Our Blog - AMF Divorce

If you're a divorced parent or currently going through a divorce, the college application process can be particularly confusing. Applying for colleges, scholarships, and financial aid is complicated enough, and the recent changes to the Free Application for Federal Student Aid (FAFSA) have added new challenges. In this post, we’ll break down the latest updates and provide clarity on how these changes may affect your financial planning for your child's education. What is the FAFSA? The Free Application for Federal Student Aid (FAFSA) is a form that students and parents across the United States fill out to determine their eligibility for student financial aid. This aid includes federal grants, work-study, tuition-free college, and loans. It's a crucial step in securing financial support for college. What’s Recently Changed About the FAFSA? Starting with the 2024-25 award year, significant changes have been made to how divorced or separated parents report their information on the FAFSA. Previously, the parent with the most overnights was responsible for completing the FAFSA. However, this is no longer the case. Here's what you need to know: Step 1: Determining the Parent of Record The primary criterion for determining which parent completes the FAFSA has shifted from living arrangements to financial support. The parent who provides the most financial support over the 12 months prior to filing the FAFSA is now the parent of record, regardless of where the student lives. Specifically, the “parent of record” is the individual who provided more than 50% of the student's financial support in the past year, even if the student does not live with that parent. If neither parent provided support in the 12 months prior to filing the FAFSA, the “parent of record” is the parent who provided greater support during the most recent year that the student received financial support from a parent. The official “parent of record” is self-reported on the FAFSA. Schools typically will not verify this unless there is conflicting information. Child Support Considerations Child support payments play a crucial role in determining the “parent of record”. For example, if the mother pays child support to the father, this amount is considered part of the mother’s financial support for the student. If this, combined with other support, exceeds 50% of the total support for the student, the mother becomes the “parent of record” on the FAFSA. Step 2: Provide Financial Information to FAFSA The parent of record will provide their information on the FAFSA forms. If both parents provide equal amount of support, the parent with the higher income and assets will report their financial information. Remarried Parents If the parent of record has remarried, the new spouse's income and assets must be included in the FAFSA calculations for the “parent of record” during Step 2. This can be significant because it can have a profound effect on the financial picture and ultimately the amount of aid the student is eligible to receive. During Step 1, only the biological parents' financial contributions to the child are considered when determining the “parent of record” and the new spouse’s income is only relevant after that determination has been made. The “parent of record” is determined by looking only at each individual biological parent’s financial support without regard to any stepparent's income or support. After that determination is made, if the “parent of record” is remarried, the spouse’s/stepparent’s income and assets are included on the FAFSA. In a scenario where both of the biological parents have remarried, the new spouse’s/stepparent’s support is not included when determining the “parent of record”, but the new spouse of the “parent of record” is included on the FAFSA. How Does This Impact You as a Divorced Parent? Potential Reduction in Financial Aid Most likely the higher earner is now required to fill out the FAFSA, and therefore there’s a possibility that your child may qualify for less financial aid. This change is particularly impactful if the higher-earning parent is not the one the child lives with primarily, or has fewer overnights. Cooperation Between Parents The need for the higher-earning parent to complete the FAFSA can introduce challenges, especially if the relationship between the divorced parents is strained. Ensuring that this parent cooperates and provides the necessary financial information on time is crucial for the financial aid process. Individuals and family law attorneys may want to include provisions in divorce agreements stating that the parties agree to work together and provide required financial information needed for their child’s college financial aid process. Strategic Financial Planning Given these changes, strategic financial planning becomes even more important. Here are some steps you can take: Early Communication: Start discussions with your ex-spouse well before the FAFSA filing deadline to ensure all required information is gathered. Fill out the application as early as possible. Consult a Financial Planner: A professional can help you understand how these changes impact your specific situation and offer strategies to maximize your child’s financial aid and tuition free college eligibility. Review Financial Contributions: Keep detailed records of financial contributions to help with accurate reporting on the FAFSA. Navigating the FAFSA as a divorced parent has always had its complexities, but understanding the recent changes can help you better prepare and plan for your child's education expenses. The shift to considering financial support over living arrangements means that both parents need to communicate and cooperate more effectively. By staying informed and proactive, you can help ensure that your child receives the financial support they need for their college journey. For more detailed guidance and personalized advice, don’t hesitate to reach out to a financial planner who can assist you in navigating these changes. More information about Colorado’s tuition-free College Options can be found here.

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FAFSA Changes for Divorced Parents: What You Need to Know