Question About Loans

[pirateyoho]

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I apologize in advance for not being very savvy about loans. I'm hoping that if this does end up being a stupid question, at least it'll be easy and quick to answer. 😉

I saw it mentioned briefly on another thread from a few years ago that a student should have no problem taking out enough money in loans to cover tuition and even some costs of living if, typically, they never owed any money (and possibly even got a refund) during tax season. Obviously, this applies to most students entering vet school, as we're unlikely to make any more than a couple thousand dollars a year while completing our undergrad degrees.

I am a bit concerned, though, because every tax season I end up *owing* the government money. This is because 1) part of my scholarship is taxed, and 2) my parents have me listed as a dependent because they want my nice tax breaks for themselves. My parents have said they want to keep listing me as a dependent for as long as possible, even though I'm really living on my own without much financial support from them at all (I fund my own education, pay for groceries, living costs, and gas, work a job, etc).

Will their listing me as a dependent end up harming my ability to take out loans for vet school in the future?

 

[psilovethomas]

I apologize in advance for not being very savvy about loans. I'm hoping that if this does end up being a stupid question, at least it'll be easy and quick to answer. 😉

I saw it mentioned briefly on another thread from a few years ago that a student should have no problem taking out enough money in loans to cover tuition and even some costs of living if, typically, they never owed any money (and possibly even got a refund) during tax season. Obviously, this applies to most students entering vet school, as we're unlikely to make any more than a couple thousand dollars a year while completing our undergrad degrees.

I am a bit concerned, though, because every tax season I end up *owing* the government money. This is because 1) part of my scholarship is taxed, and 2) my parents have me listed as a dependent because they want my nice tax breaks for themselves. My parents have said they want to keep listing me as a dependent for as long as possible, even though I'm really living on my own without much financial support from them at all (I fund my own education, pay for groceries, living costs, and gas, work a job, etc).

Will their listing me as a dependent end up harming my ability to take out loans for vet school in the future?

My parents list me as a dependent (rightfully so, they pay for 1/2 tuition and all of my living expenses), and I still qualify for $75,000/year in loans. You will be okay.

But your parents should stop listing you as a dependent..

 

[Frozenshades]

When you fill out the FAFSA professional students are automatically qualified as independent, and supplying any family financial information is optional.

 

[pirateyoho]

When you fill out the FAFSA professional students are automatically qualified as independent, and supplying any family financial information is optional.

My parents list me as a dependent (rightfully so, they pay for 1/2 tuition and all of my living expenses), and I still qualify for $75,000/year in loans. You will be okay.

Thank you for the quick and informative responses. I had a feeling I couldn't have been the only one in this boat, so it's good to know that other "dependents" have qualified for loans with no problems.

But your parents should stop listing you as a dependent..

Right? 🙄

 

[bunnity]

I apologize in advance for not being very savvy about loans. I'm hoping that if this does end up being a stupid question, at least it'll be easy and quick to answer. 😉

I saw it mentioned briefly on another thread from a few years ago that a student should have no problem taking out enough money in loans to cover tuition and even some costs of living if, typically, they never owed any money (and possibly even got a refund) during tax season. Obviously, this applies to most students entering vet school, as we're unlikely to make any more than a couple thousand dollars a year while completing our undergrad degrees.

I am a bit concerned, though, because every tax season I end up *owing* the government money. This is because 1) part of my scholarship is taxed, and 2) my parents have me listed as a dependent because they want my nice tax breaks for themselves. My parents have said they want to keep listing me as a dependent for as long as possible, even though I'm really living on my own without much financial support from them at all (I fund my own education, pay for groceries, living costs, and gas, work a job, etc).

Will their listing me as a dependent end up harming my ability to take out loans for vet school in the future?

1. You can borrow up to your cost of attendance regardless of financial need. You do have to do a tax return and FAFSA but you will be eligible for loans up to COA regardless of your or your parents' financial situation. Direct loans are up to 40,500 a year; if you need more (depending on where you go to school) you can get grad plus which follow the same rules but require a credit check as well.
2. Your dependency status will not affect your loan eligibility but it is illegal for your parents to list you if they are not paying >50% of your expenses. If they insist on listing you despite you telling them not to, ask a tax professional how best to proceed. BTDT with my parents 🙄

 

[felinelvr44]

I'm sorry, your parents claim you as a dependent yet they aren't paying for > 50% of your expenses AND because of this you end of owing money come tax time?

Answer: Tell your parents to stop claiming you as dependent. Period.

If you are over 19 (which I assume you are), you are an adult and have every right to file your taxes correctly with the IRS, regardless of how much your parents want their tax credit. If you are providing a majority of your expenses and file as independent, your parents may have to justify and provide documentation that they support you. If they can't, they'll get that exemption taken away. Of course the easier situation would be for them *not* to claim you... but if they refuse, it just gets messy for them.

 

[Museum Nerd]

the law clearly states that the parent has to support you for more than 50% of the year/time in order to claim you. If you have a scholarship that is taxable that means that it covers all of your tution, books, lab fees and then the taxable part is living expenses so i am surprised your parents can get away with saying they support you more than 50%. I would do your taxes correctly becasue ultimatley it is hurting you!

 

[pirateyoho]

To be fair to my folks, they help me cover what I end up owing each tax season, but yes, I do disapprove of their actions simply because I know it's illegal for them to claim me when they're not paying >50% of my expenses. I'm still under their health care and car insurance plan, which may be what they think justifies it, but I can't imagine that even that's close to half of my living expenses. I was actually secretly hoping to find out that my vet loans *would* be dependent on my taxes to use that at a bit of leverage. 😛

 

[Emiloo4]

My parents used to claim me when they paid for $0. I told them to either start depositing the tax refund they get bc of me, or that I would file as an independent anyway. So I did, and the IRS questioned why I was both, told them I'm definitely independent, and they required my parents to change the status. It wasn't as dramatic as it seems. They weren't mad or anything, but I had to stick up for myself.

 

[bunnity]

To be fair to my folks, they help me cover what I end up owing each tax season, but yes, I do disapprove of their actions simply because I know it's illegal for them to claim me when they're not paying >50% of my expenses. I'm still under their health care and car insurance plan, which may be what they think justifies it, but I can't imagine that even that's close to half of my living expenses. I was actually secretly hoping to find out that my vet loans *would* be dependent on my taxes to use that at a bit of leverage. 😛

It's not going to make a difference for your loans either way... health insurance runs 2-3k a year and car insurance on a group plan probably isn't over 1k a year, so they definitely are not justified in claiming you.

 

[felinelvr44]

It's not going to make a difference for your loans either way... health insurance runs 2-3k a year and car insurance on a group plan probably isn't over 1k a year, so they definitely are not justified in claiming you.

And even if you are covered under their health insurance they get through their jobs (which on average tends to cost more than health insurance you pay for yourself since the company covers a portion of it), it's still probably not adding up to >50% of your living expenses. I have pretty decent health insurance through my job and according to my taxes this year, the cost of my employer-sponsored health care is ~$15,000 for my husband and I.

 

[deleted497320]

To be fair to my folks, they help me cover what I end up owing each tax season, but yes, I do disapprove of their actions simply because I know it's illegal for them to claim me when they're not paying >50% of my expenses. I'm still under their health care and car insurance plan, which may be what they think justifies it, but I can't imagine that even that's close to half of my living expenses. I was actually secretly hoping to find out that my vet loans *would* be dependent on my taxes to use that at a bit of leverage. 😛

I only know that Cornell does determine how much aid they give you (separate from what you get in loans from the gov't or elsewhere) based on "expected family contribution," and they require that you submit your custodial parent(s) tax info when you apply for financial aid if you're under 30 and not married. I'm not sure, though, if whether or not you're listed as a dependent affects your EFC, or if any other schools have similar requirements, but there is a chance that your dependency status might affect your financial aid *somewhere.*

 

[deleted498041]

I'm sorry, your parents claim you as a dependent yet they aren't paying for > 50% of your expenses AND because of this you end of owing money come tax time?

Answer: Tell your parents to stop claiming you as dependent. Period.

If you are over 19 (which I assume you are), you are an adult and have every right to file your taxes correctly with the IRS, regardless of how much your parents want their tax credit. If you are providing a majority of your expenses and file as independent, your parents may have to justify and provide documentation that they support you. If they can't, they'll get that exemption taken away. Of course the easier situation would be for them *not* to claim you... but if they refuse, it just gets messy for them.

And what if we're not over 19? I guess I'm one of the few in that boat.

 

[felinelvr44]

And what if we're not over 19? I guess I'm one of the few in that boat.

No idea. I mentioned 19 because I saw it on a tax website. You should check the IRS website or speak to a tax professional about your specific situation.

 

[pirateyoho]

I only know that Cornell does determine how much aid they give you (separate from what you get in loans from the gov't or elsewhere) based on "expected family contribution," and they require that you submit your custodial parent(s) tax info when you apply for financial aid if you're under 30 and not married. I'm not sure, though, if whether or not you're listed as a dependent affects your EFC, or if any other schools have similar requirements, but there is a chance that your dependency status might affect your financial aid *somewhere.*

Good to know regardless; thanks for the heads up. I would be interested in hearing if anyone else had info on this to contribute, as well.

 

[felinelvr44]

Good to know regardless; thanks for the heads up. I would be interested in hearing if anyone else had info on this to contribute, as well.

Just deleting my inaccurate info... 🙂

 

[stxjawa]

Regardless of how you file your taxes (dependent or independent), your parent's income and assets are taken into account to determine your expected family contribution UNLESS you are over the age of 30 or married. This is true for federal financial aid and further explanation can be found on the federal gov websites. I'm fairly sure that no one has problems getting the Federal Direct Loan but your eligibility for something like the Perkins loan (which has a lower interest rate) or state grants, which do go to those with financial need, are going to be affected by the amount of money your parents make, regardless of whether or not they are helping you pay for vet school. I'm married now but I can remember this sucking majorly since my parents never helped me pay for a single dime of school. The need-based federal Health Professionals loan requires parent income info regardless of marital status until the age of 30.

Are you talking about any specific loan (besides the HP loan)? Because when I filled out my FAFSA for federal loans (Stafford) for graduate school, I didn't have to put any parental information. And I was 25 and definitely not married.

 

[felinelvr44]

Are you talking about any specific loan (besides the HP loan)? Because when I filled out my FAFSA for federal loans (Stafford) for graduate school, I didn't have to put any parental information. And I was 25 and definitely not married.

Yeah, you're totally right. I got my undergrad and grad loans mixed up. For grad school, you are considered independent for Federal Direct, Perkins, and Plus loans. For the Health Professionals loan (need based) you do need parent income info. Need-based grants and scholarships at your particular school may require parent income/asset info as well - at Cornell it's required unless you're 30 or married.

 

[KCgophervet]

To ask a slightly OT question, what about married folks? I'm not, but I'm wondering if you were married with a working spouse does that cut down the amount of loans you'd be able to take out? Or are you still pretty much guaranteed to get cost of attendance?

 

[BladeofGrass]

What does everyone think about Sallie Mae recently reducing their interest rates for grad loans? I'm curious to know people's input on this and whether it will affect students taking out Grad PLUS loans:

http://www.usnewsuniversitydirector...on-graduat_13006.aspx#.UVNGrVeS8kI?mcid=53052

 

[Kansas Girl]

I just want to throw out one thing that could confuse some people (although it doesn't sound like this applies to pirateyoho's case). According to IRS Publication 501, "A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support." So in some cases, even if you are paying taxes and had a scholarship with a taxable portion, you may be legally claimed as a dependent on your parents' tax return. Also, I believe when you're in the under 24 category, the IRS looks at whether you provided more than 50% of your support but not whether your parents provided more than 50%. So your parents don't have to provide 50% + 1 but you cannot provide 50% + 1 of your own support to qualify as a dependent.

 

[pirateyoho]

I just want to throw out one thing that could confuse some people (although it doesn't sound like this applies to pirateyoho's case). According to IRS Publication 501, "A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support." So in some cases, even if you are paying taxes and had a scholarship with a taxable portion, you may be legally claimed as a dependent on your parents' tax return. Also, I believe when you're in the under 24 category, the IRS looks at whether you provided more than 50% of your support but not whether your parents provided more than 50%. So your parents don't have to provide 50% + 1 but you cannot provide 50% + 1 of your own support to qualify as a dependent.

A bit strange, if you ask me. Sure, I'm not paying out of pocket for my college tuition, but then again, neither are my parents. So I don't see how it could still count as them "providing" for me as a dependent. I guess I could see how it makes sense to not allow me to use it as proof of self-dependency, but it's certainly not proving dependency either...

 

[BulldogMS]

If an undergrad student claims financial independence to the IRS, that opens the door for grants and scholarships regardless of parents ability to pay. The reason it's so difficult to become emancipated or independent in the eyes of the government, is strictly monetarily. A "kid" usually has an income so low, their finances are well below the poverty level. For a crafty, dishonest parent, this is the golden road to a free or mostly free college education for their kid. That's a major reason why it's so difficult for a HS or college student to file their taxes as an independent.

 

[scb44f]

To ask a slightly OT question, what about married folks? I'm not, but I'm wondering if you were married with a working spouse does that cut down the amount of loans you'd be able to take out? Or are you still pretty much guaranteed to get cost of attendance?

Nope, it has no effect on the amount of direct loans you can take out. My husband is in med school, so we could take out a combined 81 grand if we were feeling especially needy that year. I am unsure about the HPSL or other loans though.