Divorce + College Bound Kids
7 Questions From Divorced Parents With College-Bound Kids
Any parent can get confused when applying for federal student aid for a college-bound student. For divorced parents, however, it can be more difficult. In order for a student to get financial aid from the United States Department of Education (EOD), his or her parents must fill out a Free Application For Federal Student Aid (FAFSA). When the student’s parents are divorced, the rules for the form can be tricky.
All the resources sustaining the custodial parent’s household can be used to calculate the family’s expected contribution and then award federal aid to college students, according to Maureen Sigler, a financial aid counselor at Boise State University in Idaho, and Mark Kantrowitz, FinAid.org publisher, and financial aid expert. “They recommend every student fill out the forms to know what you are eligible to receive is to complete the FAFSA,” Sigler said.
Among the most commonly asked questions for divorced parents with college-age students seeking federal financial aid:
1. Which parent should fill out the financial application forms for a college-bound student?
“Families will sometimes, mistakenly, include the income information for both legal parents. The FAFSA is requesting information from just one parent….” Sigler said. Kantrowitz said the parent who fills out the form isn’t necessarily the parent who has “primary custody” as the court defines it. “It should be the parent the child lives with most often is the one who should fill out the forms. In situations where parents split custody 50-50, …the financial aid office will likely choose whichever parent has the highest income.” In the event that a student’s parent hasn’t maintained contact with the child, Kantrowtiz said he or she is simply not the custodial parent. “Only one parent’s household income information is included on the FAFSA, so the student would likely use the information for the parent who is still around,” Sigler added. “One answer does not fit all situations. Generally, there is probably little impact on the student’s financial aid.”
2. If you’re not divorced yet, how should the forms be filled out?
Not all parents are officially divorced when it comes time to file the application for student aid. Both Kantrowitz and Sigler said if a couple is separated and planning to divorce, they are considered divorced in terms of financial aid. “If the separation is with the intent to divorce, and the parents are living in separate locations, there is no difference in qualifying for aid. The reason is because it is appropriate to list only the information for the custodial parent’s household,” Sigler said. Kantrowitz, however, warns that co-habituating parents who claim they are separated do not count as separated. If the husband is living in the basement and the wife upstairs, that doesn’t count. “It has to be two separate residences,” he said. “That is often a misconception, and the schools will generally be suspicious if the separate residences is something temporary is like a hotel room.”
3. What happens if a parent gets divorced while the student is attending college during the school year?
In some situations, Sigler said, the student’s parents may divorce during the school year. “If a separation or divorce is one of those unexpected situations that occurs and the FAFSA was already completed with both parents’ income information, the family should work directly with the financial aid office at the student’s school to see what adjustments can be made to the FAFSA,” she said. “The school will determine if it is appropriate to change the data, and the school will actually make the changes.”
According to Kantrowitz a popular trend among divorce cases is to establish a college support agreement, which determines what, if any, financial aid the student will receive from either party. Kantrowitz said an agreement could range from a pre-determined amount of money to pay for tuition, living expenses or other college-related bills. When a custodial parent fills out a FAFSA, however, he or she is required to list any money received as part of a college support agreement. This money is considered like any form of income.
5. Does it matter if the student was claimed as a dependent on tax returns?
How the student is or is not claimed on the parents’ taxes is not a factor in determining which parent’s information is to be included on the application. “The reason is because the divorce settlement might specify who gets to claim the child as a dependent or parents may choose to claim the child as a dependent on alternating years,” Sigler said. And while many parents read the FAFSA instructions accurately and only provide one of the parent’s household information, if taxes are filed jointly, some parents get confused. As an example, Sigler explains, “The FAFSA will ask for the amount on XYZ line of the tax return. Frequently (the parent filling out the form) will remember to exclude the ex-spouse’s income where it asks for the father’s income and the mother’s income, but they forget to also adjust the AGI (adjusted gross income) and taxes paid amounts to reflect the portion relating to the custodial parent’s income.”
6. If a parent remarries, must he or she refile a federal aid application?
It depends. All of the questions on the application — not just the income questions — are used to calculate the expected family contribution and the amount of aid a student receives, Sigler said. So the number of people in a household, the number of dependents in college, the age of the older parent or stepparent in the household and even the state of residence can impact the expected family contribution. The lower the family contribution, the more eligble a student is for aid. That expected family contribution, “may go up or down after the parent remarries,” Sigler said. To find out if you should refile, check out this federal aid calculator called FAFSA4caster.
7. Should a stepparent’s income be considered in the application?
“The (custodial) parent’s and the stepparent’s income information is to be included,” Sigler said. Why? Federal college aid officials consider all the resources sustaining a parent’s household, which includes a stepparent’s income, even though the stepparent doesn’t contribute to the student’s education. A prenuptial agreement between the custodial parent and the stepparent has no bearing on the application. “Two individuals cannot make an agreement that is binding on the third party,” Kantrowitz said. “Both incomes and assets are going to be considered.”
FOR MORE INFORMATION
To learn more about the FAFSA, contact the EOD at (800) 4FED-AID to receive free assistance. Sigler also said the financial aid office at the student’s high school can also provide free assistance. “It is recommended that families not pay someone to complete the FAFSA or to pay a Web site for assistance in completing the application,” she said.
LendingTree also offers a helpful tool for future, present, and past college students. It helps people monitor their credit score, keep track of purchases made on credit, and see where they can save money and make smart financial decisions. The student loans portion of this tool allows students to monitor their loans, search for new loans, and find refinancing opportunities.
About the author: Casey Clark Ney is a freelance journalist based in Boise, Idaho. She holds a B.A. in Communication and has more than six years experience in newspaper writing. Her website can be viewed at www.CaseyClarkNey.com.