Episode 71 of the Divorce and Your Money Show discusses how divorce might affect financial aid for your kids.
When you are going through a divorce, one of the biggest concerns is your kids’ future. College education is expensive, and one of the ways to help pay for the expenses is through scholarship or financial aid. The subject of financial aid can become a part of settlement discussions.
If you are planning to deal with financial aid, you need to know about the Free Application for Federal Student Aid (FAFSA). All schools require filling out some version of this form. There are a number of questions, but the most important one is about your marital status and income. If you are separated, you will still be technically considered married on this form. Therefore, the income of your spouse is also going to be included.
The impact of divorce is interpreted a little bit differently on the FAFSA. It asks for the income of the custodial parent.
Who has the child lived with more over the past 12 months? FAFSA designates the custodial parent according to the answer to this question, regardless of other legal criteria. If the time is somehow exactly the same, there is a list of criteria that they will use to determine whose income will be listed. The reason is very simple: the higher the income, the less the amount of the aid.
If you are married, collective incomes qualify. However, if you are divorced, only one income will be considered, and the amount of financial aid will be higher. The positive aspect in this whole process is that it can be greatly helpful for you—if you are the custodial parent who earns less.
Key Learning Points
- The subject of financial aid can be made a part of settlement discussions.
- You need to know about the Free Application for Federal Student Aid (FAFSA).
- The most important question on the FAFSA involves your marital status and income.
- If you are separated, you will still technically be considered married on this form.
- FAFSA asks for the income of the custodial parent, which is the parent that the child has lived with the most over the past 12 months.
- If you are divorced, only one income will be considered, and the amount of financial aid will be higher.