Same-Sex Couples and Financial Aid

If you're the child of a same-sex couple and you apply for federal financial aid, you probably won't get what you deserve. You'll likely get too much.

That's because a federal law defining marriage, coupled with the composition of the Free Application for Federal Student Aid, generally make it impossible to report income from both members of a same-sex couple. And according to a study released today by the Center for American Progress, that means that the financial needs of the children of such couples are almost always overstated.

The trouble comes from the Clinton-era Defense of Marriage Act, which defines marriage as being between one man and one woman. Even if a same-sex couple has wed or entered into a civil union in a state where it's legal, their bond isn't recognized under federal law. That means that when the time comes to apply for any of the $134 billion in loans, grants and work-study funds doled out through FAFSA, for families headed by same-sex couples, things get confusing -- and not just because the boxes for parents' names are labeled "mother/stepmother" and "father/stepfather."

Students who are children of same-sex couples can't include both parents on their financial aid applications. If the student is part of a same-sex couple, she can't include her spouse or her spouse's income.

Both of those scenarios would result in a student getting more money than necessary, because the omission of a parent or partner's income makes it look like the student has access to less funds than she does. But the same rules can also cheat students out of the money they deserve, the report says.

As one case study explains: "If Isabel decides to return to school, the FAFSA will not only discount her spouse, but also her three children as part of her household size since she does not contribute to more than 50 percent of their income. So instead of her actual household size of five, the FAFSA will likely determine she lives alone, masking the family's need for financial aid and resulting in a diminished financial aid package, if she receives one at all."

Some colleges have reached out to such families to discourage them from giving up on the forms, and to urge them to include all family members on the FAFSA, regardless of whether the Internal Revenue Service recognizes the marriage. But for the most part, people aren’t talking about the federal rules, said Crosby Burns, the report's author and the CAP special assistant for LGBT programming.

"This is an issue that is pretty much not on anybody's radar, except a few people in the financial aid universe," Burns said. "It's not only unfair to same-sex couples, but it's unfair to American taxpayers. All people receiving financial aid should receive it based on their need.... [FAFSA] often disburses money based on this arbitrary category that has nothing to do with need."

However, Justin Draeger, president of the National Association of Student Financial Aid Administrators, said the people in his organization are in fact aware of what's going on. Whether that will change anything is another matter.

"I know it's something that certainly isn't new to a lot of our members," Draeger said. But, he added, "The report does a good job of pointing out that most of the issues are really legislative or regulatory issues. There's not a whole lot you can do when something runs counter to a law or a regulation."

Indeed, Burns concludes the report with a series of often-lofty recommendations for federal and state lawmakers and the U.S. Department of Education -- and none for colleges. Lawmakers should repeal the Defense of Marriage Act and ensure same-sex couples can legally adopt children, the report says. And the Education Department should "study these issues in detail and do what is in its power to recognize gay and transgender individuals and families," it says.

There is a small part on the FAFSA where students can account for any other sources of income, and that would be a place where applicants could list their dependents or parents, Burns said. But he's not sure how much attention is paid to that category.

The report also discusses the unique challenges that transgender and gay students encounter when applying for aid.

A transgender man could have his application delayed if he's not registered with the government department that keeps track of those who have registered for military service -- but the student wouldn't have to be part of that database because he was not born male. And those students who do transition or don't identify by their birth name could be rejected for aid if the name or gender they use doesn't match other government records (this federal rule also can create problems for transgender students in admissions).

Thus, the report also calls on lawmakers to streamline the name- and gender-changing identification process for transgender people.

When transgender and gay students who are estranged from their parents try to fill out a FAFSA, some parts of the application make it difficult. "Parents will often refuse to sign their child's FAFSA unless he or she enters 'reparative' therapies that seek to alter or 'change' a child's sexual orientation or gender identity." Further, the report says, financial aid administrators often don't take into account the plummet in support that occurs when a student comes out in college and her parents cut her off.

"While the FAFSA recognizes the obstacles facing these students by allowing them to submit an incomplete application, there is no guarantee that their financial aid institution will acknowledge students' circumstances, leaving many stuck on the street or in hostile home environments."

Other recommendations for the Education Department are to "reform the system" so gay and transgender applicants can more easily submit the FAFSA without delay or rejection; update training regimens and policy manuals to educate staff about these issues; and "issue comprehensive guidelines to the more than 6,000 institutions that disburse federal aid to students that address the issues facing gay and transgender applicants and remove existing roadblocks for these applicants."

For financial aid administrators, Draeger said, these issues have come to a head in the last several years as general awareness about LGBT families and the circumstances under which students from them apply has grown. "There is this sort of inequity going on, where we're not capturing the true needs of a household," he said.

How many applicants are affected by these rules is unclear. But D. Chase James Catalano, director of the LGBT Resource Center at Syracuse University, suggested that the problem is far-reaching. "This report highlights the systemic and institutional forms of oppression for GLBQ and Trans students," he said in an e-mail. "While LGBTQ Resource Centers work hard to address the needs of and advocate on behalf of LGBTQ students, issues of FAFSA and tuition need to be addressed on a larger scale."