How Divorce and Separation Can Affect Financial Aid

When students apply to college, there are many forms to complete. And if they are applying for financial aid, the FAFSA is No. 1 on the list. This form asks the obvious questions: name, date of birth, Social Security number, address etc. It also asks questions about parents’ financial information to determine financial aid eligibility.

If you are separated or divorced, this part of the FAFSA raises many questions:

• How will colleges treat the income of two separate families?

• Which parent’s income is used for determining the expected family contribution, or EFC?

• Do both parents have to report their incomes?

• What do the words “custodial parent” mean?

How does the FAFSA treat this issue?

Whom a child lives with matters for the FAFSA, even if another parent claims him or her as a tax deduction. The parent who has taken care of the child during the majority of the year is the “custodial parent” and would provide the financial information on the FAFSA. Married or separated, this rule applies. Even if the other parent is providing child support, the rules clearly state that whomever the student is living with should provide the financial information. However, the child support received from the noncustodial parent will have to be reported as income on the FAFSA if it is mandated in the divorce decree.

In the event the parents share custody and the student’s living situation has been equal, the parent who spent the most money on a child’s care would provide financial information.

But keep in mind that the federal government has no way of knowing this information and most financial aid experts will advise you to enter the information from the parent with the smaller income. If the custodial parent remarries, the new spouse’s income and assets will be required when completing the FAFSA.

Many different living situations will be addressed when completing this form: divorced, separated, living together but not remarried, divorced and living together, separated and living together, and stepparent married to biological parent.

For additional clarification, The Office of Federal Student Aid publishes this one-page printable document: Who Is My “Parent” When I Fill Out the FAFSA?

How does the CSS/Financial Aid PROFILE treat this issue?

If your student is applying to a college that uses the CSS/Financial Aid PROFILE, these colleges treat divorce much differently. The PROFILE asks for information from both parents: the custodial parent and the noncustodial parent. In general, these colleges add them together. Many of these colleges have created their own forms which, if both parents are included, the EFC will increase.

Additionally, if both parents are remarried, some colleges look at the income of all four parents, even the stepparents. But there is no hard and fast rule. If your student is applying to a college that uses the PROFILE, call the college and ask about guidelines regarding divorced/remarried parents’ incomes.

Click here for a list of PROFILE colleges for the 2016-17 school year from the College Board.

If you are divorced, separated, and/or remarried, the FAFSA and PROFILE can be complicated. If you have questions, don’t hesitate to contact a financial aid expert or contact FAFSA directly by email, chat or phone. Get the answers before you complete the form because filling it out incorrectly could raise your family’s EFC.

[Want more info? Here's how the new FAFSA rule will change the way you apply for aid.]