[UNITED STATES] For children of divorced parents, the journey through college financial aid can be a daunting and complex process. Not only do these students often need to provide information on two households' finances instead of one, but their financial aid awards can vary significantly from school to school due to different methods of determining how much divorced parents can afford to pay. This comprehensive guide will explore the intricacies of financial aid for children of divorced parents, offering insights and strategies to help families navigate this challenging landscape.
The two primary financial aid forms that students must contend with are the Free Application for Federal Student Aid (FAFSA) and the College Scholarship Service (CSS) Profile. These forms treat the finances of divorced parents differently, which can significantly impact a student's financial aid package.
FAFSA for Divorced Parents
The FAFSA is the standard form required for federal student loans, work-study jobs, grants, and institutional aid. For divorced parents, the FAFSA primarily considers the finances of the custodial parent - the one with whom the student lives more of the time.
John F. Pearson, a financial professional with Barnum Financial Group's Center for College Planning, explains, "The FAFSA form is primarily concerned with the household that the child resides in over the majority of the prior 12 months". This means that the noncustodial parent's income and assets are generally not considered in the FAFSA calculation.
CSS Profile and Divorced Parents
The CSS Profile, required by 237 colleges and universities for the 2023-24 school year, takes a different approach. Pearson notes, "The CSS Profile form often considers the income and assets of both parents' households". This more comprehensive view can result in a different expected family contribution compared to the FAFSA.
Of the schools using the CSS Profile, 156 require the noncustodial parent to complete the form in addition to the custodial parent. However, some institutions may waive this requirement in cases of documented abuse, legal restrictions on contact, or lack of contact or support from the noncustodial parent.
Legal Obligations and College Expenses
The legal landscape regarding a parent's obligation to pay for college varies by state. In about half of U.S. states, courts can require a noncustodial parent to contribute to their child's education costs as part of a divorce settlement. However, without a court order, parents typically have no legal obligation to pay for their child's higher education.
Despite this, financial aid awards are usually based on the assumption of parental financial support. In rare cases, undergraduate students may be classified as independent students, receiving financial aid based solely on their own circumstances rather than their parents'.
Upcoming Changes to FAFSA and Their Impact
Starting with applications for the 2024-25 school year, the FAFSA will undergo significant changes that will affect children of divorced parents. The form will consider the finances of the parent who provides most of the student's financial support, rather than the parent with majority custody.
Pearson advises, "The planning strategies would be to consider ideas that would allow the spouse with the lower income level and lower liquid asset level to somehow provide more than half the financial support to the child for the years that they attend college". However, he acknowledges that this can be challenging to implement in practice.
Strategies for Maximizing Financial Aid
Divorced parents can employ several strategies to help their children secure more financial aid:
Understanding School Policies: Learn how each school on your child's list determines parental contributions.
Living Arrangements: Consider having the child live primarily with the less well-off parent, although this advantage may be offset by alimony and child support.
Remarriage Considerations: Be aware that remarriage, especially for the custodial parent, can impact financial aid eligibility.
Seek Professional Advice: Consult with a financial advisor who specializes in helping divorced parents navigate the complexities of financial aid applications.
Financial Planning During Divorce
For parents going through a divorce, it's crucial to consider the future impact on college funding. Pearson observes, "We often see parents wanting to send their kids to high-quality, high-cost colleges, maybe when they can't really afford it, because they are feeling some regrets over the pain caused to the child from the divorce".
He emphasizes the importance of addressing college funding during divorce negotiations: "College funding should definitely get more attention and actual dollars set aside for it during the divorce negotiations".
However, it's important to note that every family's circumstances are unique. Divorcing parents may be hesitant to commit to future college expenses, especially when children are young. In such cases, it may be possible to structure agreements that account for uncertainties in future finances, college expenses, and the child's plans.
The Impact of Remarriage on Financial Aid
Remarriage can significantly affect a student's financial aid prospects. Both the FAFSA and CSS Profile may consider the income of both households when a parent remarries. This can be particularly problematic when stepparents aren't planning to contribute to college expenses, but financial aid formulas assume they will.
Navigating FAFSA as a Child of Divorced Parents
For students with divorced parents who don't live together, the FAFSA requires information about the parent with whom they've lived more over the past 12 months. If living time is split equally, students should provide information about the parent who provided more financial support.
It's important to note that the FAFSA requires information about stepparents married to the student's legal parent. Additionally, if divorced parents live together, information about both parents must be included.
Variations in Financial Aid Calculations
Financial aid calculations can vary significantly between schools. Pearson explains, "There are certainly differences between FAFSA-only colleges and many of the schools that require the CSS Profile. In addition, many colleges have supplemental questionnaires that they require that might end up including or excluding certain income and assets".
This variation underscores the importance of thoroughly researching and understanding each school's financial aid policies.
Navigating the world of financial aid as a child of divorced parents is undoubtedly complex. The interplay between FAFSA and CSS Profile requirements, varying school policies, and the potential impact of remarriage creates a challenging landscape for families to traverse.
However, with careful planning, thorough research, and potentially the guidance of a financial professional, families can develop strategies to maximize their financial aid opportunities. By understanding the nuances of how divorce affects financial aid, parents can better support their children's educational aspirations while managing their financial responsibilities.
As the landscape of financial aid continues to evolve, with significant changes coming to the FAFSA in the 2024-25 academic year, it's more important than ever for divorced parents to stay informed and proactive in their approach to college funding. By doing so, they can help ensure that their children have access to the educational opportunities they deserve, regardless of the complexities introduced by divorce.
