Kids & Money: Paying for College and The Myth of Financial Independence

Whether you have a child that’s prepping for college or your young one has finally made it there, the rumor of filing for financial independence to increase financial aid eligibility is pervasive. After all, it makes sense: the less income you generate the more aid you’re likely to receive. But, it’s more of an urban legend than actual fact, says Ken Clark, author of The Complete Idiot’s Guide to Paying for College, debuting October 5.

READ: Alternative Ways to Pay for College

“The only place it’s going to make a huge difference is maybe whether or not you’re eligible for a Pell Grant which can be an additional $5,000 to $6,000 a year,” says Clark, a certified financial planner. “The government is savvy enough to know that when people are trying to look like independent students.”

Aside from a slim chance of boosting your financial aid package, the process can be costly and lengthy. Students looking to emancipate themselves must provide documentation to prove that mom and dad do not provide an ounce of financial support. In the end, with court fees and documentation, this process can end up costing up to $2,000.

Clark says students who do receive little financial help from mom and dad should consider applying for status as an “independent student” through the Department of Education. The Department of Education’s website has all the paperwork and information students need in order to file as an independent student. And, unlike emancipation, students will still have access to their parent’s current medical coverage.

Finally, Clark urges to students to consider the American Opportunity Credit passed by the White House. “If you spend $5,000 on college in any given year you’re going to get a $2,500 rebate against what you owe,” says Clark. “If you spend nothing the federal government will send you $1,000 as a check.”

The credit only applies to undergraduate students.