Financial Aid for Families of Divorce
Divorced, or never-married, parents of college bound students often wonder how financial aid will be determined. It’s common for families to ask me if one or both parents need to complete the Free Application for Federal Student Aid (FAFSA). Families who are completing a CSS Profile have the same question.
The answer is actually a bit more involved than we might expect. In the past, the FAFSA instructions were based on physical custody. The parent who had the child for at least 51% of the year would complete the FAFSA. Financial aid would be determined on that parent’s household income. So if the parent is now married to the child’s step-parent, that income is also reported for FAFSA purposes. Many families of divorce are able to agree that the student should live with the parent whose income will achieve the best financial aid outcome.
Changes Coming to FAFSA
For the 2023-2024 academic year, however, FAFSA will be changing. As part of the bill that contained pandemic relief, FAFSA was simplified. The idea is to make financial aid more predictable and easier for families to plan. While there are many changes, the one that applies to divorced families is how to determine which parent should complete the form. Under the new rules, the parent who claims the student as a tax dependent will fill out the FAFSA. For many families, this will not cause any changes. The parent who claims the student for taxes is typically the parent who houses and financially supports the student. But there will be many circumstances in which the student does not live with the parent who claims him or her, and those families will need to make sure to follow the new rules.
Take note that this is going into effect for the school year beginning in August 2023. For the upcoming academic year, FAFSA will still be completed under the residential guidelines. For the year in which the changes take place, financial aid will be determined on the most recently filed tax returns. It’s a good idea to sit down with your accountant and connect with your child’s other parent to determine how to move forward for financial aid purposes. Claiming a student as a dependent has many tax implications regarding credits and deductions, so it’s important to look at the big picture before filing your tax returns.
CSS Profile and Families of Divorce
The CSS Profile is used by about 400 colleges and universities to determine non-federal aid. This form is a much more in-depth questionnaire than the FAFSA, and it allows schools to get a more comprehensive look at a student’s family and financial picture. For this reason, the CSS Profile may require both biological parents to enter information. The schools themselves set these parameters, so it won’t be required by every school.
Students who will be applying to a school that uses the CSS Profile should go through the application ahead of time to find out whether or not both parents need to complete it. Students will need to make sure both parents are aware of the need to have a complete CSS Profile for financial aid purposes. If one parent refuses to complete their part of the application, or if the student is not able to contact one biological parent, waivers are available. The school will review the Noncustodial Parent waiver and follow up with the student about their decision to waive that application requirement.
Financial Aid Preparation is Key for Families of Divorce
Financial aid always seems to be a daunting undertaking for first-time college families. When divorce is part of the family dynamic, it can feel downright overwhelming. But it doesn’t have to be a high stress process. Remember that financial aid is mostly a formula-based activity, so we can take emotion out of it. Review all of the forms and applications in advance, and then collect the necessary information before starting. If you have questions about financial aid, or you’re looking to strategize your approach, let’s connect. I’m here to help.