It’s normal to be intimidated by the prospect of filling out financial aid forms for college. For children of divorced parents, the process can seem especially daunting. Not only will they sometimes need to provide information on two households’ finances instead of one, but a student’s financial aid award can vary considerably from school to school due to different methods of determining how much divorced parents can afford to pay.
Key Takeaways
- With the FAFSA, expected family contribution is based on the finances of the parent the student lives with more of the time.
- Schools that use the CSS Profile may look at both parents’ finances, regardless of which parent the student lives with more or which parent provides more financial support.
- When a divorced parent remarries, the stepparent’s financial situation may get factored into financial aid decisions, which can increase or decrease aid.
CSS Profile vs. FAFSA for Students Whose Parents Are Divorced
The Free Application for Federal Student Aid (FAFSA) is the financial aid form that every student seeking federal student loans, work-study jobs, grants, or institutional aid needs to complete. The CSS Profile is a form that, for the 2022-23 school year, 237 colleges, universities, and scholarship programs require financial aid applicants to complete.
Many students will find themselves completing both forms and should know that the CSS Profile and FAFSA treat the finances of divorced parents differently when determining financial aid.
“The CSS Profile form often considers the income and assets of both parents’ households, whereas the FAFSA form is primarily concerned with the household that the child resides in over the majority of the prior 12 months,” says John F. Pearson, a financial professional with Barnum Financial Group’s Center for College Planning in Stamford, Conn. Because the CSS Profile looks at household income, a stepparent’s income will likely be considered even though that person may have no legal obligation to support the child’s education.
The CSS Profile will calculate a total that both parents must provide, but “will not referee as to where the actual family contribution will come from,” Pearson says.
Undergraduate students may be classified as independent students and receive financial aid based solely on their own circumstances, not their parents’, but these cases are rare.
Of the 237 schools that use the CSS Profile, 156 require the noncustodial parent to complete the form in addition to the custodial parent. Some institutions may waive this requirement in cases of documented abuse, legal restrictions on contact, or lack of contact or support from the noncustodial parent.
Parents’ Legal Obligations to Pay for College
In about half of U.S. states, courts can require a noncustodial parent to contribute to the cost of their child’s education as part of a divorce settlement. Decisions depend on the facts of each family’s case. Without a court order, parents do not have a legal obligation to pay for their child’s higher education, but financial aid awards are usually based on an assumption of parental financial support. In rare cases, undergraduate students may be classified as independent students and receive financial aid based solely on their own circumstances, not their parents’.
FAFSA Changes Will Affect Financial Aid for Children of Divorced Parents
Starting with applications for the 2023-24 or 2024-25 school year, FAFSA will consider the finances of the parent who provides most of the student’s financial support instead of the parent who has majority custody. This change means that divorced parents seeking to maximize a child’s financial aid will need to rethink their game plan, starting now, regardless of whether their student will just be entering college or will be partway through when the changes take effect.
(At the time of writing, the Office of Federal Student Aid had not published information about the school year when this specific change would be implemented as part of its larger FAFSA overhaul, originally scheduled for full implementation in 2023-24 but later postponed by one year.)
“The planning strategies would be to consider ideas that would allow the spouse with the lower income level and lower liquid asset level to somehow provide more than half the financial support to the child for the years that they attend college,” Pearson says. “That’s often easier said than done.”
Schools that use the CSS Profile may still come up with expected family contributions that are different from those of the FAFSA.
How Divorced Parents Can Help Their Child Get More Financial Aid
Divorced parents can help their child get more financial aid by learning how the schools their child is interested in attending expect each parent to contribute.
Strategies that might increase financial aid include having the child live primarily with the parent who is less well off, as noted above, though alimony and child support (and future changes to FAFSA formulas) may offset any potential advantage. Avoiding remarriage, especially for the custodial parent, may also help, but of course marriage can have financial (and emotional) advantages as well, not just for the family but also for financial aid.
Families who have enough resources to strategize around financial aid, but not enough resources to easily cover college costs, may want to seek help from a financial advisor who understands how to help divorced parents navigate the complexities of the FAFSA, CSS Profile, and institutional aid. More broadly, these professionals can advise on how to fund a college education.
College Financial Planning for Parents Who Aren’t Divorced Yet
During the divorce process, parents are often ignorant of how their decisions will affect their child’s future financial aid prospects, Pearson says. Being sensitive to custody and support issues, and speaking to a specialist on these topics, can save both parties significant sums and prevent future conflicts.
Pearson said his firm’s experience with families divided by divorce is that divorce heightens the likelihood of financial stress. “We often see parents wanting to send their kids to high-quality, high-cost colleges, maybe when they can’t really afford it, because they are feeling some regrets over the pain caused to the child from the divorce,” he says. “College funding should definitely get more attention and actual dollars set aside for it during the divorce negotiations.”
That said, every family’s circumstances are different, and divorce can be a financial minefield. Divorcing parents may not wish to willingly submit themselves to a binding agreement in arbitration about future support for college, especially when a child is young. However, it may be possible to structure the agreement to account for various uncertainties around the parents’ future finances, future college expenses, and the child’s college plans, explains longtime family law attorney Dana McKee, partner at Brown, Goldstein & Levy in Maryland, in her post on college costs and divorce on the firm’s blog.
How Does the FAFSA Work for Divorced Parents?
The Free Application for Federal Student Aid, or FAFSA, takes into consideration whether a student’s divorced parents live together or not. Students whose divorced parents don’t live together should provide information about the parent they’ve lived with more over the past 12 months. Students who lived equally with both parents (which is actually quite difficult to accomplish, if you think about it) should instead provide information about the parent who provided more financial support over the past 12 months.
The FAFSA does require students to include information about a stepparent who is married to their legal parent. It also requires students to include information about both legal parents if they live together despite being divorced.
Do Financial Aid Calculations for Students of Divorced Parents Vary by School?
“They can,” said John F. Pearson of Barnum Financial Group’s Center for College Planning. “There are certainly differences between FAFSA-only colleges and many of the schools that require the CSS profile. In addition, many colleges have supplemental questionnaires that they require that might end up including or excluding certain income and assets.”
How Does Remarriage After Divorce Affect Financial Aid?
If one or both divorced parents get remarried, it could hurt the student’s financial aid prospects because both the FAFSA and CSS Profile may look at the income of both households. Remarriage can be especially harmful to financial aid when stepparents won’t actually be providing any financial support for college, but the financial aid formulas assume they will.
The Bottom Line
When a student’s parents are divorced, applying for college financial aid becomes more complicated. Differences between the FAFSA and CSS Profile, as well as individual schools’ policies, can mean that students will be responsible for very different expected family contributions at the various institutions that admit them.
Having divorced parents can also mean a lengthier financial aid application process. Preparing to complete the forms far enough in advance to account for the complexities of divorce will help students get the best shot at first-come, first-served financial aid resources.