It’s nearly October, which means that it is nearly time 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.
1. 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. However, now you have the official language, and I will point out a couple of things to consider while figuring out the right answer for your specific situation.
- In many cases, military members and their spouses are not legal residents in the place where they live on PCS orders, due to the provisions of the Servicemember’s Civil Relief Act. It might help to review the differences between Home of Record and State of Legal Residence.
- Being a dependent for tax purposes is completely unrelated to being a dependent for purposes of the FAFSA.
- Your child is not protected under the Servicemembers Civil Relief Act, and so they are likely a legal resident of the place where they actually live. Being your dependent, for either taxes or FAFSA, does not make them a resident of the place where you are a resident.
- To the best of my knowledge and experience, colleges are not using the states listed on the FAFSA for purposes of in-state or out-of-state tuition. Schools have their own verifications, and there are special rules for military dependents. The state listings are usually used to find students eligible for specific programs.
2. You Don’t Include Basic Allowance for Housing
Line 44f and 92f 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!
3. But You Do Include Basic Allowance for Subsistence
BAS needs to be included on Line 92f, Untaxed Income, Housing, food and other living allowances.
According to page AVG-24 of 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.
4. Don’t Report Combat Pay
Questions 44 and 92 asked about non-taxable income. The instructions for question 44h and 92h 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.
5. 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. From Page AVG-24 of the FAFSA Application and Verification Guide:
However, it is important to note that some Yellow Ribbon benefits may be taxable. There are several examples in this still current 2009 announcement. It’s tricky.
6. But You Do Report VA Disability and Dependency Benefits
VA Disability benefits and Dependency and Indemnity Compensation (DIC) are specifically included in non-taxable income, on line 44g and 92g of the FAFSA.
From page AVG-24 the FAFSA Application and Verification Guide,
This stuff gets counted.
7. Cost of Living Allowances
A helpful reader asked about Cost of Living Allowances (COLA). I’ve reviewed all the available documentation, and there’s no rule saying that you don’t include Cost of Living Allowances. So, I suspect the Department of Education would argue that COLA should be included on Line 92f, Untaxed Income, Housing, food and other living allowances, just like BAS is included there.
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! I also recommend you check out Three Great Resources for Understanding The FAFSA.
For more information on college funding, check out these articles: