In the divorce business, there are few alleys as dark as of the college financial aid. We are commonly asked how separation and divorce may affect eligibility for student aid and loans. The October 21, 2019 Wall Street Journal sheds some light on this murky subject and is worth a full read. But, the main points we derived from it can be summarized.
For FAFSA purposes, a parent is a biological or adoptive parent including same sex couples who have adopted. Other family members generally are not counted in the data BUT custodial parents who have remarried are required to report their new spouse’s income even though that spouse is not obligated to support the college student. Note as well the status is determined when the application is filed, thus it would seem that parties can marry after the application is submitted without having to amend it to add the new spouse’s income data.
As one might expect where both parents are living in the same household, both incomes are considered relevant for FAFSA even though they may be legally separated. It means that the form needs to say, “married” even though “separated.” If the parents are physically and legally separated or divorced, only that parent with whom the child has lived primarily for the preceding 12 months needs to provide his/her financial data. If during that time custody was equally shared, it is the parent who provides more financial support. That’s a slippery question but one would think it is the parent earning the higher income, which is what the IRS does. Bear in mind that shared physical custody could prove to be a disadvantage for the FAFSA applicant because the higher earning parent’s income is going to be the one considered.
If you have remarried or if you are separated and still filing joint income tax returns, the article indicates that you should be carefully delineating parent income from non-parent income or income of the other parent whose income is not supposed to count. This may flag additional inquiries in the application process, but that’s not a reason to avoid drawing the distinctions. It may also be helpful to present the situation to the financial aid office of the recipient educational institution rather than wait for them to inquire.
Unfortunately, FAFSA is often just one leg of the financial aid empire. Four hundred schools also require a form created by the College Board known as a CSS Profile. The standards are different. Some of these schools are looking for financial data from both parents without regard to marital status. This may make it worth looking at a site called: https://cssprofile.collegeboard.org/. Remarriage invites CSS applicants to provide all household information including non-parents and people with whom the child is living. Each college in the CSS empire has its own standards but each is also getting a lot more data, which could damage eligibility. If the non-parent is unwilling to provide data, it is considered best to let the school know. A resource here is: https://cssprofile.collegeboard.org/info-divorced-separated-parents.