How Divorce Affects College Planning

If you are getting divorced or contemplating divorce you may want to consider how the decisions you make during your divorce can affect the way student financial aid is determined for college bound children. In Rhode Island, the courts have no authority to require either parent to provide support after a child turns 18. However, that does not mean that your decisions and/or court orders do not have an impact on the availability of financial aid for college to your children and there are steps that can be taken and decisions that may be made that will have an impact on how much your child might receive.

What happens to your child if you die?

The FAFSA

FAFSA is an acronym that stands for the Free Application for Federal Student Aid. Colleges and universities use the FAFSA to determine your eligibility for federal, state, and college-sponsored financial aid. The custodial parent is responsible for filling out the Student Aid (FAFSA). The custodial parent for federal student aid purposes is the parent with whom the child lived the most during the previous 12 months. This is not necessarily the parent who has legal custody and if the child didn’t live with one parent more than the other, the parent who provided the most financial support during the previous twelve months should fill out the FAFSA. Biological parents who never married are treated the same as parents who are divorced.

The parties to a divorce may agree on who is the custodial parent, who is responsible for college tuition, etc. However, these agreements are not determinant for purposes of the FAFSA. For FAFSA purposes, the term “custodial parent” is not synonymous with custody. Usually the parent with whom the student lived with the most during the previous 12 months is considered to have custody for FAFSA purposes. However, if it is not clear with whom the child lived most in the previous year or if the divorce is recent so that a track record is not available, custody is usually determined to be with whichever parent provided more support during the period.

If that is not definitive, then the financial aid administrator at the college will make the decision, and this will usually be based on whichever parent has the greater income. In other words, if the facts as to custody are not crystal clear, they will chose to regard the parent with the greater income as custodial and that  will result in less aid. However, establishing in an order which parent is to be considered custodial and with which parent the child is to live with the most will provide guidance and in most cases the financial aid administer is going to presume that the order represents the reality.

The Role of the Non-custodial Parent

The federal government does not consider the income and assets of the non-custodial parent when determining a student’s financial need. However, it does consider child support received by the custodial parent. In contrast, many private colleges do consider the non-custodial parent as a potential source of support and require a supplemental financial aid form from the non-custodial parent. This affects the awarding of the school’s own aid, but not Federal and state aid.

Obligations of Stepparents

If the custodial parent remarries, the stepparent must report their income and assets too. Even if the parent and new stepparent signed a prenuptial agreement that absolves the stepparent from financial responsibility for the child’s education, the stepparent’s financial information must be provided in order for the student to be considered for aid. The federal government considers the stepparent a source of support regardless of any private agreement to the contrary and the amount of aid available to the child is reduced accordingly.

Primary Consideration

The primary consideration for determining which parent’s income is used to determine financial aid is the number of days the child lives with either parent in the year before filing the application. Therefore, thought should be given to that and steps taken to address it if the parties want to cooperate in maximizing aid. However, student financial aid is not the only consideration during a divorce and efforts taken to maximize aid must be balanced against other considerations, such as the appropriate payment of child support and which placement is in the best interests of the child, either of which or both may be more important than the issue of student financial aid.

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