What Should Schools Do If Concerned About Parents Placing Their Children In Legal Guardianships Solely For Financial Aid Eligibility?

Under Section 480(d) of the Higher Education Act of 1965 (HEA), as amended [20 USC 1087VV], a student is an independent student if they are, or were immediately prior to attaining the age of majority, in legal guardianship as determined by a court of competent jurisdiction in the student’s state of legal residence. The school cannot overturn a court’s decision. That is, the school does not have the professional judgment (PJ) authority to adjust a student’s dependency status from independent to dependent.

However, the financial aid administrator (FAA) could choose to exercise their discretion to perform a PJ adjustment to the student's income or cost of attendance (COA) to account for any money received or paid on the student's behalf (cash support), such as assistance with:

• Health or car insurance bills;
• Cell phone bills;
• Rent or housing bills; and
• Higher education expenses.

Any PJ decision must be based on special circumstances, exercised on a case-by-case basis, and thoroughly documented in the student’s file.

Starting with the 2024-25 award year under the FAFSA Simplification Act, money received by the student is not reported on the FAFSA, is not included in need analysis, and is not other financial assistance (OFA) when packaging the student with Title IV aid.

Cash support includes money and gifts and housing, food, clothing, car payments or expenses, medical and dental care, college costs, and money paid to someone else or paid for on the student's behalf (such as a friend or relative paying the student's electric bill or part of the student's rent). The basic rule is: if someone pays a cost the student is obligated to pay, the amount counts as cash support. On the other hand, in-kind support is support other than money, such as when friends or relatives give the student food or allow the student to live with them rent-free.

Note that this applies only to federal student aid. State aid laws may vary, and schools have discretion to administer and determine eligibility for their own institutional aid programs as they see fit.

See also AskRegs Knowledgebase Q&A, Are Schools Required To Verify That a Student Answered the Dependency Status Questions Correctly On the FAFSA? 

P&P Builder: NASFAA’s Policies & Procedures (P&P) Builder guides you step-by-step through the creation of a centralized, accessible policies and procedures manual. This is included in the cost of NASFAA Value Plus membership. There is an additional cost for other membership levels.