Scene: A parent casually mentions not filing taxes and asks if that will be a problem for submitting FAFSA.
The pulls income data from U.S. tax returns to determine eligibility for need-based federal student aid—but ask follow-up questions before panicking and completely revising the student’s college list.
First, identify the student’s contributor; this determines which parental income and assets should be reported. (See “Clearing Up ‘Contributor’ Confusion” in the Fall 2024 Insights.)
FAFSA uses “prior-prior” income and current asset information to determine eligibility for federal student aid. If a dependent student applies for federal aid for the 2027–28 academic year, their parent(s) would submit income information from 2025.
Some situations allow manual income submission or ignore income reporting.
Examples include parents who:
- live and file taxes outside the United States and don’t file U.S. tax returns;
- live in and file taxes in a U.S. territory; or
- do not meet the income threshold to file U.S. tax returns.
If parents are divorced, separated, or unmarried and live apart, FAFSA considers the parent who provided the most financial support to the student in the previous 12 months to be the contributor who provides income and asset information. It doesn’t matter which parent has custody or claims the student as a dependent on their tax return. If the contributor parent is married, their spouse’s income information will also be required.
FAFSA doesn’t consider the income of the parent who provides less financial support to the student. Generally, their tax return isn’t required for federal student aid.
Bottom line:
- Failure to file required U.S. tax returns may significantly affect a student’s eligibility for need-based federal student aid as well as need-based aid from their state or college.
- If a student’s “contributor parent(s)” are unwilling to provide their financial information, the student can still submit their FAFSA. In this situation, the student would usually only be eligible for a Direct Unsubsidized Loan.
- Note: Students who are homeless or at risk of homelessness are considered independent for financial aid and would not require contributor financial information.
By Lisa Rielage, MSEd, 51Թ (VA)