Does Being Married affect Financial Aid?

[deuce924]

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I tried to search for this question in the archives but couldn't find any worth-while answers. Does anyone know if being married affects your eligibility for financial aid?

 

[jojo_1981]

Yes, the financial aid office will ask for your spouse's income, and a percentage of that income will be expected to "be available" for use in paying tuition and expenses. This means less chance for scholarships and more loans. Some schools even ask if you have a significant other you "plan to marry."

 

[nalgie24]

The only way I can see it becoming an issue is if your spouse makes a ton of money a year. That would cause your EFC on the FAFSA (expected family contribution) to change somewhat. Other than that, schools set their cost of attendance based upon the costs of a single student. They won't give you more than that unless it is for child care expenses and a little extra for health insurance coverage if you qualify. There are however, some benefits that may arise from having a spouse. If you need extra money to survive, their are institutions like Bank of America and Chase that have education loans which are independent of your schools financial aid office. this means that you do not need to fill out a FAFSA or go through the schools Financial Aid Office to get the loan. These loans are based soley on your credit history so if you have good credit or your spouse has good credit they can be a co-signer on the loan which will increase how much you can borrow and decrease the interest rate you will be borrowing at. I hope this helps.

 

[deuce924]

Thanks for your help...I figured as long as the spouse isnt making tons of money, it shouldn't have that big of an effect on financial aid.

 

[pirata]

Not necessarily.

I'm a nontrad that's been working for several years so my situation might be different than yours, but I barely worked last year and my husband worked full-time (not making a ton of money, under 50K per year) and our EFC still came out to 20K!

Thankfully, most schools still fully fund the entire budget, with the amount that is your EFC being drawn from unsubsidized staffords or grad PLUS loans so it's not like we're going to have to come up with 20K in cash. But YES, being married will significantly affect your financial aid package--at least the need-based grants and loans--if your spouse makes an income that reflects anything over that of a fellow grad student.

 

[bluesTank]

What about a spouse who won't be making much money at all (graduate school) but has a huge trust fund set up in her name (which she can't touch til she's 25). Will any trust funds be considered?

 

[JRockdown]

Trust fund would not be considered since it should be looked at as a separate legal entity, hence the name trust.

On the other hand, people should also see the upside of being married in school, if the significant other doesn't make much money. If they have good benefits it will almost certainly save you money on health insurance (it usually saves on car insurance to be married too.) As well your significant other can take a credit for the cost of tuition while you are in school and claim as head of household. Basically, your significant other should pay 0 taxes while you are in school and possibly provide some cheaper insurance.

Just some extra info.

 

[glamqueen]

What do you do if you will have a spouse that will be making good money? As in > 60K? Are you totally screwed? Should I start crying now? We thought it would be good that we had some money coming in...

 

[mshheaddoc]

moving to financial aid.

 

[Jejton]

The only way I can see it becoming an issue is if your spouse makes a ton of money a year. That would cause your EFC on the FAFSA (expected family contribution) to change somewhat. Other than that, schools set their cost of attendance based upon the costs of a single student. They won't give you more than that unless it is for child care expenses and a little extra for health insurance coverage if you qualify. There are however, some benefits that may arise from having a spouse. If you need extra money to survive, their are institutions like Bank of America and Chase that have education loans which are independent of your schools financial aid office. this means that you do not need to fill out a FAFSA or go through the schools Financial Aid Office to get the loan. These loans are based soley on your credit history so if you have good credit or your spouse has good credit they can be a co-signer on the loan which will increase how much you can borrow and decrease the interest rate you will be borrowing at. I hope this helps.

Actually your school can increase your COL if you are married and have dependent kids ( mine did). How much they will raise it, depends on the school and if your spouse is working or not. If she is working, they wont raised it much if at all, if she is in school they expect her finaid to cover her half, if she is neither they will give you a hard time.

 

[AMDFAO]

If you are legally married than any trust is required to be reported on the FAFSA. The gov't doesn't much care that it can't be touched until 25 it is still legally considered her asset in all federal need calculations. If your school has their own FA app besides the FAFSA it would be required to be disclosed there as well. You may even be asked to provide a copy of the trust. Your assets are her assets and her assets are yours-- there's no such thing as his and hers in the world of financial aid.
I'm also fairly doubtful you (or she) could claim head of household since no spouse would ever be viewed as a dependent on a federal tax return: there are 2 statuses for married folks: married filing jointly or married filing separately. Your spouse is not considered a dependent under any circumstances but is viewed by both the IRS and the Dept of Ed as your equal partner who is responsible to take care of themselves; if income provides would be considered the individual reponsible for helping you achieve your educational goals and meet your cost since your spouse would be the first to reap the benefits of your increased income.
I didn't get the deduct your tuition" bit either since the max deduction is $4000 and max tax credit is 20% of tuition and fees up to a max of $2000.
As such, both are testifying to the fact that when you fill out the FAFSA that all of the information is true and correct as of the day you sign it. I would not encourage anyone to try and get "clever" when filling out a federal form. It really looks bad professionally if before you even enroll, you are being less than forthcoming. It also is a guarantee that if you are caught misrepresenting your financial situation all of your aid can be rescinded by the school and worse the feds can prosecute you for committing fraud against the government because basically that is what it boils down to.
As for the worst case scenario: if Bill Gates filled out his FAFSA correctly, was accepted as a regular student in a degree or certificate program, registered for selective service when he needed to, wasn't in default of a fed loan and didn't get convicted of a drug felony he would be able to borrow the annual max in a Stafford up to his cost of attendance. If he needed more and he met all the previous requirements he would be eligible for a federally backed GradPLUS loan as long as he didn't have a tax lien (you owe the feds money in back taxes it's a problem) or wasn't delinquent in paying his bill past 90 days that would be a fairly certain option.
Simply put: all you may lose is a sub loan for a max of $8500... To most it seems like the be all and end all in funding but all it means is that the taxpayers don't pay the interest on that piece of the money while you are going to school. Do the math at 6.8 on $8500 for 4 years and it's really not all that much. Me, I'd keep the wife with the trust fund and give up the payment from the taxpayers for 4 years (or a few more) and count my blessings and inform your wife that if you pass away and owe federally backed debt it is forgiven and she's not left paying it.
As for borrowing the "secret" side loans: buyer beware. Any lender understands that when you are willing to go outside the FA office you are in a bind and willing to take most anything. There is no death forgiveness on that type of debt which may mean your spouse is left paying it off. There is a limited time you may be able to defer or request a forbearance no matter what your circumstances--at some point in time, the piper wants to be paid and it's really tragic when it's 1/2 way into your DMD program (I have 2 such lucky students). Frankly, it's not worth it and I encourage my students to enter into those types of loans when their back is against the wall. Besides, the feds are looking at further ways to regulate the outside loans provided they are connected with the cost of your education and mandate all lenders report any funding to the school you attend. Should that happen with any of my students I would be left with no choice but to start cancelling out their aid I awarded.

 

[Beau Geste]

What is considered "not much money" for your spouse to make to have a low EFC?

Also, what if you made more than your spouse in '07 but will not be working to go to med school in '08? Does your income count toward the EFC or just the spouses'?

 

[Doctor Bagel]

What is considered "not much money" for your spouse to make to have a low EFC?

Also, what if you made more than your spouse in '07 but will not be working to go to med school in '08? Does your income count toward the EFC or just the spouses'?

The FAFSA doesn't take into consideration the fact that you will not work once you start school, so both incomes are counted fully in determining the EFC.

Having a super low EFC doesn't matter much because main need-based aid is the $8500 subsidized stafford loans. As long as your school's cost of attendance less your EFC is $8500 or greater, you'll likely wind up in the same spot. If you check the links sticky thread at the top of the forum, you'll find a link I posted to the official EFC calculation so you can run some numbers.

 

[Beau Geste]

The FAFSA doesn't take into consideration the fact that you will not work once you start school, so both incomes are counted fully in determining the EFC.

Having a super low EFC doesn't matter much because main need-based aid is the $8500 subsidized stafford loans. As long as your school's cost of attendance less your EFC is $8500 or greater, you'll likely wind up in the same spot. If you check the links sticky thread at the top of the forum, you'll find a link I posted to the official EFC calculation so you can run some numbers.

We are probably looking at a huge EFC. We will still qualify for Stafford Loans and private loans, correct?

I can't do an EFC guestimate yet because I have no idea what our taxable income will be this year. I have to wait for my accountant to handle all of the business deductions and so on. So, I truly have to wait until I file my taxes to know more.

 

[TMP-SMX]

The EFC doesn't matter. You just will not get the $8500 in subsidized loans a year. You will get the full unsubsidized amount though.

 

[Sol Rosenberg]

There is no death forgiveness on that type of debt which may mean your spouse is left paying it off.

It's generally a really bad idea to have spouse co-signors on ANY loan for just this reason. There is no such thing as "community debt," meaning that if you (and only you) sign for debt, it does not, because of your marriage, automatically become your spouse's obligation upon default (for any reason, including your death.) If you were to die, the obligation would be part of the your estate, and the debt would be paid out of any assets in the estate. If there are no assets in the estate, the estate is bankrupt and that is that.

Moral of the story: Don't take out joint loans when you are married. There is almost no benefit whatsoever in doing so (though brokers, loan officers, etc, will try to convince you otherwise, and will always try to get as many names as possible on a loan.)

 

[Doctor Bagel]

Besides, the feds are looking at further ways to regulate the outside loans provided they are connected with the cost of your education and mandate all lenders report any funding to the school you attend. Should that happen with any of my students I would be left with no choice but to start cancelling out their aid I awarded.

Interesting. I've definitely noticed that those loans have by and large disappeared. When I came to SDN a few years ago, it seemed like students here were getting them left and right with not so horrid terms (not great terms but better than most credit cards). Now the general word is that all the main lenders have pulled out of that market.

 

[litldime]

I am going to be in-state next year (dental school) and the cost for my first year will be $30k. When my fafsa is tabulated, will there still be an EFC amount or will I get the total 30k since I am below the max in federal sub/ un-sub?

 

[Doctor Bagel]

I am going to be in-state next year (dental school) and the cost for my first year will be $30k. When my fafsa is tabulated, will there still be an EFC amount or will I get the total 30k since I am below the max in federal sub/ un-sub?

You'll still get an EFC, but you should still be able to borrow the full $30k. If your EFC is pretty high, you might see some reduction in the amount of subsidized loans that you receive, but subsidized loans make up such a small part of any aid package that it won't make a huge difference.