Will My Divorce Impact My Child's Financial Aid?

Divorce is a difficult and emotional process for all involved, and it can bring about significant changes in family structure and finances. During this challenging time, it is natural for parents to worry about the myriad ways in which their divorce might affect their children's future, including their ability to afford higher education. The prospect of navigating college financial aid can seem daunting under the best circumstances, and the added complexity of a changed family financial situation can be overwhelming.   

The Impact of Divorce on Financial Aid Eligibility  

Divorce can significantly alter the landscape of financial aid eligibility for a child planning to attend college, largely due to changes in household income and assets, as well as who claims the child as a dependent. Financial aid applications, like the Free Application for Federal Student Aid (FAFSA), typically require information about the custodial parent's finances, not necessarily those of both parents. Therefore, if the custodial parent has a lower income, the student may qualify for more need-based aid.  

However, there are specific factors related to divorce that influence financial aid calculations, including:  

  • The FAFSA uses the financial information of the custodial parent, which is defined as the parent with whom the child lived the most during the past 12 months.   
  • Some colleges, especially private ones, require the CSS Profile in addition to the FAFSA and will consider the finances of both parents, regardless of marital status.  
  • Special circumstances, such as a significant change in income or unforeseen financial burdens, can be communicated to financial aid offices for potential adjustments to aid eligibility.  

Understanding these dynamics is crucial for parents navigating the impact of divorce on college funding. Collaborative planning and clear communication between parents about their financial situation and goals can help mitigate the impact on financial aid and ensure their child receives the support needed to pursue higher education.  

Key Factors FAFSA Considers Post-Divorce  

Post-divorce, the FAFSA evaluates several critical factors to determine a student's financial aid eligibility. It's important for divorced parents to understand these elements, as they can have a significant impact on the financial aid package their child might receive. The primary focus is on the custodial parent's financial information; however, other aspects such as child support, alimony received, and the financial health of both parents are also considered. This comprehensive evaluation ensures that the student's need for aid is accurately assessed, taking into account the complexities that may arise from a divorce.  

Some key factors that FAFSA considers post-divorce include:  

  • Income and assets of the custodial parent - This is the backbone of the FAFSA application and the primary determinant of the Expected Family Contribution (EFC).  

  • Child support received - Any child support received by the custodial parent for any children in the household must be reported and considered as part of the household income.  

  • Alimony received - Any alimony received from a divorced spouse is counted as income in the FAFSA calculation.  

  • Number of children in college - The more children a family has in college simultaneously, the lower the EFC may be, potentially qualifying the student for more aid.  

By carefully considering these and other relevant factors, divorced parents can better prepare for and potentially maximize their child's financial aid opportunities, making the path to higher education more accessible despite the financial strains that divorce might bring.  

Considering College Expenses and Financial Aid in Your Divorce Settlement  

When undergoing a divorce, it's prudent for parents to consider college expenses as part of their divorce settlement. This proactive approach can significantly alleviate stress and confusion down the line, ensuring a clearer path for supporting their child's education. By legally formalizing who is responsible for college expenses and to what extent, parents can create a structured plan that includes savings strategies, such as 529 college savings plans, and an understanding of how financial aid will be pursued. It's also beneficial to define how expenses not typically covered by financial aid, such as books, transportation, and living expenses, will be handled.  

Negotiating college expenses during a divorce settlement involves more than deciding who pays for what; it's about understanding the financial implications of these decisions on future financial aid. For instance, the designation of which parent is responsible for college expenses can influence the custodial parent designation for FAFSA purposes. Additionally, parents should consider the impact of alimony and child support payments on financial aid eligibility, as these income streams are factored into financial aid calculations. Consulting with a financial planner or attorney who understands the nuances of financial aid and divorce can provide invaluable insights during this process.  

It's also essential for both parents to maintain an open line of communication regarding their financial situation and any changes that may affect their child's financial aid eligibility. This includes income updates, marital status changes, and adjustments to financial commitments. Such transparency not only fosters a cooperative environment but also helps ensure that the child has the best possible financial support for their educational endeavors. By putting the child's educational needs at the forefront and planning accordingly, divorced parents can help mitigate the financial challenges posed by college expenses.  

How We Can Help  

At Burch Shepard Family Law Group, we understand that divorce can be a complex and emotional process. Our team of experienced attorneys is dedicated to helping families navigate this challenging time, providing seasoned legal guidance and support every step of the way.   

Burch Shepard Family Law Group incorporates college planning into your divorce settlement as a strategic process tailored to safeguard your child's future educational opportunities. We assist in drafting comprehensive agreements that address college expenses, considering the intricacies of financial aid, custodial designations, and the potential impact of alimony and child support.  

Our goal is to ensure that your agreement reflects a deep understanding of how these factors interact to maximize financial aid opportunities. With our help, you can achieve a settlement that meets your child's immediate needs and lays a solid foundation for their academic aspirations beyond high school.  

If you need assistance negotiating college expenses in your divorce settlement, please don't hesitate to contact us at (949) 565-4158 to schedule a consultation.