Many students who want to enroll in college often fill out the Free Application for Federal Student Aid (FAFSA).  This application is how the government determines the dependency status of upcoming undergraduates, and it is a huge factor in determining the amount of federal aid awarded.  While the FAFSA is an important tool for graduating high school students, it has some flaws that are reflected in a 2014 study conducted by the American Association of Community Colleges.  These flaws involve the number of dependent students compared to the number of independent students.

The government recognizes dependent students as those with parents responsible for a large portion of the cost of higher education; independent students are defined as responsible for financing their own college education. These definitions are used to determine loan amount eligibility for Stafford loans. A large majority of undergraduates are considered dependent throughout school by the FAFSA, but the study run in 2014 reveals that this may not accurately reflect the status of undergraduates attending four year colleges.

While an overwhelming majority of students are considered financially dependent, approximately 36% of students in 2014 claimed to be financially independent.  This means that there is a considerable disparity between federally recognized independents and actual independents.  This is a problem because federally recognized independents are eligible for more financial aid, but this study shows that a large portion of independent students are not receiving the assistance they might need.

So why is there such a disparity between federally recognized and actual independents in college?

The FAFSA has several standards that students must meet in order to be recognized as independent.  These standards range from marital status (must be married), dependents of student (if a student accounts for over 50% of their child’s finances), orphan status (must be an orphan after age 13), veteran status (must be a veteran), unaccompanied youth (abandoned or homeless), and more.

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The majority of the small portion of independent undergraduates are married.  The government has strict standards for many of these independence qualifications which accounts for the disparity of recognized vs. unrecognized independents.  This disparity is not as surprising when considering the government dependency override standards.

On a case by case basis, dependent students who applied for the FAFSA can be considered for dependency override, but these are heavily regulated.  An override requires consideration of extreme extenuating circumstances such as abandonment or abusive home environment.  There are several exceptions that disqualify and applicant for an override: parental refusal to financially contribute, parental refusal to provide FAFSA information, parental refusal to claim student for tax purposes, or if the student demonstrates complete self-sufficiency.

This last dependency override exception is a key factor that bars financially independent students from receiving more financial aid from the government.  A financially independent student who is receiving a dependent status loan from the government is at a greater chance of dropping out from college due to financial strain, and dropouts without a degree are notoriously at risk for defaulting on their student loan payments.

This is just one aspect of the student loan issues that are hotly debated today.  While the government is limiting the amount of financial aid that it distributes, a large portion of that aid is at greater risk of reaching default status.  On the other side of the coin, looser regulations may require more funds than the government can promise.  At any rate, this is yet another topic that calls for a solution, but the answer turns out to be much harder to find.