FAFSA presents challenges for divorced parents

If you are divorced, separated or dealing with adoption issues, filling out the FAFSA for college financial aid has its own set of challenges.

I was reminded of this after my recent column about the Dec. 31 opening of the 2024-25 filing season for the Free Application for Federal Student Aid.

My column focused primarily on traditional households, which prompted questions from several readers about how the filing process works for parents who have divorced, along with confusion over adoptions.

The new FAFSA, which is available at studentaid.gov, has been streamlined and simplified by the Department of Education to make student loans, grants, scholarships and work-study funds available to more students and families.

There’s also new language — for example, “contributors” refers to anyone who provides financial support.

You never know

Filling out the form is often worth the time and effort, even for families who mistakenly think they may not qualify for aid.

The Department of Education has established guidelines for completing the FAFSA with divorced parents, and knowing those requirements is key to receiving financial aid.

For more details, go to student aid.gov.

Among the tricky issues are the following.

One of the changes involves the redefinition of “custodial parent” for those students with parents who have become divorced.

Rather than the custodial parent being defined as the person with whom the student lives for the majority of the time, it now refers to the person who provides the most financial support for the student over the 12 months ending on the date the FAFSA was filed, said Kevin Ladd, chief operating officer and vice president of Scholarships.com.

Another new wrinkle

If the parents provided equal financial support, then it is the parent with higher income who will be primarily responsible for filing the FAFSA, said Mark Kantrowitz, author of “How to Appeal for More College Financial Aid.”

“There isn’t any verification of this,” he said, “so the parents could choose the parent with the lower income, although colleges may question if the parent filing the FAFSA lives in a different state or there are other red flags.”

Yet any contributor who provides some financial support will be required to sign the FAFSA and provide consent to have their federal tax information transferred directly from the IRS into the financial aid form, according to the Department of Education guidelines.

The reporting of alimony changed in 2019 for new and modified divorces. Alimony is reported on the tax return of the payer, not the recipient.

“This can yield lower income for the recipient, which may result in more financial aid for the student,” Kantrowitz said.

For couples in the process of adopting a child, Ladd said, the key is whether the student is considered a dependent at the time the FAFSA is completed.

“This means if you are still in the (adoption) process, it is likely they will not yet count as a dependent,” Ladd said. “Once the process has been finalized and the student is your legal child, they will be considered a dependent on the FAFSA.”

However, if there are considerable costs with the adoption process, these may come into play when discussing financial aid offers from the colleges the student is considering, Ladd explained.

“Often, if there are mitigating circumstances that are not on the FAFSA, schools may consider offering additional financial assistance,” he said.