There are a few things that confuse parents of college-bound children when it comes to applying for college financial aid, and in some cases the rules are different when the parents are divorced. It may come as a surprise to California readers to discover that property division and who claims the student as an exemption for tax purposes generally is of little importance when filling out the standardized financial aid application form known as FAFSA. This form requires disclosure of certain financial information.
In the case of a child with divorced parents, the application is to be filled out by the parent with whom the child lived for the majority of the preceding 12 months. Only the income of that parent is required to be disclosed. The income of the other parent is irrelevant for this purpose, as is the identity of the parent paying child support. However, if a custodial parent remarries, the income of the new spouse must be included.
While the FAFSA form is standard in use among public colleges and universities, many private schools have their own application forms. In some cases, aggregate parental income has to be disclosed regardless of the marital status of the parents.
Spouses going through the process of applying for both FAFSA & divorce are faced with countless issues. An attorney with experience in divorce and family law matters may be able to advice someone contemplating a divorce regarding such matters as property division and valuation. Such an attorney may be able to negotiate and prepare agreements which provide for an equitable division of assets that were obtained during the marriage.
Source: CBS Money Watch, “How does divorce affect college financial aid?“, Lynn O’Shaughnessy , September 27, 2013