How Divorce Affects the Financial Aid Process
How to complete the FAFSA for a child of divorced parents
Unfortunate but true! When a marriage ends, children are affected the most. One of the issues concerning children of divorced parents is the payment of education costs, and financial aid. A court of law may award custody to one parent, which seems to imply responsibility for education expenses and the completion of the FAFSA (Free Application for Federal Student Aid). However, this implication causes confusion as the US Higher Education Act interprets the term custodial parent in a different manner.
Who shall fill the forms for FAFSA?
As implied above, the parent with the custody of child should complete the FAFSA. However, custody in this case does not mean legal custody awarded by the court; rather, the custodial parent is the one with whom the child lived for a longer time period in the previous 12 months.
Let’s take an example of Child C whose parents A and B have been divorced. In the case where C spends 180 days with parent A and the remaining 185 days with parent B in the previous year, FAFSA shall be filled out by parent B even if Child C’s legal custody was awarded to parent A by a court of law.
In a case where the child does not live with either of the parents but A fulfills most of C’s financial need, parent A should complete the FAFSA. This fact of provision of financial assistance should be represented on the concerned parent’s Income Tax Return as well.
If there is a tie between both of the criteria discussed above, then the College financial aid administrator shall determine who shall fill out the form based on the income of both the parents. Normally, the parent with the higher income is responsible for completion of the form.
How to calculate the time period of the last 12 months:
The period of the last 12 months does not imply last calendar year. Instead, it is the twelve months immediately preceding the date of application for financial aid. Elaborating on the above example of Child C, if the application is made on 12th January, 2010 then the period of 12 months shall start on 11th January 2009 to 12th January, 2010.
Criterion for Private College Financial Aid
The income and assets of the non-custodial parent is not taken into consideration for the FAFSA. Certain private colleges, however, do take into account the particulars of the non-custodial parent as well and require an additional form to be completed.
To avoid any confusion and disputes, it is always better to inform the college authorities about the possibility of divorce. In fact, an agreement should be made with the college clearly specifying which parent is liable for college fees and costs. This may provide some peace of mind to the child and the college as well.
Though there is the possibility of confusion as to who will bear the education expenses, children of divorced parents are at an advantage as well. Even though the income of only one parent is required to be oncluded on the FAFSA, the child may provide the particulars of the parent with the lower income also. This figure is used to calculate the EFC (Expected Family Contribution). The lower the EFC, the higher the amount of financial aid granted. However, it’s not prudent to mention the particulars of a parent with whom the child has little or no contact since form will need to be signed by the parent.