Child’s College Costs and the FAFSA in Divorce

As parents and their children rush to complete college applications, many also wonder how they will afford to pay for college.  When parents are divorced, the financing of college may be allocated in the Parenting Plan, but it does not answer the ultimate question of what the divorced parents can afford. In Missouri, parents must look to their Parenting Plan to determine what, if any, responsibility the court requires of them regarding paying for college. It is best if parents can agree during the divorce whether and how to contribute to college. 

Some families have been taking advantage of various savings programs to pay for college; during divorce, the parties should put a priority on paying for college through these funds first. As to any remaining balance, the parties must decide how much they will contribute and how much the child will contribute. If parents believe they will not be able to afford more than X dollars for college, that expectation should be set clearly in the settlement agreement. If a child wants a more expensive college, the child will need to apply for grants or loans. Also, the parents must agree on how much debt they will accept to finance for college, if any. And, if the parents have multiple children, they must decide how to apportion their available funds.

Colleges offer a variety of financial aid alternatives, and divorced parents should know how to best take advantage. Students with strong academic records – grades and standardized test scores – can qualify for merit-based scholarships at most colleges and universities.  Some colleges will even give free tuition if the applicant has a certain grade point average and ACT score. As an example, at the University of Alabama, a student with at least a 3.5 GPA and a 32 composite on the ACT qualifies automatically for free tuition. Parents should look at a wide range of schools to see what merit packages might reduce the cost of college.

Most College Students Need Financial Aid

Even if both parents plan to contribute toward their child’s education, the student may still need financial aid. Students can qualify for financial aid, either through federal programs or institutional programs, or some combination of both.  Therefore, parents should anticipate the likely financial aid process and plan as much as possible. In the United States, each year a student is enrolled in college and seeks federal financial aid, they and their parents must fill out the government’s Free Application for Federal Student Aid (FAFSA). Almost all college students do this — there are millions of applications per year. The FAFSA is an online process that can automatically pull IRS data into the form. Even if a student doesn’t anticipate applying for federal aid, they may fill out the FAFSA for other reasons. For example, schools that grant their own scholarships may ask for it.

For divorced parents, who complete the FAFSA becomes a critical issue. In 2024, U.S. students and parents who fill out the FAFSA application will notice some changes. Stay current on how this works so divorce settlements are using the newest information.

Recent FAFSA Changes Affect Divorced Parents 

Some important changes affect applications beginning with the 2024–2025 school year.  Parents who are serious about financial planning should consider these points. 

  1. Be aware of which parent pays more to support the child financially, especially as college approaches. When parents are divorced, the FAFSA asks for a “parent of record.” This is the parent who paid the most to support the child, considering day-to-day expenses as well as any child support payments, during the year before the FAFSA is filed. (The parent of record is no longer the parent who spends the most time with the child. Before 2024, if parents are divorced, the custodial parent was required to complete the FAFSA and only that parent’s income was considered for financial aid.  If the custodial parent had a much lower income than the non-custodial parent, the child ends up the ultimate winner because the child would qualify for significant financial aid.)
  2. Understand how support payments can factor into the financial aid calculation. If the parent of record received some child support from the other parent during the relevant tax year, the child support they received is treated on the FAFSA as their asset. (It’s no longer treated as their income.)
  3. Anticipate how a new marriage might affect their financial profile. If the parent of record has remarried, the FAFSA also considers their new spouse’s tax information. 
  4. Promise to be available to fill out the FAFSA when the time comes. Each person — student, parent of record, and parent of record’s new spouse (if the stepparent filed taxes separately) — has to participate in the application process by completing a section online.
  5. Use the most updated financial terminology to avoid confusion in the future. For example, when negotiating a divorce settlement, refer to the personalized result of the FAFSA calculation as the Student Aid Index. (It’s no longer called the Expected Family Contribution.)
For Parents Who Divorce Shortly Before Filling Out The FAFSA

If a parent’s marital status has changed since they filed taxes, they may have to copy and paste their IRS data into the FAFSA, as the FAFSA may not retrieve it automatically. Why? Because the FAFSA uses parents’ 2022 tax information for the 2024–2025 school year. If a parent filed 2022 taxes while married but is divorced by the time the student applies for Fall 2024 or Spring 2025 financial aid, the parent of record may have to manually enter their tax information. It’s just an extra step for which a parent should be prepared to make sure the application goes smoothly. Parents should use all legal means to help position themselves for financial aid for college where those parents need that assistance.

Should you need the assistance of an experienced divorce attorney in Creve Coeur and O’Fallon or have questions about your divorce situation, know that we are here to help and ready to discuss those questions with you.

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