Dear Joe, My boyfriend and I have a dilemma that no one seems able to solve. It appears that if we marry before he completes the majority of his degree, he will qualify for less in federal school loans, if at all. We're looking at approximately $50,000 in tuition alone. I'm a self-employed sole proprietor of an expanding service business -- even in this economy! It seems that as his wife, my gross income -- not my net -- will be used to determine my ability to pay for his education. To finish as quickly as possible, he will most likely not work much while in school. Ideally, he wouldn't work at all. There is no way that my net income will cover his education on top of our San Francisco rent, food and my own school loans! What are our options for financing his education? Are we limited to waiting to marry and/or (taking) out private loans? To add to the debacle, because of my age, we may have our first child before he finishes school. It'd be great to be married and for him to be close to graduation before having a baby! Help! -- Susie
Your boyfriend's situation is not as dire as you think. It's true that once married your income and assets will normally be combined with his in determining his "expected family contribution" in the federal aid formula, and a higher contribution leads to less need-based aid. But only the net income from your business -- not your gross sales -- is counted. More specifically, the Free Application for Federal Student Aid, or FAFSA, asks for adjusted gross income, which for a self-employed individual includes the net income from Schedule SE of your tax return.
Being married may actually improve your boyfriend's eligibility for need-based federal aid. Unlike most undergraduate students, he will automatically be considered "independent" and will not have to include his parents' assets and income on the FAFSA, as most undergraduates are required to do. Note that the federal government looks at the marital status of the student on the date the FAFSA is filed, so your boyfriend should consider whether it's best to fill out and sign the application before or after the day you get married.
Having, or expecting, a child can help even further when it comes to qualifying for financial aid, as the formula provides more shelter for your combined income and assets.
The best way to plan for all these variables and compare outcomes under different scenarios is to use Savingforcollege.com's simple financial aid calculator. You can access other tools at Web sites run by the College Board and the U.S. Department of Education.
If after all is said and done your boyfriend finds he is not eligible for need-based aid, don't despair. Federal student loans will still be available to him under the Stafford Loan program, although the terms are not as advantageous as they would be for a student with financial need. And remember, federal aid of any type is unlikely to pay for all of his schooling. Other sources will need to be tapped along the way.