35942 DEPARTMENT OF HEALTH, [45 CFR Parts 144, 175, 176, and 190] Definition of Independent Student AGENCY: Office of Education, HEW. ACTION: Notice of Proposed Rulemaking. SUMMARY The Commissioner of Education, with the approval of the Secretary of Health, Education, and Welfare, proposes to issue the following amendments to the regulations defining the independent student under the Basic Educational Opportunity Grant Program. the Supplemental Educational Opportunity Grant Program, the College Work-Study Program, and the National Direct Student Loan Program. The proposed regulation sets forth a revised definition of independent student in order to improve equity in the classification of students as dependent or independent for purposes of participation in the Federal student financial aid programs. DATES: Comments must be received on or before August 26, 1977. Hearings will be held on August 8, 1977 in Washington, D.C. commencing at 10:00 a.m. ADDRESSES: The hearing will be held at Regional Office Building No. 3 Auditorium, 7th and D Streets SW., Washington, D.C. 20202 Written comments should be sent to Mr. Peter K. U. Voight, Director Division of Basic and State Student Grants, ROB-3, Room 4717, 400 Maryland Avenue SW, Washington. D.C. 20202. Comments will be available for public inspection at the above office, between 8:30 and 4:00 p.m., Monday through Friday. FOR FURTHER INFORMATION CONTACT: Ernst Becker, (202) 245-1744. SUPPLEMENTARY INFORMATION: These regulations are expected to be in effect during the 1978-79 academic year (20 U.S.C. 1070a. 1070b-1070b-3, 1087aa-ff. 42 U.S.C. 2751-2756). These amendments are being submitted for public comment. Since the definition of the independent student under the Basic Educational Opportunity Grant Program is embodied in the regulations covering the basis for determining the expected family contribution for dependent and independent students, these amendments will also be submitted for review by both Houses of Congress as required by statute. The regulations to which these amendments are proposed were previously published on June 11, 1976 (41 FR 23874 for the Basic Educational Opportunity Grant Program, November 24, 1970 (41 FR 51957/ PROPOSED RULES for the National Direct Loan and the Supplemental Educational Opportunity Grant Program, and September 1, 1976 (41 FR 36884) for the College WorkStudy Program. EXPLANATION OF NEED FOR REGULATIONS The basic premise for all need-based financial aid programs is that the primary responsibility for financing a student's education rests with the student and his family. The Federal aid is intended to meet those educational costs which remain after the student's resources and an expected contribution from his or her parents have been taken into account. At the same time, there is a category of students who are financially independent of their parents and, as such, cannot expect their parents to bear the cost of their education. The problem of defining an independent student in a manner which will be acceptable and which can be easily administered is an extremely complex issue. Historically, it has been a highly controversial subject in the administration of financial aid. There is general consensus among flnancial administrators that any definition of an independent student should meet certain basic requirements: (a) It should maintain the concept that the primary responsibility for meeting the cost of postsecondary education rests with the student and his family. (b) It should be based on objective and verifiable criteria, and require the least possible amount of personal information from the student and his family. (c) It should prevent inequities in the classification of applicants to the fullest possible extent, (d) It should be readily understood by students and their parents. During recent years, the definition which is most widely used in awarding Federal, State, and institutional aid defines a student as independent if the student 1. Has not and will not be claimed as an exemption for Federal Income Tax purposes by any person except his or her spouse for the calendar year(s) in which aid is received and the calendar year prior to the academic year for which aid is requested, or 2. Has not and will not receive financial assistance of more than $600 from his or her parent(s) in the calendar year(s) in which aid is received and the calendar year prior to the academic year for which aid is requested; or 3. Has not or will not live for more than two consecutive weeks in the home of a parent during the calendar year in which aid is received and the calendar year prior to the academic year for which aid is requested. However, program experience has indicated a number of concerns and weaknesses with the present definition. Specifically, there has been increasing concern that the present definition does not support the concept of the parents' responsibility for the post-secondary education of their children. The intent of the present definition may be readily cir cumvented by those parents who choose not to claim a student as a tax exemption during the base year in order to qualify the student as an "independent" applicant. In addition, the present formula has also been criticized as being arbitrary and unfair to some students. Furthermore, it is difficult to verify the accuracy of most of the information provided in the application form under the present definition. In view of the serious implications for the future impact on need-based programs, and in particular the Basic Grant Program, it is essential that serious consideration be given to changing the present definition of the independent student. This issue is further underscored by the fact that between 30 and 40 percent of all eligible applicants under the Basic Grant Program are expected to file as independent students during the current and subsequent academic years, and similar trends are evident for the campus-based programs. At the same time, it should be noted that the primary concerns regarding the definition of independent student revolve around questions of improved equity, rather than developing a definition with the purpose of reducing the proportionate share of applicants filing as independent students. For these reasons, a number of amendments to the current definition are proposed. Specifically. these amendments to the Basic Grant and campus-based student aid programs provide for an extension of the residence limitation from two weeks to six weeks. The sixweek period is proposed as a reasonable period of time in which a student can be expected to visit his or her parents without classifying the student as dependent, as frequently would be the case under the present two-week rule. On the other hand, residence with parents which extends for more than six weeks would be considered as an indication of parental support to the student. In addition, the Federal tax exemption criteria has been extended to apply for two calendar years prior to the academic year for which aid is requested, rather than the one calendar year required under current regulations. This provision is proposed to strengthen the concept of parental responsibility to provide support for the postsecondary education of their children and to reduce the possibility of deliberate evasion of the intended purpose of the definition. Under the proposed revision of the definition, the criteria concerning the amount of actual financial assistance received from the parents by the student has remained unchanged. However, it shoud be further noted that the criteria concerning the residence limitation und parental financial assistance will continue to apply for the base year and the subsequent calendar years. under the proposed definition, whereas the tax exemption cirteria has been extended to include the year prior to the base year. Consideration has been given to the extension of all of the criteria to cover the year prior to the base year FEDERAL REGISTER, VOL. 42, NO. 133-TUESDAY, JULY 12, 1977 as well as the base year and year of application. It was determined, however, that the extension to the year prior to the base year of the residence limitation and the parental contribution criteria would have. created serious inequities for many applicants and, therefore, would not improve the effectiveness of the definition of independent student. However, because it is generally agreed that the tax exemption criteria is a strong and definitive indicator of financial dependence, the expansion of this criteria is considered to be fair and equitable. For this reason, it was determined that the tax exemption criteria would be extended an additional year in the proposed revision of the definition of independent student. Under the National Direct Student Loan Program, all veterans will continue to be treated as independent students regardless of their financial relationship to their parents. This special criterion for veterans in determining eligibility for a National Direct Student Loan was enacted in the Education Amendments of 1972, and appears in § 144.2 (dd) of the NDSL Interim Regulations published in the FEDERAL REGISTER on November 24, 1976. It should further be noted that an accurate determination as to whether a student is actually independent of parental financial support essentially requires a detailed review of the financial relationships between the student and his parents. Such an approach could be considered an unnecessary intrusion into the personal and private family relationships by public agencies which would be regarded as unacceptable by many applicants. At the same time, any definition of the independent student which is based on more objective criteria invariably raises questions of equity and fairness regardless of the definition of dependence/independence that may be developed. This issue is of some concern with respect to the Basic Grant Program which is a formula-based program designed to treat all applicants in a standard and consistent manner with a minimum of discretionary intervention. However, accommodation of potential inequities under the Basic Grant Program is possible by applying discretionary judgments under the campusbased programs for those students for whom parental resources were included in the determination of Basic Grant eligibility, but who in the judgment of the financial aid officer cannot be expected to receive financial support from their parents. In these situations, the expected parental contribution may be waived at the discretion of the financial aid officer in determining eligibility for aid under the campus-based programs. Regulatory authority permitting such discretionary judgments on the part of the financial aid officer is already contained in the regulations governing the campus-based programs. Accommodation of potential inequities through the exercise of professional judgment by the financial aid officer serves to maintain the legislative intent of the individual programs. PROPOSED RULES SUMMARY OF COMMENTS RECEIVED The Commissioner published in the FEDERAL REGISTER, Vol. 41, No. 230, Monday, November 29, 1976, a Notice of Intent to Issue Regulations implementing the provisions of the Education Amendments of 1976 (41 FR 52410). On page 52413, comments were invited concerning the revision of the independent student definition and the possible criteria for determining student dependency. Five public conferences were held at various locations between December 1317, 1976, at which the Office of Education received comments on this and other issues presented on the Notice. In addition, forty-three written comments were also received through December 30, 1976, concerning the independent student definition. The possible factors to consider in defining a financially independent student were presented as follows: 1. Tar Exemption. Should being claimed as a tax exemption for Federal income tax purposes be used as an indication of dependency? 2. Marital Status or Dependents. Should consideration be given to those students who are married or have dependents for whom they provide at least one-half support? 3. Age. Should age be a factor in determining dependency, and, if so, what age limit should be established? 4. Residence. Is residence at a parent's home an indication of dependency? If so, what limit on the length of residence should be established? 5. Employment. When determining a student's independent status, should prior employment history or other visible means of support be required? 6. Actual Financial Contributions by Parents. What amount of financial support should disqualify a student from being considered independent? The following is a summary of the comments received pertaining to these proposed criteria. The comments received were almost unanimous in their opinion that being claimed as an exemption for Federal Income Tax purposes by someone other than a spouse is an indication of dependency. This criterion is generally agreed to be an objective and readily verifiable determinant of financial dependence. It is also considered to be the strongest indication of a student's financial depend ence upon his or her parents. For these reasons, the Federal tax exemption criterion has been retained in the present definition, but has been extended to apply for two calendar years prior to the academic year for which aid is requested. rather than the one calendar year as presently required. This extension is intended to strengthen the tax exemption criterion in order to improve the effectiveness of the definition. Comments were divided on whether the applicant's marital status or having dependents of his own should be considered in determining dependency. Several commenters felt that the presence of either of these conditions constitutes independence and should be considered in 35943 the determination of dependency status. However, many of the comments stated that marriage or having dependents does not necessarily indicate an applicant's independence from parental support. As a number of commenters noted, the fact that a student has recently married and left his or her parent's household should not entitle the student to special consideration as an independent student for purposes of receiving Federal financial aid. The married student or the student with dependents should be required to fulfill the same criteria as all other applicants in determining the financial relationship with his or her parents. Some students may be receiving parental support regardless of their marital status or whether they may have dependents of their own. Therefore, marital status or having dependents cannot be considered a reliable measure of financial independence. For this reason, the regulations were not amended to include these two factors as criteria in determining independent student status. The majority of commenters felt that age should not be a factor in determining dependency. The age of the applicant does not necessarily preclude dependence or independence from parental support. In addition, several responses questioned the possible legal issues concerning the discriminatory effects of this condition. Establishment of an objective and equitable age level that would be consistent in treatment for the majority of students would be difficult, if not impossible. For these reasons, the definition was not amended to include age as a factor in determining dependence. Responses were generally mixed concerning whether residency at the home of the parents is an indicator of dependency. Several of the commenters expressed the opinion that living at home does not always mean that a student is financially dependent upon his parents, especially in cases where the student pays room and board to his parents. In contrast, many commenters supported the inclusion of this factor on the basis that extended residence at the home of the parent did. in fact, constitute dependency. In the past. it has been program experience that students who live at home, even if they pay for room and board, are generally subsidized to a significant degree by their parents. Lack of monetary contribution by the parents does not necessarily mean that there is no support. Therefore, it was felt that some limitation on the period of residence with the parents should be retained in the definition. However, many of the commenters in favor of this criterion felt that the present requirement that applicants residing with their parents for two consecutive weeks or more should be considered dependent is too restrictive and that a longer period of residency would be necessary to indicate financial dependence. Therefore, the present definition has been amended to expand the limitation on the period of residency from two weeks to six weeks. The majority of commenters indicated that an applicant's prior employment FEDERAL REGISTER, VOL 42, NO. 133-TUESDAY, JULY 12, 1977 35944 history or verifiable documentation of other means of support should be required for students who wish to be considered independent. However, the regulation was not changed to include this provision. Specifically, in order to make a determination of a student's ability to support himself, the present application form would need to be considerably expanded in order to collect information on all resources available to the student. This would include information on taxable income such as income from employment as well as non-taxable income such as unemployment benefits. welfare benefits, Social Security and Veterans benefits, student financial aid awards, loans, gifts, support in kind, etc. Collection of such data for purposes of establishing the dependency status of an applicant would be cumbersome both from the standpoint of the applicant who must provide this information and for administrative considerations. Further, given the formula nature of the Basic Grant Program, a minimum living alowance standard would need to be established on the basis of which a student would be determined to be self-supporting. Since such a standard could not accommodate unique circumstances of individual applicants, certain inequities in the treatment of applicants would not be alleviated by this approach. In addition, a primary objective of the independent student definition is to determine whether there exists a parental responsibility to provide for the postsecondary education of a child. Evidence of selfsupport and the degree of that self-support does not necessarily preclude the financial responsibility of the parents. Finally, most comments agreed that the actual financial contribution by parents should be included as a factor in determining dependency. Although there were a variety of suggested levels of parental support which should be used to determine dependency, most commenters indicated that the current 600 level of actual parental contribution was an objective and equitable amount. Therefore, the definition was not changed with respect to actual contribution by parents. NOTE-The Office of Education has determined that this document does not contain a major proposal requiring preparation of an Inflation Impact Statement under Executive Order 11821 and OMB Circular A-107. (Catalog of Federal Domestic Assistance No. 13.418 Supplemental Educational Opportunity Grant Program; No. 13.463 Higher Education Work-Study (College Work-Study Program): No. 13.471 (National Direct Student Loan Program; No. 13.539 Basic Educational Opportunity Grant Program.) Dated: May 4, 1977. ERNEST L. BOYER, JOSEPH A. CALIFANO, Jr., PROPOSED RULES 1. Part 144 of Title 45 of the Code of Federal Regulations is amended to read as follows: PART 144-NATIONAL DIRECT STUDENT § 144.2 Definitions. (dd) "Self-supporting or Independent Student" means a student who is either (1) a veteran as defined in 144.2(hh) or (2) a student who: (1) Has not and will not be claimed as an exemption for Federal income tax purposes by any other person except his or her spouse for any calendar year(s) in which aid is received or either or both of the two calendar years prior to the academic year for which aid is requested; (ii) Has not received and will not receive financial assistance of more than $600 from his or her parent(s) in any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested; and (ii) Has not lived or will not live for more than six weeks in the home of a parent during any calendar year(s) in which aid is received or the the calendar year prior to the academic year for which aid is requested. For purposes of this paragraph, a student will not be considered to have been claimed as an exemption by a parent, or (3) Has not lived or will not live for more than six weeks in the home of a parent during any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested. For purposes of this paragraph, a student will not be considered to have been claimed as an exemption by a parent, or to have received $600 from a parent, or to have lived with a parent if that parent has died prior to the student's submission of an application for employment under the College Work-Study Program, and if no person, other than the student's spouse, provides or will provide more than one-half of the student's support for the first calendar year in which assistance is requested. (s) "Self-Supporting or Independent Student" means a student who: (1) Has not and will not be claimed as an exemption for Federal income tax purposes by any other person except his or her spouse for any calendar year(s) to have received $600 from a parent, or in which aid is received or either or both to have lived with a parent of that parent has died prior to the student's submission of an application for a loan, and if no person, other than the student's spouse, provides or will provide more than one-half of the student's support for the first calendar year in which assistance is requested. (w) "Self-supporting or Independent Student" means a student who: (1) Has not and will not be claimed as an exemption for Federal income tax purposes by any other person except his or her spouse for any calendar year(s) in which aid is received or either or both of the two calendar years prior to the academic year for which aid is requested; (2) Has not received and will not receive financial assistance of more than $600 from his or her parent(s) in any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested; and of the two calendar years prior to the academic year for which aid is requested; (2) Has not received and will not re ceive financial assistance of more than $600 from his or her parent(s) in any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested; and (3) Has not lived or will not live for more than six weeks in the home of a parent during any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested. For purposes of this paragraph, a student will not be considered to have been claimed as an exemption by a parent, or to have received $600 from a parent, or to have lived with a parent if that parent has died prior to the student's submission of an application for a grant, and if no person, other than the student's spouse, provides or will provide more than onehalf of the student support for the first calendar year in which assistance is requested. 4. Part 190 of Title 45 of the Code of Federal Regulations is amended to read as follows: PART 190-BASIC EDUCATIONAL (a) In § 190.32, subparagraph (n) (2) is amended to read as follows: FEDERAL REGISTER, VOL. 42, NO. 133-TUESDAY, JULY 12, 1977 § 190.32 Special definitions. (n) (1) (2) Notwithstanding the provisions of paragraph (n) (1) of this section, the student's mother or father will be considered the student's parent (1) If, for the calendar year(s) for which aid is received or either or both of the two calendar years prior to the school year for which aid is requested, either claimed or will claim the student as an exemption for Federal income tax purposes, or (ii) if either contributed or will contribute more than $600 to the student in any calendar year(s) for which aid is received or the calendar year prior to the school year for which aid is requested, or (ii if the student has lived or will live for more than six weeks in their home during any calendar year(s) for which aid is received or the calendar year prior to the school year for which aid is requested. PROPOSED RULES (b) In 190.42. paragraph (a) is amended to read as follows: § 190.42 Special definitions. 35945 (2) Notwithstanding subparagraph (1) of this paragraph, a student will not be considered to have been claimed as an exemption by a parent, or to have received $600 from a parent, or to have (a) (1) A student qualifies as an inde- lived with a parent if that parent has pendent student if the student: (1) Has not and will not be claimed as an exemption for Federal income tax purposes by any other person except his or her spouse for any calendar year(s) in which aid is received or either or both of the two calendar years prior to the academic year for which aid is requested; (1) Has not received and will not receive financial assistance of more than $600 from his or her parent(s) in any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested; and (ii) Has not lived or will not live for more than six weeks in the home of a parent during any calendar year(s) in which aid is received or the calendar year prior to the academic year for which aid is requested. died prior to the student's submission of an application for a grant, and if no person. other than the student's spouse, provides or will provide more than onehalf of the student's support for the first calendar year in which assistance is requested. (3) Notwithstanding subparagraph (1) of this paragraph, a student qualifies as an independent student if, (1) the student's parent is not his mother or father but is the person, other than the student's spouse, who provided more than one-half of his support in the base year [190.32 (n) 1, and (ii) that parent does not or will not provide one-half support during the first calendar year for which aid is requested. . [FR Doc 77-19363 Filed 7-11-77,8:45 am) FEDERAL REGISTER, VOL. 42, NO. 133-TUESDAY, JULY 12, 1977 |