The Question
I’ll never understand why the government assumes parents will be paying for their kids to attend post-secondary school.
We were a one-income (educator) family until six years ago when my husband went back to work and finally got his own teaching position. He was a stay-at-home dad until then. So our savings is next to nothing.
Did our FAFSA last night and the SAI is 28,000. I knew it’d be high because of the two of us working now, but that doesn’t say anything about our actual situation. Obviously our daughter is applying for scholarships nonstop and has a part-time job when she’s able to work around school activities, but it’s all so sad for kids today. School is so expensive, even Pennsylvania state schools.
— Margot
Welcome to the Friday mailbag, where we take one reader question and answer it. Have one? Send it to us — details at the bottom.
The Short Answer
You’re asking the question most parents never get a straight answer to after they see their Student Aid Index. The FAFSA treats your 18-year-old as part of your household’s balance sheet until she turns 24, and it does that whether or not you plan to pay a dime.
The idea that parents pay first started with the College Board’s College Scholarship Service in 1954, decades before the Department of Education existed. The age-24 cutoff came from the Higher Education Amendments of 1986. Congress set it just past the oldest age a student could still be receiving a Pell Grant, so parent finances would count for every traditional undergraduate.
The longer answer runs through three places: a private college pricing system from the 1950s, the 1979 law that created the Department of Education, and a 1986 rewrite of the Higher Education Act. Each one added a layer to the FAFSA formula your family ran into when you filed the 2027-28 FAFSA.
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Parents-Pay-First Started With Colleges, Not Congress
The idea that parents pay for their children’s college predates federal student aid. In 1954, the College Board launched the College Scholarship Service with about 100 member colleges, with the goal of collecting “a single set of financial data from students and parents”.
Harvard’s John Monro, its first chairman, built a formula to measure what a family could afford rather than using aid to bid for top students. That formula is the ancestor of every Student Aid Index calculation in use today.
The logic was rationing limited aid dollars: colleges had limited scholarship money, so they asked what each family could pay first and covered the gap.
When the U.S. Government created the Basic Educational Opportunity Grant (today’s Pell Grant) in 1972, it adopted the same structure with an “expected family contribution” built into the formula.
Federal law still frames it this way: aid fills the gap when parents can’t pay, not when they won’t. That’s why income limits for Pell are calculated on household income and not the student’s alone.
What The Department Of Education’s Charter Actually Says
The 1979 law that created the Department of Education also explicity put parents first. The Department of Education Organization Act, signed October 17, 1979, includes this congressional finding: “parents have the primary responsibility for the education of their children, and States, localities, and private institutions have the primary responsibility for supporting that parental role” (20 U.S.C. § 3401).
The law’s stated purposes describe the federal role as supplementing state and local efforts and encouraging “the increased involvement of the public, parents, and students in Federal education program.”
That language captures the philosophy of how federal financial aid policies are crafted. It’s not a specific rule, but it’s a thesis that education is the responsibility of the parent first, even higher education. The parental contribution model was already 25 years old when the department opened. The charter reflects the same belief that drives the financial aid model today.
The 1986 Law That Set “24” As The Magic Age
Before 1987, federal programs judged independence “strictly in terms of a student’s financial and living relationship with his or her parents“. A typical version of that test, used by Minnesota’s state grant program since 1968, required three things: parents didn’t claim the student on their taxes, the student lived at home no more than six weeks a year, and parents gave no more than $750 of support.
However, around this time, reports were warning that families were gaming the system to qualify for larger financial aid awards.
The numbers behind that concern: Independent students made up 14% of Pell recipients in 1974-75 and 47% by 1983-84, according to a 1985 study by economist W. Lee Hansen. Hansen traced much of that growth to older adults enrolling for the first time and found the incentive for students under 25 to switch status was modest, but status-shifting to unlock larger aid packages was the part that drew Congress’s attention.
Congress answered with the Higher Education Amendments of 1986, which President Reagan signed on October 17, 1986. Starting with the 1987-88 school year, a student was independent if he or she was 24 or older, an orphan or ward of the court, a veteran, married, a graduate student, or had legal dependents. Those same categories still decide who can borrow at the higher independent student loan limits today.
Higher education expert Mark Kantrowitz says the age limit was part of an effort to eliminate the so-called Bright Line Test for independent status, “which was prone to abuse,” the same kind of gaming that still drives the penalties for FAFSA fraud. A narrow version survived for single undergraduates who showed $4,000 a year of their own resources for two years, until Congress repealed it in 1992. “Congress wanted to make sure that families couldn’t abuse the new age-based rule, so they set the age threshold at 24 years old as of December 31 of the academic year,” Kantrowitz told The College Investor.
Kantrowitz said the number itself came from the Pell Grant time limits of the era. “Most college students graduate at age 21,” he said. “However, the Pell Grant was limited to five years for 4-year programs and 6 years for 5-year programs at the time. So, a student could still be receiving a Pell Grant at age 23, and Congress wanted to be sure that their parents’ finances were considered.“
In other words, 24 sits just past the oldest age a traditional student could still be drawing a Pell Grant, so no undergraduate on the standard path ages out of parent information while still eligible.
Kantrowitz put the goal plainly: Congress wanted “to be sure that students could not game the system to receive Pell Grants without parent information when they weren’t truly financially independent.”
Why FAFSA’s Age 24 Doesn’t Match The Tax Code
Today the rule reads that an independent student “is 24 years of age or older by December 31 of the award year,” with exceptions for orphans, foster youth, emancipated minors, veterans and active-duty service members, graduate students, married students, students with dependents, and unaccompanied homeless youth. Marriage is one of the few legal ways an undergraduate gets out early, which is why FAFSA marital status rules draw so many questions.
The tax code’s version of 24 came later. The Technical and Miscellaneous Revenue Act of 1988 added the words “who has not attained the age of 24” to the student dependency rule, effective for tax years after 1988. A 2004 law folded it into today’s “qualifying child” test: under 19, or a student under 24.
The financial aid rule came first and the tax rule followed, the opposite of what most parents assume when they file their taxes.
The bigger difference is that the tax code still asks who supports the child, and FAFSA doesn’t care. A child who pays more than half of her own support can’t be claimed as a qualifying child on her parents’ return. Meanwhile, the Department of Education’s guidance states that parents who “refuse to contribute, are unwilling to provide information, or do not claim the student as an income tax dependent,” along with a student who shows “total self-sufficiency,” don’t qualify for a dependency override “either individually or in combination“.
A 22-year-old who pays every bill can be independent for the IRS and dependent for FAFSA in the same year, a disconnect we see every day in questions about what counts on the FAFSA.
Every Federal Program Picks A Different Age
What most people understand, but rarely see directly, is that there’s no single age of adulthood in federal policy.
Health plans must let children stay on a parent’s coverage until 26 under the Affordable Care Act. The kiddie tax can reach full-time students through age 23, and the dependency exemption on income tax that once made claiming a college student valuable has been $0 since 2018.
Each age was set by a different Congress solving a different problem, which is why it’s so confusing!
| Rule | Age | What It Means |
|---|---|---|
| FAFSA Independence | 24 | Parent info required unless 24 by Dec. 31 of the award year |
| Tax Dependent (Student) | Under 24 | Parents can claim a student who doesn’t pay over half their own support |
| Kiddie Tax | Under 24 | A student’s investment income can be taxed at the parents’ rate |
| Parent’s Health Plan | Under 26 | Child can stay on a parent’s plan under the ACA |
| Dependency Exemption | None | Worth $0 since 2018 |
| Court-Ordered College Support | Varies | Divorce cases only, in states such as Illinois |
The FAFSA Simplification Act Made It Harder For Big Families
The 2024-25 overhaul replaced the Expected Family Contribution with the Student Aid Index, allowed an SAI as low as -$1,500, and stopped counting how many children are in college at the same time.
Under the old formula, a family with a $30,000 ability to pay and two kids in college was expected to pay $15,000 per student. A family like yours now gets the same $28,000 SAI for each child who enrolls, with no credit for the tuition already going to a sibling.
That change hit households with several kids close in age harder than anyone, a pattern visible in our SAI chart.
Takeaway: The System Measures Capacity, Not Willingness
After nearly 20 years writing about financial aid, my view is that the age-24 rule is defensible as an upper limit for undergraduate need-based aid and fraud control, and but it doesn’t work as a description of how American families handle finances today.
Congress finalized the current test because the system was being gamed, and that problem was real. However, the result is that as parents have more income, it could make it more challenging for a student to pay, regardless of the family’s overall financial circumstances, and you’re seeing that firsthand.
For your family, here are some options that may help.
A financial aid administrator can adjust an SAI for special circumstances such as a job loss or unusual expenses by appealing your child’s financial aid award.
If parents end financial support or refuse to file, the same law lets a financial aid office offer the student Direct Unsubsidized Loans without parent information, though not grants. Students can also stack private scholarships, target tuition-free colleges, or shorten the time in college with a three-year bachelor’s degree.
The rule itself only changes if Congress changes it. Until then, an SAI of $28,000 means the formula expects money to come from the students AND parents together. Nobody is forcing you to pay it, you can make choices on higher education, but you cannot expect need-based aid to cover a significant amount of your costs.
The result is that families are better off planning around that number through crafting a college list or strategy that works for their finances.
Send Us Your Question
Got a student loan, financial aid, or money question you can’t get a straight answer on? Send it to us and we may answer it in a future Friday mailbag.
Reader Mailbag
Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.