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Applying for college financial aid is complicated no matter what your situation. For children of divorced parents, it’s even more so.
Because federal and institutional aid formulas weigh each parent’s income and assets differently, families may need tailored strategies depending on the school. For example, decisions about which parent provides more financial support can have major implications for college financial aid.
Free college financial aid calculators are often too simplistic to capture this complexity. Working with a college planning expert who understands the nuances of your situation can be one way to make the most of your college funding opportunities.
But first, here’s an overview of what divorced families should be aware of before applying for college financial aid.
The importance of parental cooperation
The first thing divorced parents need to consider when thinking about their children’s college education isn’t financial: It’s relational.
Todd Huettner, president of Denver Divorce Professionals, said he wishes more divorced or divorcing parents knew how their behavior might impact their child’s college prospects.
“Your children must know and see and believe that they are loved by both parents and that their parents are not enemies,” Huettner said.
Without the stability and support of their parents, kids can develop self-esteem issues, underperform academically, and get into trouble with drugs and alcohol.
Reducing conflict can also have financial benefits.
“Fighting about anything can result in couples spending more on attorneys’ fees than the cost of a college education,” Huettner said.
How the FAFSA looks at divorce
For students whose parents are divorced or separated but not remarried, the Free Application for Federal Student Aid (FAFSA) only counts the income and assets of the parent who provided the most financial support in the 12 months before applying for aid. If the divorced parents live together, however, both of their incomes and assets count.
For income, the FAFSA looks at prior year tax returns. This means that for a student entering college in the fall of 2027, the 2025 tax return is the one that matters. (Later, we’ll discuss what to do when present circumstances don’t match past tax returns.)
For assets, the FAFSA wants to know their value on the day you submit the application.
Divorcees who have already sent one child to college should know that some rules are different now.
The federal Department of Education changed the requirements for divorced parents starting with the 2024–25 school year. It used to base aid calculations on the income and assets of the parent the student lived with the most in the past 12 months (regardless of who had legal custody).
And child support received is now considered an asset instead of income, which means it has less impact on financial aid. (Related: Financial tips and advice for women in a divorce)
How the CSS Profile looks at divorce
Many colleges and universities use formulas different from FAFSA’s to award their own financial aid. Students applying to these schools will usually need to complete both the FAFSA and the school’s institutional aid application (many use the CSS Profile).
“The important thing to remember with CSS schools is that they can request both parents’ information, and each school individually determines how they will award aid,” said Robert Farrington, financial aid expert and founder of The College Investor.
In fact, the CSS Profile asks for information on all of the student’s parents, whether living, deceased, step, domestic partner, or legal guardian. It even asks about a legal guardian’s spouse and a parent’s unmarried partner.
The CSS Profile allows each parent filing the form to state how much money they plan to provide for their child’s education for the coming academic year. A parent who can’t or won’t provide support can enter zero, though it won’t necessarily change the aid calculation without documented special circumstances.
Managing special circumstances
For any number of reasons, a school’s initial financial aid offer may seem unfair for a family’s circumstances. Your tax return might give schools a completely outdated picture of your finances, especially when two households are in play.
For the CSS Profile, the form’s special circumstances section lets each parent note things not asked about elsewhere: financial support of other family members, eldercare expenses, or a change in employment, for example. (Related: How to request more financial aid for college after a job loss)
Families should prepare to provide supporting documents, such as IRS tax transcripts, recent paystubs, a divorce decree or an employment termination letter.
For the FAFSA (and for situations that change after submitting the CSS Profile), the solution is to appeal for additional aid through the school as soon as possible.
When a student wants to apply to a school that requires the noncustodial parent’s information but that parent won’t participate, it may be necessary to complete the CSS Profile Waiver Request for the Noncustodial Parent or a school-specific form.
A school may waive its requirement if the student can show that the noncustodial parent has been abusive, has been legally limited from contacting them, or has a history of not supporting them financially. (Related: Recognizing financial abuse in relationships)
The FAFSA allows the student to answer yes to a special circumstances question in the event of a parent’s estrangement, incarceration, or inability to be located.
Strategic financial aid planning for divorced parents
Families who understand the nuances of FAFSA and CSS Profile rules can make strategic (and compliant) choices to maximize financial aid.
One choice might be which schools to apply to.
● FAFSA-only: When both parents will contribute to the student’s college costs, FAFSA-only schools may offer an advantage since they only consider the more financially supportive parent’s resources.
● Certain CSS Profile schools: Some schools using the CSS Profile do not require information from the noncustodial parent. (But many do.)
Divorced parents may want to call school financial aid offices to clarify their requirements. Online information may be outdated, and policies vary by school.
For parents considering an amicable split, talking to financial aid and divorce professionals up front could help with making choices that will ease the burden of paying for college.
“Couples can look to divide the marital estate in a way that reaches a fair outcome, but with the parent who provides more of the student’s financial support retaining fewer assets that count in FAFSA calculations — like investments and bank accounts — and more assets that do not count, like retirement assets and home equity,” Huettner said.
But remember that institutional aid formulas may see things differently, and that it’s smart to speak with a financial professional before taking action.
“I see people not realizing there are transaction costs and potential tax events for unrealized capital gains if they move around assets or move them around incorrectly,” Huettner said. “For example, if they sell a stock or bond when they could have transferred it, they can create a taxable gain upon the sale.”
College financial planning for divorced families is best looked at holistically. There might be another aspect of a parent’s finances that could be adjusted to have a far bigger impact on the family than trying to optimize financial aid would.
For example, divorcing couples who use a qualified domestic relations order can avoid taxes and penalties when dividing retirement assets. (Learn more: Things sometimes overlooked in divorces)
Approaching the process constructively
Applying for college and figuring out how to pay for it can create tension in even the strongest relationships. For divorced parents and their children, it can be like walking barefoot across stray Legos.
One parent’s attitude toward college costs might be, “If you get in, we’ll find a way to make it work,” while the other parent might want to avoid borrowing or sacrificing retirement savings.
Worse, a vengeful ex-husband might encourage his child to apply to expensive schools, knowing that his ex-wife will pony up (and hoping that she’ll sabotage her retirement in the process).
Ideally, each parent would give their child space to establish their own college objectives, then evaluate funding possibilities.
“Start by learning about the financial aid process,” said Cameron Starc, financial counselor at Starculus Math & Money. “Read articles like this one. Visit the Federal Student Aid website to familiarize yourself with the student aid process. You might need to set a timer to force you to stay focused, then treat yourself afterwards with some chocolate.”
Divorced parents don’t have to like each other to be pragmatic. Each should determine how much they can contribute and talk to their child about how much financial assistance to expect.
“It wouldn’t hurt to have your student learn about the process alongside you and lead some of the conversation about student aid and college finances,” Starc added.
Parents who are willing to collaborate (even if indirectly, through a college consultant or financial planner) may also be able to implement money-saving tax strategies.
For example, if only one parent’s income is too high to qualify for the American Opportunity Tax Credit, the other parent could pay $2,000 of the child’s tuition, knowing that they’ll receive the full $2,000 back at tax time.
If that parent can put another $2,000 toward qualifying education expenses, they’ll get another $500 back. (Parents with income near the credit’s phaseout limits should plan carefully, as interest, dividends, overtime, tips, or bonuses could reduce or eliminate eligibility.)
Conclusion
Figuring out how to pay for college can be extra complicated for students whose parents are divorced, so it can help to start early.
It’s best to submit financial aid forms near the beginning submission date (typically October 1 for the FAFSA) rather than waiting until the deadline because some aid is distributed on a first-come, first-served basis. Plus, states and schools often have their own deadlines that are earlier than the federal deadline (June 30).
Consider talking to a MassMutual financial professional to get input on your college funding plans. They may be able to help with strategies you haven’t considered or aren’t sure how to implement.
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