Occasionally a student will have been raised by his or her grandparents or other relatives. (This is quite common when the student's mother got pregnant while still a teenager or the student's natural parents were incarcerated or institutionalized.) Often the student will have never lived with his or her birth parents. Unfortunately, unless the grandparents or relatives adopted the student, they do not count as parents. Legal guardians and foster parents do not count as parents for financial aid purposes. (For example, legal guardians are not eligible to borrow a PLUS loan.) As a result, financial aid administrators may not treat the guardian as a parent on the FAFSA.

However, financial aid administrators may use a dependency override to change the student's status to independent if the student has had little or no contact with his or her birth parents, on the grounds of abandonment. Third party documentation of the student's situation, such as a letter from the guidance counselor, elementary or secondary school teacher, clergy or a social worker, should be required.

Any cash support from the relatives should be reported as untaxed income on Worksheet B. (Cash support includes amounts paid by the grandparents for bills in the student's name. Amounts paid by the grandparents for bills in the grandparent's name do not count as cash support.) The financial aid administrator may then use professional judgment to include non-cash (in-kind) support from the relatives as untaxed income on Worksheet B. Financial aid administrators are about equally divided as to whether they include in-kind support from the relatives who are raising the student on Worksheet B.