Cash support includes money, gifts, loans, housing, food, clothing, car payments or expenses, medical and dental care, and college costs paid to or on behalf of the student. This includes not just money provided to the student, but money provided to others in order to satisfy obligations of the student. If the money is not provided to the student or used to satisfy an obligation of the student, it counts as in-kind support. For example, if the student is provided with free rent, it counts as cash support if the student's name is included on the lease and in-kind support if the student's name does not appear on the lease. (Note that housing and other allowances received as compensation for a job are listed elsewhere on worksheet B.)

The following types of support, in addition to in-kind support, are not reported on Worksheet B: food stamps, dependent care assistance excluded from gross income, per capita payments to Native Americans, rent subsidies for low-income housing, cafeteria plans (flexible spending arrangements), and LIHEA heating/fuel assistance.

The philosophical basis for the exclusion of support received from a dependent student's parents from the "cash received" line is that the parent income and assets are already assessed by the need analysis methodology, and that "internal" transfers related to parental obligations for their children (e.g., food, clothing, shelter, medical care, education) are not counted as part of untaxed income to the child. For an independent student, support from parents does count, as their income and assets are not included in EFC. Similarly, if a parent provides more than half support for a child from a previous marriage, he counts that child in his household size even if that child doesn't live with him. If the child is counted in his household size, he doesn't report the amount of child support he pays for that child in Worksheet C, as per an example from the Verification Guide. Or to invert this example, cash support from a non-custodial parent is counted on Worksheet B (albeit in the child support received line instead of the cash support line) because the non-custodial parent's income and assets are not assessed by the need analysis formula.

Part of the philosophical basis for excluding in-kind support is that it does not represent cash that the family has available to redirect to other purposes, and because it is hard to assign a value to in-kind support. In-kind support is not a resource under the control of the family.

Money received from the non-custodial parent continues to be reported on the child support received line of Worksheet B even if the child is beyond the age for child support. Child support normally terminates when the child reaches the age of majority (age 18 or age 21 in most states). But non-custodial parents sometimes continue to provide support for the child even after their obligation has terminated.

Cash support and in-kind support received by the student's parents are not reported on Worksheet B. Section 480(b)(7) of the Higher Education Act specifies that untaxed income and benefits includes "cash support or any money paid on the studentís behalf, except, for dependent students, funds provided by the studentís parents". There is no similar language for money paid on behalf of the parents, which is why Worksheet B has XXX's through the parent's column on the line for "Cash received or money paid on your behalf". It is unclear why Congress did not want the Federal need analysis methodology to consider cash support received by the student's parents. (As a result, a student's grandparents, other relatives and friends can give money to the student's parents to help pay for the student's education without affecting the student's eligibility for need-based financial aid.)

Cash support from an adopted student's birth parents does get included on Worksheet B. The restriction against including support from a dependent student's parents does not apply, since adoption terminates the parental rights and obligations of the birth parents and the birth parents are no longer considered parents for financial aid purposes.

It is inappropriate to increase a student's cost of attendance to include child support payments made by the student or the student's parents, as those payments are already considered on the FAFSA. When a student or parent makes child support payments, either the supported children are included in household size or the payments are included in Worksheet C, depending on whether the child support payments represent more than half the children's support or not.

 

 
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