By the time their kids are ready for college, many parents are either divorced or in the process of getting one. Just from a financial aid perspective, that can actually be to their benefit.
Students whose parents are divorced—or have been separated for at least six months—will in many cases be in line for a more generous financial aid package.
How much money a student might get depends on the college and on which financial aid forms it requires.
The FAFSA requires financial information only from the custodial parent and completely ignores the noncustodial parent. The custodial parent is the one the child lives with more than 50% of the time.
If that parent has remarried, the stepparent's financial information is included as well. (So don’t get remarried until you’ve completed your last financial aid form in the student’s junior year of college!)
For FAFSA purposes it’s generally best for the student to live with the parent who earns the least money. But bear in mind that any child support the custodial parent receives counts as income on the custodial parent’s FAFSA (and on the CSS Profile, as well).
To see which parent has the lower Expected Family Contribution (EFC), you can go to the College Board's EFC Calculator and calculate both EFCs.
The CSS Profile is a different story. Most colleges that require the CSS Profile also expect the noncustodial parent to complete a noncustodial Profile form. Each college will calculate a contribution from the custodial parent AND one from the noncustodial parent and add them together to determine a total family contribution. Generally, the total family contribution from both parents will be slightly less than if the parents were still married, because colleges take into consideration the added cost of maintaining two households.
Not every college that uses the CSS Profile requires noncustodial parents to fill out a Profile form, however. This list of colleges that use the CSS Profile also indicates which ones want a noncustodial Profile form.
Colleges that require a CSS Profile only from the custodial parent can be particularly attractive for students whose parents are divorced. That’s because the Profile colleges tend to be more generous with aid than colleges that require only the FAFSA. However some of these colleges have their own forms to collect financial information from noncustodial parents. Because colleges’ rules can change, it’s worth calling the ones you’re considering to confirm whether they need any noncustodial parent information.
The FAFSA and CSS Profile also differ in how they evaluate the situation if one or both parents have remarried since the divorce. The FAFSA, as I mentioned, will count the stepparent’s income along with the custodial parent’s.
Colleges that require a CSS Profile from both the custodial and noncustodial parent will generally strip out the stepparents and use only the biological parents’ income and assets in the formula. But colleges that require a CSS Profile just from the custodial parent will typically include that parent’s new spouse in their calculations.
Once more, a quick call to the financial aid department of the college, to see how it does its calculations, can save you later hassles.
If the divorce is in process but hasn’t been finalized, it’s to your advantage when applying for aid to file your tax return as “Single, Head of Household.” This filing status is allowed if you have been living apart for at least six months. A separate tax return for each parent is easier for the colleges to match with your financial aid forms to verify income, and it can be more difficult to convince a school to count only one parent’s income if the parents file jointly.
Many parents delay getting divorced until after their students graduate from college. For financial aid purposes, though, they might want to do it sooner—assuming they were planning on it anyway!
Paula Bishop is a certified public accountant and an adviser on financial aid for college. She holds a BS in economics with a major in finance from the Wharton School and an MBA from the University of California at Berkeley. She is a member of the National College Advocacy Group, whose mission is to provide education and resources for college planning professionals, students, and families. Her website is www.paulabishop.com.