Divorced and separated parents face special challenges when they and their student apply for college financial aid.
But by understanding how income and assets of divorced and separated parents impact your financial aid award, you can strategically target schools where you can maximize financial aid based on your particular situation.
Here’s your guide to financial aid for divorced parents, with tips for both the FAFSA and CSS Profile.
Financial Aid Tips for Divorced Parents
1. New Rules for Filling Out the FAFSA
The rules for divorced families are changing for the upcoming Free Application for Federal Student Aid (or FAFSA), the financial aid form required by all schools. Due to all the changes, the next FAFSA cycle will open sometime in December 2023 instead of the usual Oct. 1. The specific date has not been set. This will be for the 2024-25 academic year.
- 2023-24 FAFSA for Divorced Parents: What You Need to Know
- FAFSA Application Ultimate Guide: How to Apply, Steps, Tips, FAQ
- Why You Should Fill Out FAFSA Even if You Don’t Qualify for Financial Aid
2. Determining Which Divorced Parent Should Fill Out FAFSA
The parent who has provided the most financial support is the one who should fill out the FAFSA. This change, effective from December 2023 onward, is a departure from the previous system where the custodial parent typically filed the FAFSA.
In cases where there is a financial support tie between parents, the tie-breaker is determined by the parent with the higher adjusted gross income from the “prior-prior” tax year. These adjustments are part of the FAFSA Simplification Act, which aims to streamline the application process and make it fairer for all parents.
It’s important to note that these changes may impact the Expected Family Contribution (now referred to as the Student Aid Index), especially if the parent providing the most financial support has remarried. In such cases, the income and assets of the step-parent will also be included in the FAFSA calculation.
Here’s a quick summary of the FAFSA changes starting in December 2023:
- The custodial parent is no longer solely determined by residency but by financial support provided.
- The Expected Family Contribution (EFC) is replaced by the Student Aid Index (SAI) for need-based calculations.
- The FAFSA form is now more straightforward with fewer questions (from 108 to under 40).
- Income data is directly transferred from the IRS, streamlining the process.
- Family size is based on tax-dependent listings.
- Child support is reported as an asset, not income.
3. Filling Out the CSS Profile for Divorced Parents
Families may also submit the CSS Profile, which stands for College Scholarship Service Profile. It’s an online application used by about 300 colleges and various scholarship programs to award their own aid. This type of aid includes scholarships, grants, and loans all provided by the college or private scholarship organization. To be eligible, submit a CSS Profile.
The CSS differs in many ways from the more common FAFSA, which is used for federal financial aid, such as Pell Grants, Direct Student Loans, Parent Plus Loans and work-study programs. Many family submit both the CSS and the FAFSA.
Since CSS Profile schools administer significant amounts of gift aid from their endowments, they want to know a little more about the parents and step-parents. And some colleges require both the custodial and non-custodial parents to each submit a CSS Profile.
Differences Between the FAFSA and CSS Profile
|Purpose||Federal financial aid (grants, loans, work-study)||Private college aid (grants, scholarships, loans for select schools)|
|Applicability||Required by most colleges for federal aid||Needed by some private colleges for detailed financial data|
|Cost||Free for all applicants||$25 initial fee ($16 for extras), but free for some low-income students|
|Recipient||U.S. Department of Education||Colleges|
|Asset Reporting||Covers basic financials||Seeks more detail, including retirement assets, business net worth, home equity, and step-parent info|
Consider these distinctions based on your college choices and financial situation when applying for aid.
Most CSS schools require that the income and assets of the noncustodial parent be reported in addition to the custodial parent’s information.
Even worse, if both biological parents have remarried, the income and assets of up to four parents (two birth parents plus two step-parents) may be lumped together in calculating your “financial need.”
There is some good news, however, about one in three CSS schools exclude the noncustodial parent’s income and assets (called “CSS Noncustodial Schools”) in determining how much you should pay for college.
You can find a list of the CSS schools and whether or not they require information from the non-custodial parent on this CSS Listing. It is listed in the column titled “CSS Profile – Noncustodial Parents.”
- CSS Profile Guide: How to Fill Out, When, and How to Submit
- CSS Profile vs FAFSA: What’s the Difference?
4. Reporting Alimony and/or Child Support
Divorced parents should report alimony and child support on the FAFSA and CSS profile, but make sure it’s list only once on each form. It should be listed as nontaxable income.
5. Planning for Divorced and Legally Separated Parents
Families with divorced and legally separated parents can leverage their situation to maximize the student aid they receive.
These steps include the following:
- To increase the chance of needs-based aid, apply to FAFSA-only and CSS Noncustodial Schools.
- Parents who divorce or separate during the financial aid filing period should report their income consistent with their marital status on the date they file their financial aid forms.
- Aa divorced custodial parent may want to consider delaying getting remarried if the impact on college aid is significant.
- On the flip side, don’t wait until after the kids are out of college to get that divorce. If you are going to get divorced anyway, there is no financial reason to wait, and there may be a financial benefit to do it sooner rather than later.
Planning to pay for college is extremely stressful and complicated no matter your situation.
If divorce or separation complicates your life, make an informed decision to best serve your student and family.
Use College Insights to Find Financial Aid
Road2College offers a college search and comparison tool called College Insights. Try it for free to see which colleges provide the most financial aid for your situation. We offer a free version to get started and a premium version to go deeper. You can potentially save tens of thousands of dollars by finding the right college at the right price. Try it for free today.
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