How Does Divorce and Separation Affect Financial Aid for College Students?
Divorce between parents is common before a child reaches college age. How do divorce and separation affect a child’s eligibility for financial aid? The impact of a divorce or separation on financial aid eligibility is dictated primarily by which financial aid applications must be submitted to the student’s university. There are two major financial aid applications used by colleges. The first is the more widely used application called the Free Application for Federal Student Aid (FAFSA) and the second is referred to as the CSS Profile (Profile), which is used by a small number of private colleges.
Generally, a student with divorced or separated parents will get a better financial aid package when filing a FAFSA because the FAFSA requires financial information only from the custodial parent, the parent who the student has lived with the most in the last 12 months. FAFSA is not concerned about which parent claims the child on their taxes as a dependent or which parent pays child support. Even if the divorce has not yet been finalized, a child with separated parents may only provide the financial information for the custodial parent when filling out the FAFSA form.
In both divorce and separation, FAFSA will only consider the custodial parent’s income. In order for this to happen, both separated and divorced parents must be living in different homes. In cases in which the student has lived with both parents equally over the last year, the parent who has provided the most financial support over the past year would be the one to list their financial information. If parents share a residence, they would both include their income and assets on the FAFSA form. Additionally, if a custodial parent remarries, the new stepparent must also report their income and assets on the FAFSA. A prenuptial agreement between the child’s parent and the new stepparent would not allow the stepparent to withhold financial information from the FAFSA application.
In summary, if you strategically plan who the custodial parent is based on the lower-earning income parent when filing a FAFSA, then your child will likely qualify for more financial aid when applying for college.
Profile is used by approximately 200 colleges and universities. Most colleges that use Profile will consider contributions from both the custodial and the noncustodial parent. Each parent will have separate forms so that they cannot see each other’s financial information. Once these contributions are added together, this will be considered the family’s contribution, though the college will offset that by a certain amount to account for the cost of maintaining two households.
Unlike FAFSA, colleges using Profile will not typically consider a stepparent’s income or assets if the college has already considered both biological parents’ incomes and assets. But in the event that a college is only looking at the custodial parent’s income, the college will also look at the income and assets of a new spouse.
In conclusion, it is vital for divorced or separated parents to determine which colleges require which aid forms to ensure that reporting differences will not negatively affect their child’s chances of qualifying for financial aid.
When facing a separation or divorce, parents should be sure to consult with an experienced family lawyer about using a separation agreement to plan for their children attending college. The family law attorneys of Livesay & Myers, P.C. have extensive experience with drafting these agreements in ways that may help the parties ease the burden of paying for college. From offices in Fairfax, Fredericksburg, Leesburg and Manassas, we represent clients throughout Northern Virginia. Contact us to schedule a consultation today.