Divorce in a family that is trying to plan for their children’s college makes an already-daunting process considerably more, ahem, interesting. A myriad of twists and angles, along with a lot of questions and little guidance are encountered along the way.
As a divorced parent, myself, I am fortunate enough to get along with my ex. She is the custodial parent but is very open with me when it comes to our kids and their futures. We discuss long-term plans for them and make decisions about them, largely, as a parenting team. So far, anyway.
As the custodial parent, my ex will have considerably more say-so when it comes to our kids’ financial aid, but also much more of the burden. Typically, only the custodial parent’s finances are scrutinized under the federal model (you know, the one that requires you to fill out the Free Application for Federal Student Aid, or FAFSA), which is used exclusively by public institutions and certainly considered by private schools. Private institutions also use an additional aid formula called the CSS/Financial Aid Profile – published by the College Board — that will look at the income of a non-custodial parent for purposes of deciding aid eligibility.
If either of us remarries, a step-parent who earns a great deal could throw a monkey wrench into the whole system – unless, of course, she’s willing to step up and throw down some cash for the education of her charming (they really are!) step-children. On the other hand, if neither of us remarries, it is possible that our kids will end up with a more favorable aid package than they otherwise may have had my ex and I stayed together, because only one of our incomes will be used (assuming a public university is in their futures) to calculate our expected family contribution (EFC).
FAFSA and Custody
When it comes to filling out the FAFSA, the custodial parent is not necessarily the parent who has legal physical custody of a child. Only one parent fills out a FAFSA, and it is the parent with whom the child has lived with more during the 12 months before the day you file the form. So, although my ex-wife has legal physical custody of my son and daughter, if my son crashes at my place a few extra nights during his senior year of high school, my income and assets are those that will be considered on the FAFSA (which, frankly, if it happened today would be a good thing from a financial aid perspective, since I am currently going to school, as well) – even though I may not get to claim him as a dependent on my income tax return.
Joint custody situations, while positive for the family, can be confusing for the FAFSA. It may actually come down to counting the weeks or even days the child spent with each parent before you can decide who gets to fill out the FAFSA. For divorced parents, this is certainly something to keep track of.
If your child will need subsidized loans or Pell grants to attend college, and you and your ex-spouse get along and see eye-to-eye on educational issues, it may be worthwhile to have your child live with the parent who has less income and fewer assets during the year before the student starts college. At a public school, this will likely result in a more favorable aid package.
Do not be dishonest, though. Parental gerrymandering in order to make a student look needier than he is in reality, is generally frowned upon. Home addresses that pop up in places no where near a child’s high school can make a financial aid counselor look twice at an application, delaying an award. When it comes to financial aid, delays can be costly, especially at non-public institutions.
Stepparents and Financial Aid
As I mentioned earlier, a remarried parent must disclose a step-parent’s income and assets on the FAFSA. Even if the step-parent has no intention of contributing to the step-child’s education, her assets are still considered in calculating the EFC. The FAFSA does not, however, delve into the assets and income of a non-custodial (under financial aid rules) parent.
Many private colleges, particularly those with excellent reputations and impressive tuition rates, or both, require the non-custodial parent to file an income and asset disclosure, as well. Financial aid administrators have seen just about everything when it comes to family situations. They are generally willing to work with a family whose circumstances are unusual, as long as the information is disclosed. If it appears as though a family is trying to hide the ball or is being disingenuous about income or assets, a student’s aid award could be adversely affected.