Filing the FAFSA raises tons of questions for divorced parents. Here are some answers.

  1. Do both parents need to fill it out? The FAFSA only requires the “custodial” parent to provide income and asset data. The CSS Profile requires both parents to fill it out.
  2. Which parent is the custodial parent? Currently, the FAFSA says the custodial parent is the parent the student spends the most time with. That presents a planning opportunity insofar as a student might choose to have the lower-earning parent be custodial, as long as they can reasonably say that’s where they spent more nights. However, FAFSA Simplification, which will go into effect in either 2022 (for the 2023-24 school year) or 2023 (for the 2024-25 school year) changed the definition of custodial parent to the one who provides the most financial support. It doesn’t clearly define what constitutes the most financial support. In some cases it’s pretty clear: if one parent relies on alimony and child support for the majority of their income and expenses, the parent paying that alimony is providing the most support. In other cases, both parents work but one pays some alimony and child support to the other, in which case that alimony and child support might or might not add up to more of the student’s support. On the other hand, having a 529 in one parent’s name does not in and of itself constitute providing support, especially insofar as the 529 might have been funded by both parents prior to the divorce.
  3. What should we do if the new rules will change who’s the custodial parent and therefore our student’s financial status? You should do net price calculators for all schools you’re considering using each parent’s respective income and assets to see if there’s a big difference. Note that alimony and child support are subtracted from the income of the parent who pays them and added to the income of the parent who receives them, so sometimes the difference isn’t as big as you might think. If the results are substantially different, the student should look for alternate choices that would provide merit aid, and, if they still want to apply to the school, reach out to financial aid once they’re accepted to explain their circumstances and ask the school to continue considering their situation under the current rules. There’s no guarantee that the answer will be yes, and the student may lose access to federal aid (Pell grant, work-study and subsidized loan) but many schools are more flexible with their own funds.
  4. What if I remarried? If you remarried, then you report your spouse’s income and assets on the FAFSA and CSS Profile.
  5. What is my marital status? This question is specifically about the parent filing the FAFSA. So a divorced parent who has not remarried selects “Divorced or separated.” If you have remarried, you are “Married or remarried.” When a spouse has passed away, the question of divorced vs widowed comes down to which happened first: If the reason you are no longer married is that you divorced, you are divorced. If the reason you are no longer married is that your spouse passed, you are widowed.
  6. What if my divorce isn’t final? Parents who have separated but whose divorce is not yet final choose depending on their living circumstances. If the parents still live together, they file as “Married or remarried.” If they don’t live together, they are “Divorced or separated.”
  7. What about my income if my divorce isn’t final or was finalized after the FAFSA income year? You will use the tax return that’s requested by the FAFSA, then appeal directly with the college(s) based on your changed circumstances. Note that the question about tax filing specifically references the parent’s “filing status according to their tax return.”
  8. If I’m the custodial parent but my student’s 529 is owned by my ex, where do I report that? You do NOT report any assets that don’t belong to you. Your ex’s 529 is a freebie in the formula. Even better: with FAFSA simplification, your student will not need to report distributions from that 529. Since FAFSA simplification will go into effect for the 2024-25 school year at the latest, any distribution taken from a non-parent-owned 529 starting in 2022 will not be reported on the FAFSA.
  9. Do I have to claim the student on my tax return to be the custodial parent? No. The custodial parent is specifically the parent with whom the student lives the most (now) or the parent providing the most financial support (future). This has nothing to do with who claims the student on their taxes.
  10. What about the AOTC? Only the parent who claims the student on their tax return can claim the American Opportunity Tax Credit (or any other education or dependent credit). With the income cap of $80,000 for single or head of household filers to claim the AOTC, divorced parents might benefit from planning dependent claiming around AOTC eligibility.
  11. What if my new spouse and I signed a prenup saying we’re not paying for each others’ kids’ college educations? The Department of Education and the colleges your student applies to are not parties to that agreement, so you still have to report each other’s income and assets on the FAFSA and CSS Profile. If you are considering remarrying and that marriage would impact your student’s financial aid eligibility, you might choose to wait until after college.
  12. What if I’m the custodial parent but my ex is planning to take out Parent PLUS loans? The FAFSA is the application for federal aid including federal education loans. However, if the noncustodial parent is going to use Parent PLUS loans, they will need to contact the school directly rather than filing an additional FAFSA. Parents still need to qualify for PLUS loans: unlike direct student loans, parent PLUS loans require good credit.

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