Five Quick Tips About The FAFSA For Military Families

It’s 1 October, which means that it is the first day that you can fill out the Free Application for Federal Student Aid, also known as the FAFSA. This application is the key to a variety of federal aid, including Pell Grants and student loans, and can also impact your eligibility for the school’s need-based aid. And some schools require it for merit aid, as well, so you definitely want to fill it out. But some of those questions are tricky for military families. I’ve tracked down the specific, written instructions for the hardest questions.

What’s Your State of Residence?

I reached out to my friends at the Department of Education to clear up the ever-confusing question of what state to put as your residence on the FAFSA. I got a bunch of info back! Here’s what I was told:

“The Department cannot determine an applicant’s state of legal residence because each state has their own criteria. Therefore, students must report their state of legal residence, as defined by the state.

For assistance with qualifications regarding state of legal residence, Free Application for Federal Student Aid (FAFSA®) applicants should contact the school’s financial aid office.

For purposes of filling out and submitting the FAFSA form, a student and parent(s)—if applicable—must each report their own state of legal residence if it is different.”

And then, they provided a link to the help topic about the parents’ state of legal residence.

As always, I don’t make recommendations when something could be more complicated than it originally seems. But now you have the official language to make the best determination for your situation.

Don’t forget that your child is not protected under the Servicemembers Civil Relief Act, and so they may be a resident of the place where you live even though you are a resident elsewhere. And it might help to review the differences between Home of Record and State of Legal Residence.

You Don’t Include Basic Allowance for Housing

Line 94 g of the FAFSA asks you to list,

“Housing, food, and other living allowances paid to members of the military, clergy, and others (including cash payments and cash value of benefits). Do not include the value of on-base military housing or the value of a basic military allowance for housing.“ Next to this question, there is a little question mark. If you click on it, it re-iterates the same thing: “Don’t include rent subsidies for low-income housing, the value of on-base military housing, or the value of a basic military allowance for housing.” So that’s pretty clear!

But You Do Include Basic Allowance for Subsistence

According to the FAFSA Application and Verification Guide,

“Members of the U.S. military report their basic allowance for subsistence (BAS) but not their basic allowance for
housing (BAH).”

Straight from the horse’s mouth, this stuff.

Don’t Report Combat Pay

Questions 45 and 94 asked about non-taxable income. The instructions for question 94i specifically say,

“Don’t include extended foster care benefits, student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Innovation and Opportunity Act educational benefits, on-base military housing or a military housing allowance, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels.”

However, there is a little trick here. This is in a section about non-taxable income. Not all pay earned in Combat Zone Tax Exempt locations is always completely non-taxable. For commissioned officers generally, combat pay in excess of the highest enlisted person’s pay (plus imminent danger/hostile fire pay) is taxable. It will be coded as taxable income on the W-2, so you should be OK as long as you are using the W-2 taxable income figure.

Don’t Report VA Educational Benefits

Educational benefits provided by the Department of Veterans Affairs (VA), including Post 9/11 GI Bill benefits, should not be included anywhere on the FAFSA. This announcement, though dated 2009, is still in force. However, it is important to note that some Yellow Ribbon benefits may be taxable. There are several examples in the announcement. It’s tricky.

Hopefully this will answer some of the biggest military FAFSA questions. If you have more, list them in the comments and I’ll look for answers!