Ben and Amy have been divorced for years. Finally, though, they’ve found something they both agree on: they want their teenage daughter, Sophie, to get through college as close to debt-free as possible—and directly into a job she loves afterward. Millions of other divorced parents feel the same way.
What’s the key to making that happen?
Divorced parents can take 7 specific steps that can help their kids get through college debt-free.
1. Divorced parents, think about making a change to your child’s living situation in the fall of her junior year of high school.
On October 1st of your child’s senior year of high school, her eligibility for need-based financial aid is going to be determined by a close examination of the income and assets of her “parents.” When divorce and remarriage make family life complicated, though, who exactly qualifies as a teen’s “parent” on financial aid applications? If Ben and Amy understand the rules now, they may be able to help Sophie get thousands extra in free financial aid for college.
2. Understand exactly who qualifies as “the parent” when it comes to applying for financial aid.
In the case of divorced parents, FAFSA (Free Application for Federal Student Aid) calculations are made using the income and assets of the parent that the student lived with the most during the 12 months before the date of the FAFSA form submission.
This can be a stunning revelation for families.
The person who counts as “the parent” for FAFSA financial aid calculations is not necessarily the “custodial” parent as named in the divorce decree. The rules are stated this way at http://www.finaid.org/questions/divorce.phtml:
“The custodial parent for federal student aid purposes is the parent with whom you (the student) lived the most during the past 12 months. (The twelve month period is the twelve month period ending on the FAFSA application date, not the previous calendar year.) Note that this is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support during the past twelve months should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return. If you have not received any support from either parent during the past 12 months, use the most recent calendar year for which you received some support from a parent. These rules are based on section 475(f)(1) of the Higher Education Act of 1965 (20 USC 1087oo(f)(1)).”
3. Take an honest look at which divorced parent has the higher household income.
Does the parent that the child currently lives with have the higher household income? (Household income includes the income of each parent’s new spouse, so be sure to figure that in.)
4. Carefully consider: “Is one living situation just as safe and healthy as the other?”
If it’s feasible, safe, and healthy for the child, the divorced parents and the child might decide to have the child live with the lower-income parent for a minimum of 183 days during the 12-month period of time before submitting the FAFSA form on October 1st of the child’s senior year of high school. (If you’re cutting it this close to the line, keep track of where the student is sleeping each night on a special paper calendar.)
5. Let the rules work in your favor.
Families who do what I’ve described above are able to have the lower-income parent serve as the official “parent” for FAFSA financial aid calculation purposes.
Doing so means that the high-income parent’s household wealth (including the income of his or her new spouse) won’t figure into financial aid calculations at all. Even the 529 savings plan that this high-income parent has created for this student won’t count against her in financial aid calculations.
The high-income parent’s household assets will still count for the CSS/Profile financial aid application—but that’s okay. Fewer than 300 U.S. colleges require the CSS/Profile form. There are thousands of excellent, high-quality public and private colleges that don’t even look at it. You can see the list of colleges that do require the CSS/Profile form here.
6. Be creative and generous about making this equitable.
You might be thinking: “But is it really fair for this lower-income parent to have to take on the responsibility of paying for all the food and personal expenses of this child, leaving the wealthier parent to get off scot free?”
Some divorced parents who’ve set up this kind of arrangement will create a written agreement where the wealthier parent agrees to be especially and specifically generous toward this lower-income household while these living arrangements are in place. (Likely through October 1st of the student’s junior year of college.) Cash payments will have to be reported on future FAFSA forms—so be careful about those—but the FAFSA form doesn’t track physical gifts, even when they’re necessities such as bedroom furniture, hockey equipment, clothing, shoes, school supplies, or bags of groceries left on the doorstep.
One divorced couple who did this chose to have the lower-income mother order her groceries online from her local grocery delivery service, and then the higher-income father simply used his debit card to pay the bill she owed to the grocery delivery company. This allowed the divorced father to “leave groceries on the doorstep” every week even though he lived several states away.
With these thoughts in mind and a written agreement created, the wealthier parent can agree to be generous without handing cash over to anyone. This can make the new living arrangement more equitable.
7. Don’t make college financial decisions based on rumors you heard at soccer practice. Get your information from authoritative sources.
The financial aid rules concerning divorced or never-married parents can get complicated in some cases. If you are a divorced or never-married parent, be sure to carefully read the one-page document on this subject located at http://www.finaid.org/questions/divorce.phtml
Have you heard?
To get low-cost debt-free college help from me starting when your child is in 8th grade, get my book:
This book provides clear, step-by-step instructions on how to get your kids through college debt-free and into great jobs afterward—starting when they are in middle school. It’s an ideal resource for divorced parents because it provides one central place where both parents can get important information and start necessary discussions.
This is a reference book, so nobody reads the whole thing cover to cover. You can get 10-minute, fast-paced video instruction on how to use this book most efficiently here.
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What about you? What ideas have you heard about lowering college costs when you’re divorced?
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Who is Jeannie Burlowski?
Jeannie is a full-time academic strategist, podcast host, and sought-after speaker for students ages 12–26 and their parents and grandparents. Her writing, speaking, and podcasting help parents set their kids up to graduate college debt-free and move directly into careers they excel at and love. Her work has been featured in publications such as The Huffington Post, USA Today, Parents Magazine, and US News and World Report, and on CBS News.
This article was originally published on this blog on August 8th, 2016. It was most recently updated on September 12th, 2019.