A crisp is in the air, the leaves are starting to change; it can only mean one thing: the college application season has begun.
Parents across the country are likely busy trudging across campuses, sitting in on information sessions and gathering multitudes of brochures. Though that can all be tedious, nothing compares to the frustration associated with the financial aid process. Most people find the ordeal exhausting and confusing. Recently divorced couples may be even more confused about how their split will impact their child’s financial aid. Keep reading to find out some important tips about the process.
The all-important FAFSA
First, divorced parents need to understand that one of the most important things to impact the college financial aid process is where the child lives. The reason this is so important is because the parent who is responsible for filing the Free Application for Federal Student Aid (the dreaded FAFSA) is the one who the child has lived with for the majority of the year.
Though this may not seem to matter, the fact is there are plenty of situations where this can result in a big difference in overall financial aid. For example, if a child lives with his or her mom for the majority of the year and dad for the remainder, then as far as FAFSA is concerned the father’s income is irrelevant. While this may not always be a big deal, in some cases the impact can be dramatic. In our scenario, lets say that mom was a schoolteacher and earned $35,000 while dad was a doctor and made $250,000. Only the mom’s much lower salary would need to be declared for FAFSA’s financial aid purposes, something that will likely result in a substantially more generous financial aid package for junior.
Timing
Though determining which parent spent the most time with a child seems fairly straightforward, it’s important to clarify that for FAFSA purposes the calendar year is irrelevant. According to FAFSA, parents must instead count only the 12 months prior to the date the FAFSA was signed. This means that recent changes in your custody arrangement might result in a crucial difference in which parent files the FAFSA, so pay careful attention when counting backwards.
Taxes
An issue that can trip up some divorced parents is taxes. Many assume that whatever parent claims the child for tax purposes has the responsibility of filling out financial aid applications. As far is FAFSA is concerned, the person claiming the child tax credit has nothing to do with who fills out financial aid forms. FAFSA depends entirely on who spent the most time with the child the year before the application was submitted, nothing else.
Remarriage
A final issue that divorced parents with college-aged children should be aware of (though not held hostage by) is that remarriages can have a potentially important impact on your child’s financial aid award. This is because once a parent remarries, his or her new spouse’s income and assets will be including with your own when reporting to FAFSA. Though this shouldn’t prevent you from moving on with your life and remarrying, it’s an important point to keep in mind.
An experienced Minnesota family law attorney can help walk you through the difficult process of divorce, including offering advice on confusing financial issues such as alimony and helping negotiate emotional subjects like child custody arrangements. For more information on divorce in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 360-4721.
Source: “How Divorce Affects Financial Aid,” published at CBSNews.com.
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