Paying for College Amid Divorce

Parents want their children to have the best college education possible. But when you enter divorce and stepparents into the mix, the whole "blended family" concept can make navigating the financial aid process complex.

If you're overwhelmed, here are some sanity-saving tips to help guide you in the right direction.

Tip #1. Understand what "custodial" parent means.
The Free Application for Federal Student Aid (FAFSA) asks about the custodial parent. Generally, it's the parent who the child lived with the most for the last 12 months. The custodial parent is usually the one who receives child support payments.

Tip #2. Don't overshare your financial information.
One thing that's common with blended families with two households is they share everyone's financial information: mom and dad and their new spouses.

This mistake can be costly because you could end up over-reporting the family's income. If it's not required and you list all four spouses' incomes, your child could end up getting nothing because now it appears as if you have more available money than you actually have.

We suggest focusing on the custodial parent's financial information, which will include their spouse's income if they remarried. While the federal government does not require any information from the non-custodial parent, it does want information regarding any child support being received.

Many private institutions ask about the non-custodial parent's financial information, however, this does not affect federal aid. Rather, it affects the school's awarding of aid.

Why are they asking for the stepparent's information?

If you are the custodial parent and you're remarried, you may be surprised by the school asking about your new spouse's information (your child's stepparent). Many parents call schools, challenging them on why they need this information in the first place.

In this case, schools are looking for the household's whole financial picture, thus they ask for the information from the both of you.

Conversely, if a parent is living with a new partner but has not remarried, if that person is contributing to the household's expenses – that will need to be listed on the FAFSA under "other untaxed income."

Contact a Los Angeles divorce attorney at Claery & Hammond, LLP.