By Sandy Voit, Tangible Solutions

In addition to handling the emotional and financial challenges of becoming a two-household family, divorcing parties with college-aged children also face one of the largest expenses they may ever have to bear: the always-rising cost of a college education.

The divorce process can impact student financial aid in ways that parents are well-advised to consider during their divorce.

Probably the most important question is who will be considered the custodial parent following the divorce. This can have a major impact on financial aid awards, because if your child plans to attend a public college or university, usually only the custodial parent’s income will be considered by schools making financial aid decisions. Public colleges/universities generally rely solely on the FAFSA form (Free Application for Federal Student Aid). The “custodial parent” is the parent with whom the child has resided for the majority of the 365 days preceding the financial aid application. If the child resided with one parent for 183 days and the other parent for 182 days, the former usually would be considered the custodial parent.

The FAFSA also takes into account the assets of the custodial parent (though not his or her home equity). It may be wise, therefore, for the divorce settlement to award the student’s 529 and GET plans to the noncustodial parent.

If grandparents are willing to help, consider asking them to help pay off your child’s student loans instead of directly paying tuition. Direct payments of tuition by grandparents may diminish possible financial aid.  Paying off student loans gives the student the added benefit of establishing good credit.

The FAFSA is not the end of the story. First, virtually all private colleges and universities also require completion of either the College Scholarship Service’s (CSS) Financial Aid Profile and/or their own supplemental applications for financial aid, which usually request information regarding the noncustodial parent. The CSS Profile goes into greater depth than the FAFSA and requests financial information from noncustodial parents in addition to custodial parents.

Again, however, just because a school uses the CSS Financial Aid/Profile does not mean that they will automatically consider a non-custodial parent’s income. Many do not. For a list of CSS/Financial Aid Profile schools that do and do not consider noncustodial parents’ incomes, please click here.

Regardless, it is always a very good idea to contact schools directly to find out exactly what they will consider in making financial aid awards. And it is always best to begin early. The priority deadline for completing your FAFSA is February 1. While it is never too late to apply for financial aid (you can even apply after the school year has begun), your child will have the best chance of receiving the most sought-after financial aid – grants and scholarships – if you apply early. Furthermore, you do not have to wait to complete the FAFSA until you have completed your tax returns.  You can always estimate your income in the FAFSA and revise your FAFSA later based on your tax returns.

A final note: if you are in the process of getting divorced but your divorce hasn’t been finalized by the February FAFSA Priority Deadline, contact the financial aid director at the school(s) where your child has applied or enrolled and explain your situation. Financial aid directors have discretion and many would be willing to discount tuition (at least at private colleges) even in the current academic year and even before your divorce is final. Generally speaking, financial aid directors really want your child to be able to enroll at their school and will do their best to accommodate you within the limits of federal regulations.