This guidance is specific to the 2024-25 award year and later.
This AskRegs Knowledgebase Q&A was updated on November 8, 2023 to provide additional clarification NASFAA received from the U.S. Department of Education (ED) on children living apart from the tax filer.
Starting with the 2024-25 award year, under Section 480(k) of the Higher Education Act of 1965 (HEA), as amended [20 USC 1087vv(k)(1) Amendment of Section], household size becomes family size. Family size is based on federal tax information (FTI) transferred directly from the IRS to the FAFSA via the FUTURE Act Direct Data Exchange (FA-DDX). This means the number of dependents in the family size is now based on the number of individuals who are claimed as dependents on either the applicant’s (if independent) or parent’s (if dependent) U.S. federal tax return. For more information about who can be claimed as a dependent on a federal tax return, see the IRS document Overview of the Rules for Claiming a Dependent.
If FTI is pulled in, the FAFSA contributor (student and/or parent) is then given the opportunity to manually update the family size if it has changed since filing the applicable tax return. However, the contributor cannot see what family size was reported from the FA-DDX, as the transferred FTI is masked.
When the FAFSA contributor manually enters the family size, they are instructed as follows:
Per clarification NASFAA received from ED, the wording on the FAFSA is ED's way of helping families determine who might be in their family size for Title IV purposes. Children and other dependents who live with and receive more than half their support is in alignment with individuals who most often would be able to be claimed on a person’s tax return. ED does not expect schools to be making any IRS determinations of dependents unless there is conflicting information or an issue during verification. The FAFSA help text and articles state that the family size question on the FAFSA is aligned with general requirements for what would make someone an “eligible dependent” on the tax return under the Internal Revenue Code.
Even if They Live Apart Because of College Enrollment: NASFAA questioned ED regarding its use of the above wording "even if they live apart because of college enrollment" on the FAFSA and whether that wording eliminates children who lived apart for reasons other than college enrollment. ED responded that college enrollment is just an example of an IRS condition for claiming dependents where a child is still considered in family size even when temporarily absent from the household. There are other examples of when a child can be claimed as a dependent even if they live apart from the tax filer. IRS Publication 17 states: "Temporary absences. Your child is considered to have lived with you during periods of time when one of you, or both, is temporarily absent due to special circumstances such as:
It is NASFAA's understanding that these are examples and not an exhaustive list. Again, the financial aid administrator (FAA) is not expected to be making IRS determinations. However, if there is conflicting information or an issue during verification, and the FAA needs clarification on whether another example meets this IRS definition, then the FAA will need to consult with the IRS or a tax expert.
Updating Family Size: The rules for updating FAFSA data under 34 CFR 668.55 have not changed. As a general rule under 668.55(b), family size can only be updated if the student is selected for verification by the FAFSA Processing System (FPS, formerly Central Processing System) or the institution. Family size then must be updated to be correct at the time of verification (unless that update is due to a change in the student’s marital status).
Unborn Children: See AskRegs Knowledgebase Q&A, Can an Unborn Child Count In Family Size Starting With the 2024-25 Award Year?
Not Conflicting Information: See AskRegs Q&A, Is It Conflicting Information If Family Size Does Not Match the Tax Return?
The above guidance also applies to paper FAFSA filers and online FAFSA filers whose FTI cannot be transferred into the FAFSA.
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