Financial Aid and Divorce

In the financial aid process, many schools treat students with divorced parents differently. As someone who has been married for more than 26 years, I don’t think this is always fair, but it’s the reality.
Today I’m going to illustrate how schools can treat families of divorce differently by using the story of a girl, who I’ll call Sophia.
Sophia is a high school senior with a near perfect high school GPA, who also did very well on the SAT.  She splits her time between her mom, who makes a six-figure salary, and her father, who is underemployed and earns far less money.

Applying to FAFSA Schools

One way for Sophia to have gotten the best financial aid packages possible would have been to apply to schools that just use the FAFSA or Free Application for Federal Financial Aid.
The FAFSA only asks about the income of the “custodial” parent. For financial aid purposes, the custodial parent is the one whose residence the child lives at for more than 50% of the year.
So if Sophia lived with the dad 183 days and the mom 182 days, the dad would fill out the FAFSA. He would include his income, but not his ex-wife’s. There is no guarantee that FAFSA schools won’t require their own supplemental financial aid documents that would pick up the ex-wife’s income, but often this is not the case.
In addition, the FAFSA doesn’t care if the parent filling out the application owns a house. A big plus for families with home equity.

CSS Financial Aid/ PROFILE

So what did Sophia do? She applied to schools that use another financial aid documents – CSS/Financial Aid PROFILE  – that delves far deeper into the family’s finances. Most PROFILE schools, nearly all of them private institutions, also  want to know about the finances of the non-custodial parents. These schools also ask about home ownership and equity.

Colleges on Sophia’s List

Here are some of the PROFILE schools that Sophia applied to:

  • Reed College
  • Sarah Lawrence College
  • Fordham University
  • Boston College
  • Boston University

After sharing both parents’ income on the PROFILE, the aid Sophia received at these schools dropped her price from the $50,000+ range down to $32,000 to $35,000.  Boston College was the least generous of the bunch. The financial aid, while appreciated, left a potential college tab that was still far more than what this family can afford.
Beyond applying to FAFSA schools, what Sophia could have done is looked at PROFILE schools that don’t ask about the non-custodial parent’s income. You can find these schools by looking at this list of PROFILE colleges and universities on the College Board’s website. When I looked at the PROFILE list, here are some of the prestigious schools that I saw that don’t use the non-custodial forms:

  • Bentley University
  • Bucknell University
  • Carnegie Mellon
  • College of Wooster
  • DePauw University
  • Gettysburg College
  • Lewis and Clark College
  • Whitman College

If Sophia had applied to schools that don’t ask about the finances of the noncustodial parent, Sophia might have obtained more financial aid.
If you’d like to read more about divorce and financial aid, I wrote this post nearly a year ago:
College Choices for Teens of Divorce
Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch. Follow her on Twitter.
Read More:
Getting Rejected by Harvard
5 Ways to Increase Your Financial Aid Award
The Hazards of Dreaming About Colleges
Financial aid image by hatcheckgirl. CC 2.0.

Join My Newsletter
Get your free guide to finding the most generous colleges
Practical, actionable information for Students, Parents, Counselors & Financial Advisors.

Let's Connect

Leave a Reply

  1. Hi,
    Iv been separated since dec 2017. My daughter is attending college this fall. We fill out the fafsa app. She lives with me. She was accepted to the school of her choice but the school is asking for verification. They want my 2018 tax transcript. That year I did not work but my ex did and we decided to do our taxes jointly. Will they count my ex husband income even though we’re separated and my daughter lives with me most of the time?

  2. Hi Lynn,
    My daughter has just completed her FAFSA. Her mother and I are divorced and she currently lives with her mom more than me; so she identified her mom as the custodial parent and used her financial information. However, I am the owner of her college 529 plans, so they were not identified on the FAFSA application. Is there a problem? If so, how would we update the FAFSA since the assets are not under her mother’s name?

    1. Hi Rich,
      If you use the 529 assets to pay for college, this money must be declared as the child’s untaxed income on the FAFSA. This money would be assessed at up to 50%.
      The child has a federal income allowance so depending on how much money she made for the calendar year, money you used to help pay for school might not hurt her chances for financial aid. Your daughter could earn up to $6,400 in income without hurting aid chances. Let’s say she earned $1,000, you could pay $5,400 towards her schooling and it wouldn’t hurt aid eligibility.
      You could transfer the money to your wife and then she could use it for your daughter’s schooling without triggering the 50% penalty.
      You can also wait until your wife has filed the FAFSA for the second time and then you could safely use the money for college. Read the lesson on grandparents and helping with college costs. You would be the same situation as grandparents.
      Lynn O’Shaughnessy

  3. Hi Lynn – I attended a college financial aid talk you gave last year at SOTA here in SF, and thought it was excellent! We are in the “divorced” category and our situation actually mimics the one you gave (“Sophia”) but in reverse. As opposed to the rather sour gentleman’s comment above (why would you not want to pay for your child’s education? This is YOUR SON you’re talking about … put your focus on your child where it belongs, not your ex.) my daughter’s father and I are working together to make sure she can attend the school of her choice. Lots of hard work, but worth it.
    I noticed you mentioned Carnegie Mellon as one of the “prestigious schools” who don’t require an NCP. profile This is untrue, unfortunately (you got our hopes up! lol) – don’t know if things have changed from when you posted this, but if you go to the list link you include in your post, according to the info posted there they most definitely do require an NCP, as well. Just wanted to provide some clarification.
    Thank you for all the useful information!

    1. Hi Barbara,
      I’m glad you liked the presentation at your daughter’s high school last fall. Thanks for letting me know about Carnegie Mellon. Either I messed up or CMU changed its aid policy.
      I think it’s great that you and your ex-husband are working together to help your daughter through the admission process. That is so healthy!
      Lynn O’Shaughnessy

  4. Hello, my nephew is applying to college, and neither of his parents have income, or are around.
    He has been living with me, but I am. It his legal guardian.
    For the FAFSA application, do I include my income?

    1. Hi Pete,
      Unfortunately I don’t know the answer to this one, but I know where you can get it. Just call the FAFSA hotline number at 800 433-3243.
      Good luck!
      Lynn O’Shaughnessy

  5. I completely understand the unfairness but the grass isn’t greener on the divorced side. Try being the non-custodial father that is required by state law (Iowa) to pay for the child’s college education (the mother is not required) but cannot benefit from education tax benefits and can’t claim the child on his taxes.
    To make matters worse, the custodial mom gets entire tax benefit, even the portion that was paid by the non-custodial father.
    Yeah, this situation is unfair, unemployed custodial mom fills out FAFSA to a college that doesn’t require non-custodial income, but the non-custodial fathers are the ones getting screwed. I assure you, even with the unemployed mom filling out the FAFSA form does not equal a free ride to college. This non-custodial father just got the fall semester bill that he is required by law to pay.
    The entire system needs an overhaul.