How Can Divorce Affect a Child's Financial Aid for College?

When two people end their marriage via divorce, one or both parties might believe that their legal obligations to their child end when their dependent reaches age 18. Yet, depending on the terms of their divorce and custodial agreement, remarriage, and the policies of financial, scholastic, and government institutions, their responsibilities can continue for several years through college.

Although many couples turn to a divorce lawyer to help them navigate property division and other immediate concerns, their legal team can also help them address future legal issues unique to divorcees. This guide explores the high cost of a college education and parental responsibilities for a student's college expenses and later life. Instead of a divorcing parent taking a DIY approach to this topic that can cause headaches and create costly future debt, a skilled lawyer like those at Davis & Associates can help them achieve the best possible outcome for all parties.

The Overwhelming Cost of College

Many education experts contend that a post-secondary education will grow more expensive in the next several years. A "college" education can mean many things these days. Students have a wide range of options:

- Trade certification schools

- Two-year associate degrees

- Four-year degrees

- Postgraduate degrees

- Professional certification programs

They can choose from public schools sponsored by local and state governments, non-profit schools paid for by donations, private schools with special membership and funding, and public for-profit schools. Specialty schools also exist that focus on specific fields of study, gender, religion, and race. Students can pursue an education remotely through programs provided by offline colleges and universities or certified online-only schools.

The cost of an education depends on many factors, such as:

- The school's reputation

- A student's chosen field of study

- The average number of years for program completion

- The type and number of school supplies

- Local cost of living and basic need requirements

For example, a student might need extra years of study to reach a career training goal or meet professional study and licensing requirements in their chosen field. Extra years obviously increase the total tuition and all other costs. Their chosen field can also add extra costs. For example, a science degree might require hands-on laboratory or field work. A student might need to pay fees to use a lab and specialized equipment or travel to complete expanded research and field training.

Some students commute to a college or university, while others live on campus. Of course, many students simply learn everything they need online from a remote location. Yet, a commuter must have a working vehicle, which requires regular inspections, maintenance, and registration, or pay for public transportation. An on-campus resident might have dorm and parking fees. Remote study requires an internet connection and computer equipment.

In all these scenarios, a student will also need good health. They must also have enough funds to pay health insurance premiums and out-of-pocket and emergency expenses.

Financial Child Support Does and Does Not Matter

Typically, the main custodial parent's income and other assets determine the level and types of financial aid and out-of-pocket obligations. That said, many couples share custody equally. A stepparent's income after remarriage can also affect aid.

If a parent has 50/50 custody with their former spouse, some financial aid programs use both parents’ income, current bank balances, savings, and other assets to determine available aid, or the income of the parent who had the highest gross income in the prior year. Too much income usually reduces the amount of aid offered to the student. Additionally, the program decision-makers might consider child support, depending on which parent files for the student.

For example, at the time of this writing, the Free Application for Federal Student Aid (FAFSA) asks for the income and asset details of the parent with the highest income when that parent contributes the most to the child's cost of living and support, even if that parent doesn't have legal custody. If the parent is non-custodial and contributed less than half of the total financial support in the prior year, their details aren’t taken into account at all. When one or more stepparents exist, and their spouse is the main financial contributor, the government usually requires their financial details. It doesn’t matter if they financially support the student.

Obligations of one or both divorcees and their respective spouses change in non-federal financial aid application cases. The extent varies by school and state location. For example, some schools combine the total income, assets, and other financial sources of both birth parents when determining financial aid, even if the custodial parent can't afford to send their child to school without help. Some institutions add any stepparents’ income and other assets to the total.

Thankfully, a custodial parent might be able to remove their ex-spouse's income and other finances from consideration if they can prove that their ex has made no contributions to child support or refuses to cooperate, even with a court order. Some schools also remove a stepparent's financial data from the application if the custodial parent or student can prove that the co-parent has never contributed financially. If a grandparent or other person is the student's guardian and the living or available parent previously agreed in writing to pay for college, the custodial guardian can attempt to remove their spouse’s financial information from the application as well.

The Impact of Prenuptial and Divorce Agreements

One of the top reasons couples consult a divorce lawyer is to find out how prenuptial and divorce agreements negotiated might affect a child’s college financial aid, especially after the child reaches the age of majority. For example, financial-aid decision-makers might consider the income of only the parent who paid the most to support the student during the prior three, nine, or 12 months. If a non-custodial parent pays child support, program administrators might count those contributions, even if that parent paid less than the custodial parent in the same time frame.

If a non-custodial parent failed to meet their child-support payment obligations, the ruling body might count the actual number and total of payments rather than the total obligation. The rules depend on the program, state law, and other factors. That said, if one parent counted their child as a dependent for their taxes during the considered time frame, their work income and other assets are almost always used to determine the amount of aid.

Typically, states don't require parents to support an 18-year-old student, but exceptions exist. Federal law requires parents to keep their young-adult child on their health insurance plan until age 26. Otherwise, a parent usually pays for college tuition and other expenses only if they agreed to do so in a prenuptial or divorce agreement. Even then, the amount they agreed to pay might not match educational costs at the time of the student's application submission. Many agreements don't include all potential costs or take inflation into account. Most only cover estimated tuition, housing, and food costs.

If financial aid administrators use both parents’ finances, the student might not receive the extra money they need to move forward. If a non-custodial parent only previously agreed to pay for their child's college education if they could choose the school, the student might be limited to an academic institution that doesn't offer the degree program they need to pursue a specific career.

A local lawyer who understands divorce matters can help their client draft and negotiate a divorce agreement that contains college provisions. They can finalize a line-by-line list that clearly defines each covered, estimated expense. They can clarify how decisions about education, costs, scholarships, financial aid, and even loans will be addressed years later, which can prevent arguments when national economic, financial, and other changes occur over time. They can negotiate funding limits and cost-of-living changes and even lay out rules for where and how all parties will discuss these matters again when the student actually starts their college search.