Before we get into How to Fill Out The FAFSA, let us clarify who is the parent and who is responsible for helping the student complete the FAFSA.
Students of divorced parents have special considerations when applying for college financial aid. After all, they are likely part of two households, often two families if one or both parents remarries, and two financial circumstances. To find out the inside scoop on maximizing college financial aid for children of divorce.
When a student's parents are divorced, which parent's income should be listed on the Free Application for Federal Student Aid (FAFSA)?
When a student's parents are divorced, only one parent is responsible for completing the FAFSA. This parent, called the custodial parent, is the parent with whom the student lived the most during the 12 months preceding the date the FAFSA is filed.
If custody is not legally distinguished, the custodial parent is based on whichever parent provided more financial support. So, to some extent the parents can control which parent completes the FAFSA.
However, colleges can ask for a copy of the divorce decree and child custody agreement. So, if the living arrangements don't match both of these documents, it's best if the parents get the court to modify the agreements.
What happens if the parents are separated but not legally divorced?
If the parents are divorced or separated but living together, they are treated as though they were married, and the financial information of both parents is required on the FAFSA. This is a recent change effective starting in the 2014-2015 school year. However, if they are legally separated and living together, or informally separated and maintaining two separate residences, then only one parent must complete the FAFSA.
What happens when one or both parents remarry? How do the stepparents' income affect financial aid?
If the custodial parent has remarried, the income and assets of the stepparent must be reported. When choosing the custodial parent, the parents should take the finances of the stepparents into account.
Note that if the stepparent provides more than half support to his or her other children, these children get counted in household size, even if they don't live with the stepparent. In particular, if any of these children are in college, they get counted. Increasing the number in college can have a big impact on eligibility for need-based financial aid. So, while including the stepparent's income and assets on the FAFSA may decrease eligibility for need-based aid, including the stepparent's other children in the number in college figure may increase eligibility for need-based aid.
The marital status and living arrangements of a student’s biological and adoptive parents determines whether the Free Application for Federal Student Aid (FAFSA) requires financial and demographic information from one or both parents.
Who is Considered a Parent?
For federal student aid purposes, a student’s parents are not limited to just biological parents. An adoptive parent is treated in the same manner as a biological parent on the FAFSA. For example, if the student’s grandparent legally adopts the student, the grandparent will be required to complete the FAFSA.
Legal guardians, foster parents, grandparents or other relatives – such as aunts, uncles, or older siblings – are not considered to be parents for purposes of filing a FAFSA even if the student is living with them. The only exception is when this person has legally adopted the student. For example, if a grandparent is a legal guardian for the student and has not adopted the student, the grandparent cannot substitute for the parents on the FAFSA, not even if the student is living with the grandparent. (If the grandparents have not adopted the student, any support provided by the grandparents must be reported as untaxed income to the student on the FAFSA, regardless of the student’s dependency status. Foster care payments are not reported as income on the FAFSA.)
Parents Who Are Married to Each Other
If the student’s biological or adoptive parents are both living and married to each other, select “Married or Remarried” on the FAFSA and provide information about both of them, regardless of their gender. Consistent with the Section 3 of the 2013 Supreme Court decision on the Defense of Marriage Act (DOMA), same-sex couples must report their marital status as married if they were legally married in a state or country that permits same-sex marriage, even if they currently live in a state that does not recognize same-sex marriage.
Parents Who Are Unmarried
Starting with the 2014-2015 award year, parents who are divorced or separated but living together are treated the same as married parents, with financial information required from both parents.
If the student’s legal parents (e.g., biological and/or adoptive parents) are not married to each other and live together, select “Unmarried and both parents living together” on the FAFSA and provide information about both of them, regardless of their gender. This includes a student whose parents were never married but live together, as well as a student whose parents are divorced or separated but living together.
Both legal separations and informal separations count as separations on the FAFSA. Parents who have a legal separation agreement can live together. For FAFSA purposes, parents who have an informal separation cannot live together and should maintain separate residences. Different floors of the same house do not count as maintaining separate residences. Living in a hotel room on a temporary basis does not count either. If the student’s parents have an informal separation and are now living together, they are no longer considered as having a separation and should select “Married or Remarried” on the FAFSA instead.
If the student’s legal parents are divorced or separated but not living together, only one parent is responsible for completing the FAFSA, even if the parents file a joint federal income tax return. This parent is often called the custodial parent, but it is not necessarily the parent who has legal custody of the student or who claims the student as a tax exemption.
Do not base the parent’s marital status on any person who is not the student’s legal parent and who is not married to the student’s parent.
Who Is the Custodial Parent?
The custodial parent is the parent with whom the student lived the most during the 12 months preceding the date the FAFSA is filed. If necessary, count the number of days (nights) the student spent with each parent.
Sometimes, this criterion will not be sufficient to specify which parent must complete the FAFSA. For example, the parents might have joint custody and there might be an even number of days due to a leap year, or the divorce might have occurred less than a year ago. If so, the custodial parent is the parent who provided more financial support to the student during the 12 months preceding the date the FAFSA is filed.
Cash Support: Cash support includes money and gifts, plus expenses paid by others on the student’s behalf, such as food, clothing, housing, car payments or expenses, medical and dental care and college costs.
If that is not sufficient, the custodial parent is the parent who provided more cash support to the student during the most recent calendar year for which parental support was provided.
If all else fails, the college financial aid administrator will decide which parent is responsible for completing the FAFSA. Usually, the financial aid administrator will choose the parent with the greater or higher income.
If the custodial parent is remarried as of the date the FAFSA is submitted, the student should answer the parental information questions about that parent and the person to whom the parent is married (the student’s stepparent). This can have a big impact on eligibility for need-based student financial aid.
Prenuptial Agreement: A prenuptial agreement is a contract executed by a couple prior to getting married. The prenuptial agreement typically specifies spousal support and the division of property upon divorce. A prenuptial agreement may also be called an ante nuptial agreement or premarital agreement.
A stepparent is treated like a biological or adoptive parent if the stepparent is married, as of the FAFSA submission date, to the custodial parent (the parent’s whose information must be reported on the FAFSA). The stepparent’s financial information must be reported on the FAFSA, without exception. Prenuptial agreements have no impact on this requirement, which is a matter of federal law.
The stepparent’s income in 2015 must be reported even if the stepparent and custodial parent did not get married until 2016 (but prior to the date the FAFSA is submitted).
The stepparent’s income and assets must be reported even if the stepparent refuses to help the student pay for college. There are no exceptions. Providing income and asset information on the FAFSA does not obligate the parents to borrow or cosign a student’s loans or to pay for the student’s college education. Parents are not responsible for repaying their child’s federal student loans (e.g., Federal Stafford Loan and Federal Perkins Loan) even if the child is a minor. Federal student loans are not subject to the defense of infancy. The child’s federal student loans are not reported on the parent’s credit history. (The Federal Parent PLUS Loan, however, is reported on the parent’s credit history, as are any private student loans cosigned by the parent.) But, if the parents do not complete the FAFSA, the student will not be able to get any need-based federal student aid.
If the custodial parent dies, the stepparent is no longer responsible for completing the FAFSA unless the stepparent has legally adopted the student, even if the student continues to live with the stepparent. Instead, the noncustodial parent becomes responsible for completing the FAFSA. If the student has not had any support or meaningful contact from the noncustodial parent for an extended period of time, the student can seek a dependency override from the college’s financial aid administrator. In any event, support provided by the stepparent to the student should be reported as untaxed income to the student on the student’s FAFSA in the answer to the question about “Money received, or paid on your behalf (e.g., bills), not reported elsewhere on this form.”
If the stepparent provides more than one-half support for a child, regardless of where the child resides, the stepparent may include the child as part of his or her household size. If the stepparent’s child will be enrolled in college on a least a half-time basis in the coming academic year, the child may also be counted as a part of the number in college.
Increasing Aid Eligibility
A student will sometimes qualify for more need-based financial aid if the student’s parents are divorced or separated and do not live together and the student lives with the parent who has the lower income (including the stepparent’s income if this parent has remarried).
So, to the extent that the parents can control the student’s living arrangements, the student might be able to qualify for more financial aid. However, the living arrangements should be genuine. The parents may wish to ask the court to modify the custody agreement. College financial aid administrators have more experience with detecting fraud than parents have in gaming the system.
For example, the college financial aid administrator will be suspicious if the custodial parent does not live in the same state or even school district as the student’s high school. Likewise, if the parents claim to be living apart, the financial aid administrator will question the accuracy of the FAFSA if the father answers when the financial aid administrator calls the mother’s residence (or vice versa). College financial aid administrators may ask for proof, such as a copy of the divorce decree, separation agreement, utility bills or apartment rental agreements.