Will Claiming My 25-Year Old Child As a Dependent Cause Her to Lose Her Financial Aid for College?
- Independent status doesn't always increase eligibility for need-based financial aid for college. It only means that parents' finances are not considered in the needs analysis process. Depending on your financial situation, your 25-year-old could still be eligible. Dependent status shouldn't affect non-need based scholarships and awards.
- Pay off consumer debts such as credit cards and car loans. Purchase big-ticket necessary items before filing for financial aid. Prepay your mortgage and increase contributions to retirement funds. Reduce your family's on-paper income and assets, thus increasing your dependent student's chances of receiving financial aid.
- Don't save money in the student's name unless it's in a college savings plan; dependent students' assets count more than parents' toward possible family contributions and reduce aid packages. Avoid selling assets directly before or during your child's college studies. Capital gains are income. Don't withdraw money from retirement funds -- it becomes taxable income that reduces eligibility the following year. Have grandparents hold off on contributing until after graduation -- monetary gifts also reduce aid packages.
