4 Tips for Families Navigating College Financial Aid Amid Divorce

• Divorced parents say to prepare early for difficult conversations about paying for college. Tiffany and Clem Clay always wanted the best college education possible for their children. That the Massachusetts couple now has six children between them – three from Tiffany’s prior marriage. and three from Clem’s – doesn’t change that. But their divorces and remarriage make navigating the financial aid process harder. “There must be lots of people who just throw up their hands and wait to see what kind of aid package comes back,” says Clem, who is the executive director of a sustainable food nonprofit. “But the risk is you have to live with those numbers.” The hard work paid off for the Clays. They currently have five children in college, attending private schools in their home state as well as the District of Columbia, New York and Minnesota. The sixth child is 12 years old and has some time before applications are due. Here are four money-saving, sanity-enhancing tips for families with divorce situations who are navigating the financial aid process.
  • Understand that “custody” and “parent” may have new meanings: The Free Application for Federal Student Aid, or FAFSA, asks who the custodial parent is. That’s a loaded question, says
  • Clem. “‘Custody’ is not the legal meaning, not the tax meaning,” he says. “If I am determined the custodial parent, my ex might get upset and say ‘what do you mean I am not custodial?!’ They should use a different word.”
  • For the purposes of the FAFSA, custody is determined by which parent the student lived with the most in the past 365 days. If it is exactly equal, there is another test for which household provided more financial support in the past year. Clay says “But that guidance is very ambiguous,”.
  • Also, the form asks for information on Parent 1, the custodial parent, and Parent 2. “If I would have put my kid in front of that form they would have said, ‘Parent 2, that’s my dad, right?'” says Tiffany Clay. “No. Parent 2 is my husband!”
• Provide financial information – but don’t over-share: One common pitfall for families with multiple households is listing everyone’s financial information: mom, dad, step-dad, step-mom.
  • That can be a costly mistake, says Scott Weingold, managing director of the College Planning Network, college admissions and funding advisers based in Cleveland.  “You may be over-reporting your income,” Weingold says. Do not list everyone if it’s not required, you may change your situation for the worse. “Family that have gotten aid from a school may be getting nothing now because it looks like they have more money available than they do.”
  • He advises families to focus on the information of the custodial parent, which will include a step-parent if the custodial parent is remarried. The federal government does not require information on the non-custodial parent, but does ask about child support received by the custodial parent. At many private schools, the non-custodial parent will be instructed to provide his or her financial information. This affects the awarding of the school’s own aid, but not federal aid.
  • “This does get confusing and tense for families,” says Dave Myatt, senior associate director of financial aid at Augustana College in Illinois. “We get phone calls challenging why we need the step-parent’s information on the form in the first place. But we need the household’s information, including both individuals.”
  • In the increasingly common case of couples who are not remarried but are living together, he says, the non-parent individual is not considered a step-parent, but his or her financial contributions are viewed as part of the household. “If the parent is living with someone who is paying rent or utilities, that needs to be listed on the FAFSA as other untaxed income.”

• Determine the involvement of the “non-custodial parent”: For Naomi Elliott, the desire to avoid having contact with her ex-husband was so powerful that she and her son Simon decided he would only apply to schools that allowed financial aid to be based exclusively on the custodial parent.
  • This was both an emotional and financial decision, as she was unsure Simon would get money for college from his father when he needed it. Elliott carefully researched schools and found a handful that were a good match for her son and had a financial aid policy that did not require information from the non-custodial parent.
  • “I couldn’t afford a penny of his education,” says Elliott, who works as a real estate agent in Massachusetts. “The divorce wiped me out. Knowing that a financial package was needed o be significant and didn’t ask me or my son to take out loans.”
  • After her extensive research and a lot of paperwork, and Simon’s strong academic work, he was accepted to Vanderbilt University in Tennessee, where he is now a sophomore. “The school awarded my son $54,000 a year, which is a load of money,” says Elliott. Everything is covered but some living expenses, a difference of $10,000 paid by Simon’s father.
• Prepare for hard conversations: With divorce, costs are harder to predict, and families may be overly optimistic about financial aid offers if they are not well informed, Clem Clay says. He suggests families have a grasp on the complexities of financial aid by the summer or fall of the student’s senior year at the latest. Kids have to deal with the relative willingness and ability of their parents to pay tuition, and that can drive a lot of decision-making.
  • “There is no requirement that the higher-earning spouse pays for college,” says Jeff Landers, a financial advisor in Florida who works exclusively with women going through divorce. “That is a huge misconception many women have.”
  • Talk about paying for school as specifically as possible, if not spelled out in the divorce settlement agreement. “Otherwise you may find that one partner will suddenly say, ‘I’m not paying it.'”
  • For families beginning the process, “This isn’t just a numbers game,” says Tiffany Clay. “It is a whole emotional roller coaster caused by the numbers.”

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