FAFSA and Divorced Parents
As divorced parents—–or even as married ones—–figuring out an equitable division of labor can be tough, but when it comes to filling out the Free Application for Federal Student Aid (FAFSA), who does what has been pretty much decided for you, so there shouldn’t be much to debate about.
It’s a matter of knowing the rules, then following them.
Who Is the Parent According to the FAFSA Form?
First things first, whether you and your partner are married, divorced, or were never married, if you have a child and all live under the same roof, both of your incomes must be recorded on your child’s FAFSA.
A 1989 film, The War of the Roses comes to mind: Kathleen Turner and Michael Douglas want a divorce but both want to keep the house so they decide to play a game of chicken, living together while divorcing, each hoping the other will crack and move out.
Things get so bad they’re poisoning each other’s pets.
Even under these conditions, had their children needed financial aid, both parents would have had to provide information on the FAFSA and both incomes would have counted towards their Expected Family Contribution (EFC).
If you’re divorced, formally separated, or if you were never married and not living together, however, it’s a different story.
Do Divorced Parents Both Fill Out the FAFSA?
Usually, divorced parents don’t both fill out the FAFSA. For parents living apart and unmarried, the custodial parent is the only one whose information counts on the FAFSA.
The custodial parent is the one the child lives with more of the time. If the child lives with both parents equally, then the parent who contributed the most financially in the past year fills out the FAFSA with their information.
Financially, to make the best out of divorce and FAFSA, it makes sense for your rising college student to live with the parent who makes less money. Your EFC could be lower and your child may get more aid.
If your kid is living with the higher-earning parent though, your family shouldn’t lie about it. That’s a form of fraud and it could result in hefty fines and up to five years in prison.
The non-custodial parent may be required to provide information to schools when aid is being given out, but until then, their information is usually not needed and shouldn’t be given on the FAFSA.
If you’re the non-custodial parent, until you’re asked, don’t tell.
Michele Larson, founder of Knowledge4College, explains that some schools— such as Vassar —do require the non-custodial parent to submit financial information.
If you’re the custodial parent, make sure that your non-custodial ex will actually provide help before your child applies to a school that requires both parents’ information.
Larson recommends checking to see which schools require the noncustodial profile on the College Board Website.
If the custodial parent fills out the FAFSA based on their income, the non-custodial parent may have to cover part of the EFC based on details in the divorce settlement.
Divorce settlements should state which expenses and what percentage of college costs each parent is responsible for.
When divorced parents are still communicating, filling out the FAFSA isn’t that difficult. Uncommunicative parents, whether they’re divorced or not, can make the process frustrating.
If your child is a dependent filling out their own FAFSA they will still need to provide information for their legal parents.
Federal Student Aid, an Office of the US Department of Education, gives specific instructions for providing information about divorced parents on the FAFSA.
The website also says what to do if someone is unable to provide information about both parents due to extenuating circumstances including refusal to participate, incarceration, abusive home environment, or parents who are non-citizens.
Does it Matter Who Claims a Child on Taxes for FAFSA?
Writing for Road2College, financial advisor Robert Falcon explains that the custodial parent—the parent with whom the child spends more of their time—isn’t necessarily the one who’s entitled to claim the child as a tax credit on their federal tax form.
Falcon highlights other considerations for divorced parents relative to tax returns and the FAFSA.
- If you got divorced or legally separated after December 31, 2018, alimony payments aren’t included in taxable income and must be added along with child support to your FAFSA as nontaxable income.
- If you got divorced before December 31, 2018, alimony payments are already included in your taxable income, so there’s no need to add them to the FAFSA. Either way, you only report alimony once. Do report child support (untaxed income) on the FAFSA.
- Couples who have filed documents for a legal separation and appeared in State Court, no longer file a joint tax return. If you’re the custodial parent, report only your income on the FAFSA.
- If you and your ex are informally separated, you do file a joint tax return, but only the custodial parent reports on FAFSA. The custodial parent must split out the income reported on the joint return to do so.
- Parents need to report income that reflects marital status at the time of filing FAFSA even if it differs from your status at the time of filing taxes. So if you divorce after filing taxes, only the custodial parent reports income on the FAFSA.
Does Stepparent’s Income Affect FAFSA?
If you’re the custodial parent and you live with your new significant other, but aren’t married, your significant other’s income doesn’t get reported on the FAFSA.
If they help with rent or utilities this financial support needs to be listed with other non-taxable items.
If you’re the custodial parent and you are legally remarried, your new spouse’s income does need to be reported on the FAFSA, whereas the non-custodial parent’s doesn’t.
The plot thickens a bit when it comes to common-law spouses.
If the custodial parent and significant other have lived together as if married for long enough, in some states this constitutes common-law marriage and the common-law spouse’s income must be reported.
Final Note on Divorce and FAFSA
As a divorced custodial parent, letting new love bloom is fine, but, from a financial standpoint, you may want to put second wedding bells on hold until your children are through college so that you don’t have to include your new spouse’s income on your child’s FAFSA.
(Please note that we are NOT recommending anyone do this, we are just stating the facts.)
On the other hand, while you may have your own reasons to put off getting divorced, your child’s FAFSA doesn’t have to be one of them.
Divorce may be complicated, but it doesn’t worsen your child’s chance of getting financial aid—and the ins and outs of applying as a divorced parent are fairly straightforward.
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