Financial Independence and Age

by Harry on December 16, 2007

A terrific paper by Matthew Smith, Michael McPherson and Sandy Baum called “Financial Independence and Age: Distributive Justice in the Case of Adult Education” (pdf) is at the Equality Exchange. Currently, American colleges consider students over the age of 24 to be financially independent of their parents for financial aid purposes, and the paper argues that this rule has regressive consequences, showing that it unfairly favours students in advantaged circumstances. They argue for replacing the ‘age condition” with a ‘minimum income’ condition. It’s a great model of applied philosophy, demonstrating complete command of the (labyrinthine) institutional details in the US context (well, with these authors anything less would be disappointing) and making a compelling normative case for a modest, but valuable, reform.



Crystal 12.17.07 at 2:16 am

I was lucky to be able to be an “independent student” for financial aid when I completed college (at waaaay over 24). It makes a huge difference in the amount of aid one can receive.

Also, I’ve heard horror stories of students under 24 whose parents won’t pay for their education (even if they have the means) and that it’s virtually impossible to be declared an “independent student,” even if Mom and Dad won’t fork over one dime. No matter if you’ve been living on your own and supporting yourself – if your parents are alive, you are dependent on them, and many colleges won’t give an inch. The only real alternative is to get married.


Arlinora 12.17.07 at 2:19 am

I got divorced when I was 22 and still an undergrad. I didn’t make enough money working to support my education so I got a loan. But I had to get an unsubsidized loan at a higher rate because apparently if you are under 24 then your parents must be supporting you.


Tim Worstall 12.17.07 at 10:50 am

When we still had grants in the UK if you’d worked for 3 years then you were independent and your parents’ income wsa not used to calculate the grant you got.
Another thing I benefited from was the assumption that for work permit purposes in the US under 21 you are considered dependent (coming the oter way to the UK it’s 18). So if the family is over there on a military/diplomatic posting, those between 18 and 21 get work permits (as long as they reside in the family home).
I realise that’s nothing to do with college loans but just showing that the definitions of independence from the family finances are different across the board, not just this one point.


Matt Weiner 12.17.07 at 2:57 pm

On a quick reading, it seems to me that SM&B are focusing on the wrong part of the financial independence rule, even given their own examples.

A quick recap: They discuss two 25-year-olds, Mary and Mark. Mary comes from a wealthy family; she made very little money last year because her parents were subsidizing her artistic pursuits; since she is considered financially independent and has no income, she gets a generous grant. Mark comes from a poor family; he has been working full-time in his own business for seven years before deciding to go back to college; because his income from last year is very high, he gets no funding, even though he’s not going to be making nearly as much (since he has to give up his business to return to college).

It seems pretty clear to me that the treatment of Mark is much more unjust than the treatment of Mary. And it seems to me that the problem with the treatment of Mark is not that he is declared financially independent (which the SM&B proposal won’t change), but that his financial aid calculation is based on his last year’s income rather than on the amount he can reasonably expect to make while a full-time student. So the fix is not to tweak the criteria of financial independence, but to calculate financially independent students’ contributions based on the expectation that they’ll be working part-time. (So Mark’s contribution would be calculated as if his income were $8000 or so, rather than the $30000 he made the year before.)

And SM&B seem to basically concede the point; on p. 26, when they discuss how their proposal would help Mark, they say that it would’ve helped him go to college earlier (but he didn’t), and that an “independent reform could also be applied to the percentage independent students are expected to contribute”; which I agree with, but it’s independent of the age-limit proposal.

So, as I said, I think that the focus on the age limit and the criteria for financial independence misses the main point.


Tanya 12.17.07 at 8:47 pm

The age threshold is fine as it stands. The problem is with the exemption clause.

International experience shows that if the age threshold was dropped then parents – including wealthy parents – would simply fund less of their children’s education. That increases the costs for the state and, ultimately, makes it even more difficult to fund students from poor backgrounds.

There are lots of problems with US higher education funding, but one of it’s greatest strengths is that parents pay for their kids education. This is one of the reasons why the US has such a high college participation rate. Other countries are finding it very difficult to get expand participation because parents are too used to governments funding 100% of the costs.


Keith M Ellis 12.19.07 at 7:29 am

Strangely enough, I was just last night recalling how, 16 years ago at the private liberal arts college I attended, they insisted on calculating a parental contribution for determining my financial aid…even though I was 27, married, and had a long history of full-time employment.

On the one hand, I sympathized with their caution in trying to prevent allowing parents who can and should contribute to their child’s education avoiding doing so. On the other, my situation was so self-evidently not of that type that it was infuriating.

At the end of heated argument, I managed to get the Financial Aid Director to reduce the parental contribution to an absolute minimum allowable under their procedures. I left the office, however, with the sudden realization that calling the Director of Financial Aid an “idiot” was probably not in my self-interest. To his credit, it didn’t seem to bias him.

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