Independent Students Vs. Dependent Students

By Reese Lopez

Published on September 3, 2021

Independent Students Vs. Dependent Students

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Classification as a dependent or independent student can affect every aspect of your financial aid. This includes your eligibility for different loans and the amount you can borrow. Completing the FAFSA as an independent student may qualify you for additional types of aid, particularly if you make a low income. You may also qualify for education tax credits based on your dependent status. In some cases, you can declare independence to receive increased aid.

Read on to learn more about independent and dependent students and the advantages and disadvantages of each designation.

How Do I Decide Which Is Right For Me?


Many factors can affect your dependency status, but for most students, the selection is simple. Students under 24 listed as dependents on their parents' returns should designate themselves as dependent students. Students over 24 who file their own taxes should designate themselves as independent students. In general, very few scenarios enable students over 24 to claim dependent status. However, several circumstances may enable students under 24 to claim independent status.

If you're married, supporting children, or supporting other family members, you likely qualify as an independent student. Military veterans and those currently serving in the armed forces also qualify as independent. If you're an emancipated minor, an unaccompanied homeless youth, or both your parents are deceased, you qualify as an independent student. Finally, you can also file as an independent student if you're pursuing a graduate degree, such as a master's or doctorate.

Dependent Students

Dependent students are listed as dependents on their parents' tax returns. They must submit their parents' financial information along with their own when completing the FAFSA. Students under 24 years old count as a dependent. Even if students' parents don't support them financially, they typically maintain dependent status until turning 24.

In special circumstances, students under 24 may gain independent status. For instance, if you're not in contact with your parents, your school may let you file for financial aid as an independent. However, institutions can still deny you aid without your parents' financial information.

Pros
Cons
  • Your parents can cosign your student loans. A dependent student's parents can add their name to the student's loans, which increases financial stability.
  • You can access a wider selection of loans. With your parents as cosigners, you may qualify for different types of loans that require higher income or more extensive credit history.
  • Your parents can receive education tax credits. If your parents claim you as a dependent, they can receive certain tax credits, such as the American opportunity credit.
  • You need your parents' financial information. Dependent students must include their parents' financial information on the FAFSA. This can complicate the financial aid process if your parents have complex finances or if you do not communicate with them regularly.
  • You may qualify for fewer grants and other financial aid awards. Depending on your parents' income, you may not qualify for need-based financial aid, such as the Pell Grant.
  • Your financial aid awards may be reduced depending on your parents' income. Even if you do receive need-based aid, you may receive lower amounts due to your parents' income.
Financial Aid Options for Dependent Students
Subsidized Federal Loans The federal government awards subsidized loans to dependent students based on financial need. Your school determines how much you can borrow. When you take out subsidized loans, the Department of Education pays the interest while you're enrolled in school and for the first six months after you graduate.
Unsubsidized Federal Loans Unsubsidized federal loans do not require you to demonstrate financial need. If you take out unsubsidized loans, you must pay the interest while you attend school and after you graduate. The federal government generally offers higher loan limits on unsubsidized loans. Schools typically award you a higher amount of these loans.
Parent PLUS Loans Also offered through the federal government, PLUS loans don't require demonstration of financial need. They typically feature higher borrowing limits than subsidized and unsubsidized loans. Unlike other federal loans, PLUS loans may require a credit check. They can cover tuition costs minus any other aid you receive.
Scholarships Scholarships offer education funding that does not require repayment. Various organizations offer scholarships, including nonprofits, government agencies, and private companies. Unlike loans, these awards are highly competitive. Scholarships often require applicants to demonstrate academic achievement, community involvement, or professional aptitude.
Grants Grants function similarly to scholarships. They offer financial aid that does not require repayment. However, most grants maintain less specific application requirements than scholarships. To qualify for the Pell Grant, for example, you must only demonstrate exceptional financial need. Other grants may serve specific student populations, such as teachers or veterans.
Private Loans Banks and other financial lenders also finance college education through private loans. Compared to federal loans, private loans feature higher interest rates and less generous repayment options. They may not offer fixed interest rates or income-based repayment options. You should always explore all federal options before taking out private loans.

Independent Students

Independent students file income taxes separately from their parents and do not count as dependents on their parents' tax returns. In general, the designation depends on your age and financial status. If you're over 24 and not claimed as a dependent on your parents' tax returns, you most likely qualify as an independent student.

Independent status generally qualifies you for additional financial aid opportunities. Most college students earn less than their parents. Obtaining independent status enables you to remove their income from your financial aid assessment. If you become an independent student, you'll likely pay less for college.

Pros Cons
  • You may qualify for different types of aid. When you file as an independent student, your parents' income will not affect your eligibility for financial aid. This may qualify you for additional low-income awards, such as the Pell Grant.
  • You may qualify for higher award amounts. Without your parents' income, you can also qualify for higher award amounts from grants and subsidized federal loans.
  • You may qualify for education tax credits. When filing taxes as an independent, you may receive tax credits such as the American opportunity credit and the lifetime learning credit.
  • You take full responsibility for paying your tuition. As an independent student, you typically cover all your education expenses. Your parents may still support you financially, but they won't take responsibility for your loans.
  • You may not qualify for certain private loans. Without your parents' financial history, you may find it harder to qualify for private loans. Private loans often require higher income or stronger credit history.
  • Taking out private loans may not allow you to borrow as much. Depending on your income, you may not qualify to borrow as much through private lenders.
Financial Aid Options for Independent Students
Subsidized Federal Loans Subsidized federal loans function similarly for independent students, and loan limits remain the same. However, depending on your income, you may receive a higher amount of subsidized loans when applying as an independent. If pursuing a graduate degree, you're ineligible for subsidized federal loans.
Unsubsidized Federal Loans Independent students can receive unsubsidized federal loans without demonstrating financial need. Unsubsidized loan limits differ for independent students. Undergraduates can borrow up to $35,000, and graduate or professional students can borrow up to $73,000 (including all loans received during undergraduate study).
Education Credits Independent students who file taxes separately from their parents can receive education tax credits. The American opportunity credit, lifetime learning credit, and the tuition and fees deduction can help save on tuition expenses. Applying for these deductions and credits when filing your taxes may provide you with additional money in your tax return.
Scholarships Scholarships also serve independent students at all academic levels. In some cases, independent students can access more scholarships, depending on their income. Applying as an independent often makes it easier to demonstrate financial need, which can increase your scholarship chances.
Grants Independent students can typically apply for income-based grants more easily than dependent students. If you make less money than your parents, filing for financial aid as an independent should increase the amount received for awards such as the Pell Grant.
Private Loans Independent students can also take out private loans. However, this method of financial aid should always serve as a last resort. If you haven't built up much financial history, particularly your credit, you may find it difficult to obtain a private loan. Most lenders minimize their risk by only lending to applicants with strong credit history.

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