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Children of Divorced Parents Can Get More College Financial Aid

Can children of divorced parents use one only parent’s income on the financial aid form?

The answer is YES. Children of divorced (or legally separated) parents can report the income of one parent on a financial aid application and possibly qualify for more financial aid. Parents who work together and think ahead during their divorce can structure their divorce agreement to maximize their children’s financial aid award.

College students are required to apply for student aid through FAFSA (Free Application for Federal Student Aid). FAFSA considers 2 years-worth of income. (This will go back to your child’s junior year if they are applying for aid their first year out of high school.)
When structuring a divorce agreement to maximize college financial aid it is important to keep the following in mind:

• For married couples, the income of both parents is considered on the FAFSA form. For a divorced couple, FAFSA considers the income of ONLY the custodial parent.

• The custodial parent is the parent the child spends the majority of their time with. The custodial parent has to be legally distinguished and should be clearly spelled out in the divorce agreement. If it is not clearly spelled out, there is more paperwork involved in proving who has been primarily financially supporting the child.

• If a divorcing couple has children within a couple of years of college, they should strongly consider naming the lower earning parent the custodial parent in the divorce agreement. Couples that are working together to maximize their children’s financial aid may also consider strategically keeping “paper” earnings low for the custodial parent by trading assets in lieu of spousal support (alimony) or delaying receipt of spousal support (which would count as income for FAFSA purposes.)

• Parents who are legally separated but not yet divorced can use the income of one parent on a FAFSA form if they have been living apart for at least six months.

• If the custodial parent gets remarried, the stepparent’s income is considered for the student’s financial aid.

• Divorced parents with agreements that are not FAFSA friendly may consider writing an amendment to their parenting plan as the children near college age.

A divorce mediator can work with divorcing couples to divide their income & assets and structure their divorce agreement in a way that can maximize financial aid for their children. Taking the time to think ahead and structure a divorce agreement to maximize future financial situations simply does not happen during a traditional divorce process.

About Divorce Agree
Divorce Agree was launched in 2013 by Michele Martin, divorce mediator and Certified Divorce Financial Analyst® (CDFA™) to provide mediation and divorce financial counseling services to couples in the greater Capital District. Divorce Agree offers couples a free consultation to educate couples on mediation as well as the other divorce options available to them. Divorce Agree is located in Malta, NY which is convenient to divorcing couples from all over the greater Capital District and North Country including Saratoga, Warren, Albany and also Schenectady Counties. The phone number is 518-813-6098. Divorce Agree can be found on the internet at www.divorceagree.com.